The Lynas Corporation Ltd (ASX: LYC) share price is up by 10.14% at the time of writing, after the company signed a deal with the United States (US) Department of Defense (DoD) for a phase 1 heavy rare earth separation facility.
April announcement
This follows an announcement in April that the US DoD intended to award Lynas the phase 1 contract.
Lynas CEO Amanda Lacaze said at the time the deal created the foundation for a facility that would help the US "avoid the supply chain vulnerability that has been exposed over the past year".
As a result, it reflected the US desire to diversify its geographic supply of rare earth materials.
Heavy rare earth facility
Lynas and its US partner Blue Line will undertake a strategy study plus planning and design for the construction of a heavy rare earth separation facility – the only source of separated heavy rare earths outside China.
Completion of this work is expected within the 2021 financial year.
Lynas will process the materials sourced from Lynas mine in Mt Weld, Western Australia.
"We are very pleased to have signed a contract with the DoD for this Phase I work," Ms Lacaze said today.
"Heavy Rare Earths are essential for the high performance magnets used in electric motors, and Lynas has the feedstock, intellectual property, and track record to deliver a Heavy Rare Earths facility in a timely and low-risk manner. We look forward to working with the DoD to progress this project," she added.
About the Lynas share price
Lynas Corporation is the world's second largest producer of rare earths and only significant producer outside China. Rare earths are an essential component of digital age technologies and green technologies such as electric vehicles and wind turbines.
The company's assets include its Mt Weld mine, Mt Weld Concentration Plant and a manufacturing facility in Malaysia. According to Lynas, Mt Weld is recognised as one of the highest grade rare earths mine in the world.
Lynas shares reacted positively to today's developments, rising by 10.14% to $2.39 per share at the time of writing. However, the Lynas share price is still 10.15% down on this time last year.
