The US department of defence (DoD) has signed a $120m deal for Australia-based Lynas Rare Earths to construct the company’s first commercial scale heavy rare earth (HREE) separation facility in the US, as part of efforts to reduce reliance on China for critical minerals.

The facility will be located in Texas, which Lynas Rare Earths CEO and managing director Amanda Lacaze says is an “excellent location” from which the company can serve its customers and “support the US government's move to strengthen its industrial base and make supply chains more resilient through a diversified supply”.


Rare earth elements are key components of making magnets used in military applications such as jet fighter engines and missile defence, as well as necessary components for consumer electronic goods such as mobile phones, electric vehicles (EVs) and hybrid cars. 

In 2019, China was responsible for about 60% of global production of rare earth elements, compared with just 13% in the US, according to a report published by the International Energy Agency in 2021. China also accounted for nearly 90% of global refining of rare earth elements.

June Teufel Dreyer, a professor of political science at the University of Miami, told fDi that the fact the HREE are processed in China “puts the US at the mercy of the Chinese government”, particularly as relations between the two countries sour.

Currently the only large rare earth elements processing plant outside of China is in Malaysia, which is operated by Lynas. The new US facility is expected to be located within an existing industrial area in Texas and targeted to be operational in 2025. 

Feedstock for the facility will be produced from material sourced at the Lynas mine in Australia, and be shipped to the US, bypassing China. The attempt to build a critical minerals value chain is part of the White House’s push under the Biden administration to be less dependent on foreign materials, given the supply chain disruption.

“We can’t build a future that’s made in America if we ourselves are dependent on China for the materials that power the products of today and tomorrow,” president Joe Biden said at a White House Event in February 2022.

Possible challenges

Although strategically relevant for the development of key industries, building a full US-based supply chain for rare earths brings with it several challenges. 

“A singular supply chain for rare earths is problematic, particularly in an area where the material is critical for success,” Ms Lacaze told fDi

The main sticking points boil down to environmental and cultural challenges. Ms Dreyer said that environmental issues would be “problems” when it comes to rare earth elements supply chain in the US.

“Mining is a dirty process (...) everyone wants more rare earth metals, but at the same time everyone wants to conserve the environment,” she added. The desire of the US for the rare earth minerals supply chain is evident in another $35m contract that the DoD awarded to MP Materials, an American mining firm, in February 2022. The DoD supports the construction of  its processing facility for HREE in Mountain Pass, California, the only active rare earth production site in North America. However, Ms Dreyer added that California has “very strict environmental protection laws” to mine rare earth elements,  which will “slow down” progress in the rare earth elements domestic supply chain in the US.

Alongside environmental protection law, Ms Dreyer said “cultural issue” will be one of challenges in the US rare earth elements industry as some of the property possessing the rare earth element deposit does not belong to the US government, but Native Americans.

Mining companies suggest compensations to utilise the area with rare earth elements, such as collecting artefacts and putting them into the museum. However, from Native Americans’ perspective, the property could be culturally valuable, such as tribal burial ground. Therefore, it is hard to compromise to allow miners to extract minerals in the property and keep Native Americans’ heritage at the same time.

“Texas has much less strict environmental protection laws than California,” Ms Dreyer said.

Australia has some of the largest deposits of critical minerals including nickel, lithium, cobalt and rare earth elements, which are vital for a wide range of electronic devices.