Bechtel locked in for FEED at Aus Strategic Materials’ Dubbo days after US funding interest

Only days after receiving a letter of interest from the US export bank underscoring a potential funding boost of US$600M, Australian Strategic Materials (ASX:ASM) has made another update on its NSW Dubbo project.

International engineering firm Bechtel, headquartered in Virginia USA, has inked a contract with ASM to support the latter with engineering at Dubbo.

The Dubbo play is a critical minerals and rare earths (REE) play, and the US export bank last week revealed it’s keeping a close eye on the project.

So close, in fact, it may inject nearly A$1B into the project under existing government-level critical mineral strategy agreements between Australia and the US.

The US export bank is government-led, underscoring the value potential perceived by Washington in the NSW REE project.

In turn, ASM has gone back to the bank to apply for a funding program that would see over 80% of the costs of FEED covered by the US government.

“Bechtel’s services under the contract will be provided on a rates basis for work completed and is estimated to be about A$55M (~US$36M),” ASM wrote on Monday.

To support this application, ASM has forwarded the same letter it received from that same bank. The company appears confident, between the lines, it has a genuine shot at unlocking that funding boost.

It’s a notable development for the domestic REE space. Earlier this month, the government threw nearly A$1B at Arafura Rare Earths with a similar outcome in mind: securing domestic critical minerals supply.

Downstream processing remains an unknown, given that refifning REEs is notoriously dirty, and, waste producing. Large volumes of acid are needed and disposal of the acid can be more expensive than the raw material itself.

This is just one reason why China dominates in the sector, where it has been accused of simply dumping spent acid into rivers and other natural assets in Mongolia. To be sure, far way from Beijing.

ASM shares were up 2.53% to $1.42/sh at 11am AEDT.