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Lynas received a $120 million Pentagon contract for a U.S. rare earths project.

The U.S. Department of Defense has awarded Lynas Rare Earths an additional $120 million to construct a commercial heavy rare earths separation facility in Texas, the company announced on Tuesday.

Lynas is the only rare earth processor outside of China, and the contract with its U.S. subsidiary builds on “Phase 1” funding for a facility that will be announced in July 2020.

Initial funding for the project came from the Pentagon, and the company says it will be built in an industrial area on the Texas Gulf Coast by 2025.

Lynas wants to combine the heavy rare earth separation facility with the light rare earth separation facility, which is partially paid for by the U.S. Department of Defense’s Defense Production Act office.

Chief Executive Officer Amanda Lacaze told Reuters in an interview that the facility would be the first outside of China to separate heavy rare earths.

“That’s why this is such an important step,” she said in response to Tuesday’s news.

Lynas gets rare earths from Western Australia and ships them to Malaysia in southeast Asia, where they are turned into rare earth oxides.

Lacaze said that the company’s goal of increasing production by 50% by 2025 would not be enough to keep up with rising demand.

“The rapid growth of the market, particularly over the past year, tells us that we need to accelerate this plan,” she said of the 2019 objective set by the company.

After supplies were disrupted by the COVID-19 pandemic, Western nations, Japan, the European Union, and others began to recognise the risk of relying solely on China as a source of supplies.

“The issue here is not whether it’s Chinese or not,” said Lacaze. “It’s just that a single supply chain is hard to manage, especially in a fast-growing area where a key material is used.”

We work closely with governments that care about the security of the supply chain, and we will continue to do so.

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