ASX-listed American Rare Earths has signed a memorandum of understanding with a US-based rare earth metallurgy and metallisation company called Novex, covering the conversion of separated rare earth oxides from the Halleck Creek project, in Wyoming, into the metal required to make permanent magnets.

American Rare Earths, through its US subsidiary Wyoming Rare, will work with Novex to form a long-term commercial partnership spanning process optimisation, metallisation of demonstration plant output and the joint design of a domestic rare earth metal production facility.

American Rare Earths points out that converting separated oxide into metal is the "chokepoint" of the mine-to-magnet supply chain, adding that magnet manufacturers can not generally process oxide.

"The magnet makers need metal and alloy, however, China currently controls most of the world's supply.

In April 2025, China imposed export licensing on samarium, gadolinium, terbium, dysprosium and yttrium, which are the elements used in defence grade and high temperature magnets," American Rare Earths explains.

From January 1 next year, US defence contractors will be barred from delivering magnets containing rare earth elements mined, refined or separated in China, therefore, domestic metallisation capacity has become a national security requirement as much as a commercial opportunity.

American Rare Earths had been investigating how it might participate in the midstream segment of the mine-to-magnet rare earth supply chain, specifically the step from separated oxide to metal and then to precursors for magnet production.

In this regard, Novex has been developing metal-making techniques and processes aimed at solving many of the workable issues in rare earths refining.

The agreement between the companies stipulates that Novex will support American Rare Earths in improving recovery, purity and product qualification for neodymium-paseodymium, terbium, dysprosium, samarium and yttrium from Halleck Creek ore, while Novex will also receive oxide produced from American Rare Earths' demonstration plant and convert it to a metal product suitable as a magnet precursor.

The parties will work together on the design and development of a metal production facility to be built by American Rare Earths, covering process design, technology selection, engineering scope, throughput and product mix, siting and permitting, and capital and operating costs.

Novex and American Rare Earths will then look at options for building a US supply chain with entirely US feedstock and processing running from Halleck Creek in Wyoming through Novex's metal production to permanent magnet applications.

The parties will also review options for American Rare Earths to produce and supply samarium, dysprosium and terbium samples for metallurgical testing and qualification.

"We will assess how our respective development plans align and how best to engage with federal and state programmes supporting domestic critical minerals and magnet supply chains," American Rare Earths CEO Mark Wall says.

He adds that American Rare Earths' technology review demonstrated that molten salt electrolysis is the cleanest path from oxide to metal, and Novex has been developing that capability in the US for years while working with various areas of the US government and leading consulting companies.

"Putting our massive Wyoming resource alongside their technical capability is an important step in developing the cornerstone of US domestic rare earth and magnet production, in Wyoming."

Novex CEO Ilija Mišković says Novex has spent years developing one of the most technically challenging and strategically important capabilities in the rare earth supply chain, which is converting separated and purified oxides into high-quality metals and alloys.

"Establishing this capability in the US requires a secure domestic source of the right rare-earth feedstocks, and Halleck Creek provides that foundation. We look forward to metallising American Rare Earths’ oxide products and working together to advance a US rare earth metal and alloy production facility."