Recommendation to Sell MP Materials (MP)
Based on the below press release highlighting the agreement for Australia’s Lynas to build a rare earths refinery in Texas, I recommend you sell your MP Materials (MP) position.
I’ll have more on this in the next update.
22 January 2021
LYNAS SIGNS CONTRACT TO BUILD U.S. LIGHT RARE EARTHS SEPARATION FACILITY
Lynas Rare Earths Limited (ASX:LYC, OTC:LYSDY) (“Lynas”) has today entered into an agreement with the United States Government to build a commercial Light Rare Earths separation plant in the United States, through our wholly owned subsidiary, Lynas USA LLC.
This collaboration with the Department of Defense is sponsored by the Title III, Defense Production Act program, which sits within the Pentagon’s office of Industrial Policy, and will ultimately be directed by the Office of the Undersecretary for Acquisition and Sustainment.
This project is scheduled to be completed in accordance with the Department of Defense timetable and as part of our Lynas 2025 plan. Detailed costs are still being finalized; we expect Department of Defense funding to be capped at approximately US$30 million. Lynas will also be expected to contribute approximately US$30 million under the agreement.
The plant is expected to be located in Texas. Once operational, the plant is expected to produce approximately 5,000 tonnes per annum of Rare Earths products, including approximately 1,250 tonnes per annum of NdPr. The plant will be able to receive material directly from the cracking & leaching plant that Lynas is developing in Kalgoorlie, Western Australia.
The signing of this agreement follows the announcement on 27 July 2020, that Lynas had signed a contract with the U.S. Department of Defense for Phase I work on a U.S. based Heavy Rare Earth separation facility. Should that contract proceed to the next phase, the Texas facility would house both Heavy Rare Earths and Light Rare Earths processing facilities. The facilities will serve both the Defense Industrial Base (DIB) and the growing commercial market, including electric vehicles and green technologies made in the U.S. as well as in global markets.