By Ernest Scheyder
(Reuters) - The U.S. Department of Defense has resumed funding for two projects to process rare earth minerals for military weapons after a review found the grants are in the best interest of the U.S. government, according to documents seen by Reuters.
The Pentagon on April 22 awarded Australia's Lynas Corp <LYC.AX> and privately held MP Materials funding for rare earths separation facilities in Texas and California, respectively. Those decisions were put on hold on April 29, the Pentagon said, pending "further research."
Reuters reported in late April that a Chinese company's minority stake in MP Materials, which owns the only U.S. rare earths mine and is majority-controlled by a Chicago hedge fund, had prompted concerns from U.S. government scientists.
Several U.S. senators have pushed the Pentagon to fund only domestic rare earth projects.
After a legal and program review was completed by a third party, the Pentagon determined the award process was followed fairly and decided to resume funding for Lynas and MP, according to the documents, which were dated July 10.
Officials at the Pentagon did not respond to requests for comment, nor did MP Materials. Lynas declined to comment.
The amount awarded to both companies was not published by the U.S. government, though the funds were allocated for planning work for the construction of processing facilities.
Lynas has said it does not require U.S. government funds to move forward on its Texas project with privately held Blue Line Corp.
Reuters has reported the Pentagon is also reviewing applications for other rare earth-related funding projects. Applicants have said they expect decisions in the coming months.
Separately, Nevada-based MP said last week it would go public later this year in a $1.47 billion deal by merging with a private-equity-backed blank-check company.
(Reporting by Ernest Scheyder; Additional reporting by Melanie Burton; Editing by Leslie Adler)