* Lynas only major rare earth minerals producer outside China
* Companies to develop Texas rare earths separation facility
* Will close supply chain gap for U.S. manufacturers - Lynas (Writes through, adds CEO comments)
By Liz Lee
KUALA LUMPUR, May 20 (Reuters) - Rare earths producer Lynas Corp said on Monday it has signed a memorandum of understanding with Texas-based Blue Line Corp to set up a rare earths separation facility in the United States.
The move comes as the United States, which is highly reliant on the world's biggest producer China for rare earths, is prioritising the sourcing of its own strategic minerals used in everything from consumer electronics to military equipment.
Lynas and Blue Line will cooperate over the next year to develop the processing facility in Texas. The venture will be majority owned by Lynas, the companies said in a joint statement.
The deal has been struck as Lynas faces regulatory issues at its processing plant in Malaysia, and fends off a $1.1 billion takeover offer from Australian retail-to-chemicals conglomerate Wesfarmers Ltd
Chief executive officer Amanda Lacaze told Reuters in a phone interview that the U.S. venture was a specific market opportunity and would complement its operations in Malaysia.
The venture would allow Lynas to close a "critical" supply chain gap for U.S. manufacturers.
It's "an important reflection of the fact that countries all around the world are keen to have rare earths processing capabilities," Lacaze said.
"Electric vehicle manufacturers are looking for security of supply of the heavy rare earths as well as on the light rare earths and this provides that opportunity," she said.
Lynas is the world's only major producer of rare earth minerals outside China. The materials produced by the company, such as neodymium-praseodymium, are used in a variety of applications such as electrical components and high-power magnets.
The companies did not give any details on the cost of the proposed U.S. facility.
Lacaze said the company was "absolutely committed" to Malaysia, where it has been required to remove years of accumulated waste at its plant in order to have its license renewed.
She was confident Lynas could meet a framework outlined by Prime Minister Mahathir Mohamad, who said in April that Lynas or any other company will need to clean raw materials coming to Malaysia in order to operate in the country.
Lynas has said it is considering initial ore processing near its Australian mine, given the situation in Malaysia.
The company last month reported a near 33% rise in its third-quarter production of rare earth oxides, and has rejected the Wesfarmers bid as undervaluing its business..
(Reporting by Liz Lee; additional reporting by Ambar Warrick in BENGALURU; editing by Richard Pullin)