(Bloomberg) -- The world's largest rare-earth producer outside of China will prioritize the U.S. military's needs when it starts production at a plant it's building in Texas, the company's chief executive officer said.
While defense applications are small compared to commercial uses, the military has been successful in creating “viable supply chains” across the industry and that makes it a high priority, Lynas Corp.'s Amanda Lacaze said in an interview in Chicago Thursday.
Rare earths -- a group of 17 vital elements used in missile systems, electric-vehicle, computer screens and other tech devices -- have been thrown into the limelight after China signaled it may restrict shipments to the U.S. Lynas has been talks with the U.S. Department of Defense and the Defense Logistics Agency "pretty much for as long as I've been in the job and I'm thinking before that as well," she said.
Negotiations for supply to the DoD and the DLA gave Lynas the confidence to enter into a joint venture with Blue Line Corp. to build in Texas the only separation plant for heavy rare earths outside of China, she said.
The U.S. stressed the urgency to ensure it doesn't get cut off from supply, with Commerce Secretary Wilbur Ross promising on Tuesday “unprecedented action” to secure the nation's access to the raw material. The country relies on China for 80% of its imports, according to the U.S. Geological Survey.
Defense contractors account for just 1% of the U.S. rare earth demand, or about 0.09% of global consumption, Raymond James analysts including Pavel Molchanov, said in a note Monday. China produced about 71% of the world's output last year, according to the U.S. Geological Survey.
Lynas' plant in Texas will have the capacity to produce at least 1,200 tons of so-called SEG oxide, a group of heavy rare earth elements, Lacaze said.
To contact the reporter on this story: Justina Vasquez in New York at jvasquez57@bloomberg.net
To contact the editors responsible for this story: Luzi Ann Javier at ljavier@bloomberg.net, Steven Frank
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