As the United States seeks to reduce their reliance on Chinese raw materials and resources, Aussie mining company Lynas Rare Earths (ASX: LYC) has secured lucrative backing from the US Department of Defence to build a Rare Earths facility in Texas which will be critical in meeting demand for electric vehicles.

The backing comes with the US Department of Defence signing a contract for Lynas to build the Rare Earths separation facility which will produce approximately 5,000 tonnes per annum of rare earth products, including 1,250 tonnes of neodymium-praseodymium (NdPr) which is a vital element in EV batteries.

“As the only non-Chinese commercial producer of separated Rare Earths products to the global marketplace, Lynas is delighted by the opportunity to develop a Light Rare Earth separation facility in the United States,” said Lynas CEO Amanda Lacaze.

“Rare Earth materials are critical inputs to many industrial supply chains, including electric vehicles, electronics and several defence applications. 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.

“The Texas plant will ensure the U.S. 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.”

The contract signing comes after discussions commenced between the US Government and Lynas in July 2020 at a time when the Trump Administration was desperately seeking alternative suppliers of Rare Earths outside of China.

Initially, Lynas and the Department of Defence will contribute USD $30 million each towards the project with detailed costings still to be finalised. Once completed, the plant will receive material directly from Lynas’ plant in Kalgoorlie, Western Australia where it will be further processed in Texas for commercial markets including electric vehicles, defence systems and green technologies.

China currently accounts for more than 60% of the world’s Rare Earths production and has a powerful influence on price fluctuations in the neodymium and dysprosium markets where both elements are critical in electric vehicle battery manufacturing.