The Lynas Rare Earths Ltd (ASX: LYC) share price is having a strong session.
In morning trade, the rare earths producer's shares are up over 6% to $7.17.
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Why is the Lynas share price jumping?
The company's shares are racing higher this morning after it announced the signing of a follow on contract with the United States Department of Defense (DoD).
This contract relates to the construction of the heavy rare earths component of the Lynas U.S. Rare Earths Processing Facility in Texas.
The release reveals that the updated contract is an expenditure-based contract under which all of Lynas' properly allocable construction costs will be reimbursed. A contribution of approximately US$258 million from the U.S. Government is now allocated to the project, which is up from approximately US$120 million previously.
Management highlights that this project will strengthen supply chain resilience for responsibly produced rare earths and will be the only scale producer of separated heavy rare earths outside of China.
The good news is that a site has been chosen and purchased for the facility. A 149-acre greenfield site in Seadrift, Texas has been snapped up from The Dow Chemical Company. Management notes that the site is located in an existing industrial zone and is close to a skilled workforce, potential customers, infrastructure, and logistics.
If all goes to plan, the facility will be operational in FY 2026.
'Key pillar of Lynas' growth strategy'
Lynas CEO & Managing Director, Amanda Lacaze, said:
We are delighted to work with the U.S. DoD to deliver our U.S. Heavy Rare Earths separation plant in Texas, which is a key pillar of Lynas' growth strategy. This further support by the DoD demonstrates the priority being given to developing robust and resilient rare earth supply chains.
Our Heavy Rare Earths separation plant will be the first of its kind outside China and will help to establish a globally significant, safe and environmentally responsible rare earths supply chain. Lynas is the only commercial scale source of separated rare earths outside of China and our expertise makes us the ideal partner for the DoD as it addresses supply chain vulnerabilities and strengthens national security.
