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Australian Strategic receives letter of intent from US government

WA has three, the Northern Territory has one, now NSW could have a rare earths project all of its own. For that we can thank the US government.

Australian Strategic Materials (ASX:ASM) joins Lynas (ASX:LYC), Iluka (ASX:ILU) and Arafura (ASX:ARU) in the rare earths business after Thursday’s announcement.

Australian Strategic told the ASX on Thursday that it has received a letter of interest (LOI) for a debt funding package of up to US$600m from America’s Export-Import Bank to support construction of its Dubbo rare earths project in central western NSW.

If confirmed, this would be the first direct investment in rare earths processing in Australia — the US government has announced a financial package totalling US$258 million to help Lynas build a key plant in Texas.

ASM has plans to build out its Dubbo rare earths mine and processing plant for which it is seeking customers and finance.

“US EXIM’s support is linked to the potential US content (equipment, goods and services) to be supplied in the construction phase of the Dubbo Project and the key strategic role the Dubbo Project can play in the critical minerals supply chain,” ASM said in Thursday’s statement.

The LoI is subject to completion of due diligence by US EXIM and ASM obtaining all necessary approvals for the Dubbo Project.

“US EXIM’s letter of interest for the construction phase of the Dubbo Project follows Export Finance Australia’s previous conditional finance support of A$200 million debt funding for the Dubbo Project.” ASM added.

ASM last year agreed to sell neodymium iron boron alloy from its South Korean metals plant to US-based rare-earth magnet maker Noveon Magnetics Inc.

Australia last week said it would provide up to $840 million for the Nolans combined rare earths mine and refinery in the country’s Northern Territory, owned by Arafura Rare Earths.

Northern Minerals is moving ahead slowly on developing its Browns Range rare earths deposit in the far north of WA and, near Perth, Iluka is developing a huge refinery (using its stockpiled ores at Eneabba). Iluka received a $1.25 billion assistance deal from the Australian government.