NEW YORK (Bloomberg): Lynas Rare Earths Ltd. has signed a binding letter of intent to supply the Pentagon with rare-earth oxides over a four-year period.
The arrangement is worth $96mil and will cover heavy and light rare-earth products, the company said in a statement on Monday. The letter "establishes a framework to finalise an agreement for the supply" of the critical minerals, used in everything from wind turbines and electric-vehicle motors to advanced military applications.
The floor price for neodymium-praseodymium oxide will be $110 per kilogram, it said.
"Through this agreement, the US Defense Industrial Base will continue to have access to light and heavy rare-earth oxides that are essential for modern manufacturing," Lynas Chief Executive Officer Amanda Lacaze said in the statement.
Shares in the Sydney-listed company rose as much as 3.4% before paring gains to trade at A$21.10 a share at noon local time.
Lynas is one of only two major rare-earth miners outside China, which holds a near-monopoly over the supply chain. It currently has a mine and processing plant in Western Australia and another facility in Malaysia.
The company had already been selling material to the US defense industry "at very pleasing prices," Lacaze said during a call with investors in late February. These were spot sales not subject to a floor price, as distinct from the supply arrangement announced on Monday (March 16).
The latest offtake agreement follows a mutual decision to "modify" an agreement to build a heavy-rare-earth processing facility in Texas, Lynas said in the statement. There is "significant uncertainty" as to whether construction will go ahead, the company said.
The deal comes less than a week after Lynas signed a separate offtake agreement with Japan Australia Rare Earths BV, which negotiates on behalf of Japanese companies, for at least 5,000 tons of neodymium-praseodymium oxide annually until 2038, also at a floor price of $110 per kilogram. – Bloomberg
