US political heat puts Lynas defense contract on ice – by Colin Kruger (Sydney Morning Herald – May 25, 2020)

Rare earths group Lynas Corp has received a setback to its expansion plans after warning the US Department of Defense contract it was awarded last month may be on hold while the political debate heats up on whether the country should source its rare earths onshore.

In a statement to the ASX on Friday evening, Lynas confirmed media reports in the US – debating the merits of sourcing rare earths locally versus from allies or other sources – have impacted on the contract that could help fund its plants to set up a processing plant in Texas.

“Lynas remains one of two companies selected for Phase 1 of the project, however Lynas understands that the US government’s progress on Phase 1 is currently on hold those political issues are addressed,” the company said.

According to Reuters, the Department of Defense – also known as the Pentagon – informed Lynas and another successful applicant for rare earth funding, MP Materials, that the decision had been “put on hold until further research can be conducted.”

This was after US Republican Senator Ted Cruz, a former presidential candidate, and other senators sent a letter to the Pentagon urging it to only fund US rare earth projects.

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