Australian mining company Lynas Rare Earths has been awarded a contract by the United States Department of Defence worth $US120 million to build a processing facility in the US.

The facility is expected to be built on the Gulf Coast in the state of Texas and should by operational by 2025.

It will reduce America's reliance on China for strategic minerals used to make missiles and other high-tech equipment.

Lynas operates the Mt Weld rare earths mine in Western Australia's northern Goldfields and is building a $500m refinery in Kalgoorlie-Boulder that is due to begin production next year.

The ASX-listed company, which counts the Japanese government among its biggest backers, ships rare earths to its processing facility in Malaysia, but the new deal means WA minerals will also be headed for the US.

Lynas originally struck a deal with the Pentagon in July 2020 to progress plans for the facility.

Lynas managing director Amanda Lacaze says the deal demonstrates the priority that the US is placing on "ensuring that supply chains for these critical materials are resilient and environmentally responsible".

"The development of a US heavy rare earths separation facility is an important part of our accelerated growth plan," she said in a statement.

It is unclear whether the Texas plant will affect Lynas' pre-existing supply agreements with Japan, which has priority supply rights until 2038, according to the company's last annual report.

Lynas has financing facilities in place with a group known as Japan Australia Rare Earths (JARE), a joint venture that is part-owned by the Japanese government.

The principal amount of the JARE loan facility was US$145 million at June 30 last year, according to Lynas's annual report, with an interest rate of 2.5 per cent and a maturity date of June 30, 2030.

Powerful backers

Kalgoorlie-Boulder Mayor John Bowler, a former WA resources minister, welcomed the deal with the US as construction of Lynas's new Kalgoorlie refinery continued at pace.

"I'm not surprised," Mr Bowler told ABC Goldfields.

"When we were first talking to Lynas about coming to Kalgoorlie, the deal hadn't been done at that stage and no-one was mentioning money.

"Things were obviously dependant on funding, and I said to Amanda Lacaze, 'You haven't mentioned money … do you have the funds?'

"They've been right behind them all the way."

Australia's new Resources Minister Madeleine King and the US Consul General's office in Perth have been contacted for comment.

Plant progressing

Meanwhile, construction work at the new Kalgoorlie refinery in recent days has focused on the installation of the last section of a 110-metre-long kiln, one of the biggest in the Southern Hemisphere.

Speaking at the Kalgoorlie-Boulder Commodities Forum, Lynas Kalgoorlie general manager Grant McAuliffe said recruitment for 128 operational roles was well underway.

"We are employing from the top down first," he said.

"We've got most of our leadership team in place and their job is now to employ their workers.

"But we concentrate on being a socially responsible company that's going to be here for the very long term, so that people can join us and have a good career."