Lynas Rare Earths Ltd (ASX: LYC) has signed an agreement with a US magnet manufacturer, as a step towards setting up a scalable rare earths magnets supply chain in the key global market.
The Australian company, which operates the world's largest rare earths separation plant in Malaysia, as well as mining rare earths at Mt Weld in Western Australia, said late on Wednesday it had signed a memorandum of understanding with US company Noveon Magnetics.
Lynas shares hit a new high-water mark for the past 12 months on Thursday, trading as high as $20.16 before settling back to change hands at $19.91, up 1.8%.
The company's valuation is now nudging $20 billion and has more than tripled over the past year.
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US supply chain crucial
Noveon, Lynas said in a statement to the ASX, is a "high-performance rare earth magnet manufacturer" supplying magnets for use in electric vehicles, wind turbines, robots, pumps, "and an array of military systems''.
China currently dominates the global supply of rare earth minerals, accounting for approximately 70% of the market, according to the industry website Rare Earth Exchanges. The US has a policy focus on diversifying away from China and promoting new sources of supply.
Noveon Chief Executive Officer Scott Dunn said the agreement with Lynas would allow the companies to rapidly build a new supply chain.
Partnering with Lynas Rare Earths will allow our two companies to build on our proven capabilities to accelerate the development of a secure and sustainable domestic magnet supply chain. Together we can offer a total solution today, not five years from now, that meets immediate US economic and national security needs while building greater capacity and ensuring long-term supply chain resilience for the US.
The companies said they had committed to finalising a "definitive agreement" and would work closely with customers and the US government to ensure supply continuity for critical applications.
Lynas recently released an investor briefing to the ASX, which said the company had a number of growth projects in its pipeline under its Towards 2030 strategy.
These included continued exploration and mine plan optimisation at Mt Weld, the development of value-added specialty rare earths manufacturing capabilities, and a plan to partner with companies with proven expertise in rare earth metal and magnet production.
Lynas Managing Director Amanda Lacaze said in Wednesday's statement to the ASX that the agreement with Noveon supported the Towards 2030 strategy.
By combining our world-class rare earths mining and processing expertise with Noveon's proven downstream manufacturing capabilities, we can provide immediate and practical support to US manufacturers with a secure and traceable supply of high-performance magnets.
The statement said the partnership would prioritise magnets used in defence systems.
