Pentagon Commits $30 Million to Texas Rare Earth Plant, Aims to Reduce Reliance on China

February 1, 2021 Updated: February 1, 2021

The U.S. Department of Defense has awarded $30 million in funding to Australia’s Lynas Corp to build a rare earth processing plant in Texas, as the nation continues to seek to break its reliance on Chinese imports of the critical minerals.

The facility will be able to process light rare earth elements (LREE), which are not only widely used in consumer goods such as cellphones and electric car motors, but also critical to the production of next-generation fighter jets and precision-guided missiles.

It’s not the first time Lynas, one of the few major non-Chinese rare earth miners, received federal funding for a U.S.-based project. Last year, the company teamed up with Texas’s Blue Line Corp to land a deal with the Pentagon to build a separation plant for heavy rare earth elements (HREE), which are used in the manufacturing of specialized military weapon systems.

Both plants will be built in Hondo, Texas, about 45 miles west of San Antonio. Lynas said it will be able produce a quarter of the world’s demand for rare earths once the facilities become operational.

Once the global leader in rare earths production from 1960s to 1980s, the United States is now almost entirely dependent on Chinese imports of rare earth materials. The Chinese communist government, seeing rare earth elements as a strategic resource that can be leveraged to its advantage in negotiations, spent decades transferring the American rare earth industry to China by using a combination of low labor costs and the absence of environmental standards.

That reliance on China for rare earth minerals has raised serious concerns, especially as Beijing seeks to take advantage of the United States’s and the world’s preoccupation with the CCP (Chinese Communist Party) virus pandemic. In October 2020, China said it would cut off rare earth supplies to American defense manufacturers that have been arming Taiwan’s defense force, including Lockheed Martin, which leads an industry team to develop and produce F-35 fighter jets.

“While demand for Rare Earth materials continues to grow, COVID-19 has exposed the risks within global supply chains of the single sourcing of critical materials,” Amanda Lacaze, Lynas’s CEO, said in a statement, adding that her company is the only non-Chinese commercial producer of separated rare earth products to the global marketplace.

“The Texas plant will ensure the US has a secure domestic source of high quality separated Rare Earth materials. This secure supply will provide the essential foundation for the renewal of downstream specialty metal making and permanent magnet manufacturing in North America.”