American Rare Earths (ASX: ARR) and metallurgy firm Novex have signed a memorandum of understanding (MoU) to develop rare earth metal production in the United States, using feedstock from the Halleck Creek project in Wyoming — described as the country's largest deposit — to supply magnets used in defence and other modern applications.

The companies said Monday that the agreement covers advancing the conversion of separated rare earth oxides into metals used in permanent magnets and exploring the design of a U.S. rare earth metal production plant.

Halleck Creek anchors the effort, which targets a domestic supply chain stretching from mined ore to permanent magnets. The project's mineral resource of about 2.63 billion tonnes has the potential to supply domestic magnet metals and has drawn federal and state support, including a non-binding U.S. Export-Import Bank letter of interest of up to $456 million.

"Putting our massive Wyoming resource alongside their technical capability is an important step in developing the cornerstone of U.S. domestic rare earth and magnet production, in Wyoming," American Rare Earths CEO Mark Wall said in a release.

Shares in American Rare Earths gained 6% on Monday to close at A36¢ apiece in Sydney, valuing the company at A$204 million (C$201 million).

Wyoming supply

The agreement targets one of the gaps in the U.S. rare earth supply chain: turning refined and separated oxides into metals suitable for magnet manufacturing. The gap is significant because the United States mines rare earths only at Mountain Pass in California, and that concentrate has historically been shipped abroad for separation, while China handles the bulk of global refining and produces most of the world's high-performance neodymium-iron-boron magnets found in electric-vehicle motors, wind-turbine generators and consumer electronics. Developing that capability domestically could reduce reliance on overseas processing as Washington seeks to secure supplies of materials considered important for defence and advanced manufacturing.

The partners aim to improve recovery, purity and product qualification of rare earth elements, and plan to establish a domestic production plant and a fully domestic mine-to-magnet chain.

They also intend to metallize neodymium-praseodymium (NdPr) oxide and convert it into a metal product suitable as a magnet precursor, and to review options for American Rare Earths to produce and supply samarium, dysprosium and terbium for metallurgical testing and qualification. Dysprosium and terbium are heavy rare earths added to neodymium-iron-boron magnets to maintain performance at high temperatures, while samarium is the basis for samarium-cobalt magnets used in aerospace and other demanding applications.

Halleck Creek hosts 1.48 billion measured and indicated tonnes grading 3,334 parts per million (ppm) (0.33%) total rare earth oxides (TREO) for 4.93 million tonnes of contained TREO, according to a resource issued in February 2025. The project also holds 1.15 billion inferred tonnes grading 3,239 ppm (0.32%) TREO for 3.72 million tonnes of contained TREO. The combined resource totals 8.65 million tonnes of contained TREO.

Chain review

The MoU follows an American Rare Earths oxide-to-metal review, which identified several workable metallization technologies that could help the U.S. advance the sector.

Those routes included fluoride conversion followed by calciothermic reduction, lanthanothermic reduction for volatile metals, and high-temperature molten salt electrolysis. The review found molten salt electrolysis to be the cleanest of the methods, reducing dependence on anhydrous hydrogen fluoride and avoiding the use of a rare earth metal — which could otherwise be sold — as the reductant.

China deadline

The companies' push comes as the U.S. seeks to lessen its dependence on China's dominant rare earth supply chain, particularly for materials used in defence applications and data centres. Starting Jan. 1, U.S. defence contractors will face restrictions on delivering certain magnets containing rare earth elements mined, refined or separated in China, adding another obstacle to the sector and underscoring the need for domestic production.

"Establishing this capability in the United States requires a secure domestic source of the right rare-earth feedstocks, and Halleck Creek provides that foundation," said Ilija (Eli) Mišković, CEO of Washington state-based Novex, in the same release.

Source: The Northern Miner