Lynas Rare Earths Signs Binding $96 Million Letter of Intent with US Department of War for Rare Earth Supply
Lynas Rare Earths has signed a binding Letter of Intent with the US Department of War to supply light and heavy rare earth oxides over a four-year period. Photo Credit: Lynas Rare Earths Ltd.
Key Points
- Lynas Rare Earths (ASX: LYC) announced on March 16, 2026 that its wholly owned subsidiary Lynas USA LLC has signed a binding Letter of Intent with the United States Department of War (DoW) for rare earth oxide supply.
- Approximately US$96 million has been allocated by the DoW for the purchase of light and heavy rare earth oxide products from Lynas over a four-year supply period.
- The agreement includes a floor price of US$110 per kilogram for neodymium-praseodymium (NdPr) oxide, providing Lynas with price protection on a key revenue stream.
- The Letter of Intent follows a mutual decision by both parties to modify the original agreement, after significant uncertainty arose over whether the Heavy Rare Earth processing facility at Seadrift, Texas would proceed.
- Discussions between Lynas and the DoW are ongoing for further supply arrangements, including for heavy rare earth oxides.
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The Letter of Intent
Lynas Rare Earths Ltd announced on March 16, 2026 that Lynas USA LLC — its wholly owned US subsidiary — has signed a binding Letter of Intent with the United States Department of War. The agreement establishes a framework for the supply of both light and heavy rare earth oxide products to support US national security and supply chain resilience objectives.
Under the arrangement, approximately US$96 million has been allocated by the DoW for the purchase of rare earth oxide products from Lynas over a four-year supply period. The floor price for neodymium-praseodymium (NdPr) oxide has been set at US$110 per kilogram, providing a minimum pricing guarantee on one of the most commercially significant rare earth products used in permanent magnets for electric vehicles, wind turbines and defence applications.
| Term | Detail |
|---|---|
| Parties | Lynas USA LLC and the United States Department of War (DoW) |
| Agreement Type | Binding Letter of Intent (to facilitate a definitive supply agreement) |
| Total Allocation | Approximately US$96 million |
| Products | Light and Heavy Rare Earth oxides |
| NdPr Floor Price | US$110/kg |
| Supply Period | Four years |
| Purpose | US national security and supply chain resilience |
The Letter of Intent is described as binding and is intended to facilitate the finalisation of a definitive supply agreement between the two parties. It follows the mutual decision by Lynas and the DoW to modify their original agreement, a change driven by significant uncertainty over whether the Heavy Rare Earth processing facility at Seadrift, Texas would proceed to construction.
“Lynas is pleased to sign this binding Letter of Intent with the U.S. Department of War. Through this agreement, the U.S. Defense Industrial Base will continue to have access to Light and Heavy Rare Earth oxides that are essential for modern manufacturing.
“We thank the U.S. Government for working with Lynas to reach this mutually beneficial arrangement and look forward to finalising the definitive agreement in due course and continuing our productive engagement with the U.S. Government.”
— Amanda Lacaze, CEO and Managing Director, Lynas Rare Earths Ltd.
NdPr Oxide (Neodymium-Praseodymium)
NdPr oxide is a mixed rare earth product used as the primary feedstock for neodymium-iron-boron (NdFeB) permanent magnets — the strongest permanent magnets commercially available. These magnets are essential components in the electric motors of electric vehicles, the generators of wind turbines, and a wide range of defence and aerospace systems. NdPr is considered the highest-value product in the light rare earth oxide category and is a key commercial driver for rare earth producers like Lynas.
Strategic Context: US Rare Earth Supply Chain Security
The agreement reflects the ongoing priority placed by the US government on securing reliable, non-Chinese sources of rare earth materials. The United States currently has limited domestic rare earth processing capacity, and the majority of global rare earth separation and oxide production remains concentrated in China. Lynas occupies a strategically important position in western efforts to diversify rare earth supply chains, operating processing facilities in Malaysia and a light rare earth separation facility in the United States.
The DoW’s engagement with Lynas has a multi-year history. The original agreement encompassed plans for a Heavy Rare Earth processing facility at Seadrift, Texas, which would have expanded Lynas’s US processing footprint beyond its existing light rare earth separation capabilities. While that facility has faced uncertainty, the binding Letter of Intent signals continued US government commitment to securing rare earth oxide supply from Lynas regardless of the Seadrift facility’s status.
The US$110/kg NdPr floor price included in the agreement is notable in the context of rare earth market conditions. NdPr prices have been subject to significant volatility, and a government-backed floor price provides Lynas with revenue certainty on a portion of its NdPr production — a meaningful commercial benefit for project planning and investment decisions.
Light vs Heavy Rare Earth Oxides
Rare earth elements are divided into two groups based on their atomic weight. Light rare earths (LREEs) include neodymium, praseodymium, lanthanum and cerium — the most commercially abundant and widely processed. Heavy rare earths (HREEs) include dysprosium, terbium and others that are critical for high-performance magnet applications in extreme conditions (such as EV motors and defence systems) but are rarer and harder to produce. China dominates HREE processing globally, making western HREE supply a particularly sensitive national security issue.
Next Steps
The binding Letter of Intent is designed to facilitate finalisation of a definitive supply agreement between Lynas USA LLC and the Department of War. No timeline for completing the definitive agreement has been specified in the announcement.
Lynas and the DoW have confirmed that discussions are continuing on further supply arrangements, including specifically for heavy rare earth oxides. This suggests the current agreement — focused on both light and heavy rare earth oxides at an aggregate level — may be followed by more targeted arrangements as the two parties progress their engagement.
Lynas is listed on the Australian Securities Exchange under the ticker LYC and trades on the OTCQX market in the United States under the tickers LYSDY and LYSCF.