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March 16 (Reuters) - Australia's Lynas Rare Earths LYC.AX said on Monday its unit Lynas USA LLC has signed a binding letter of intent with the U.S. government to finalise a rare earth oxide supply agreement.

Under the deal, the Pentagon will allocate about $96 million to buy light and heavy rare earth oxide products from Lynas, with a floor price of $110 per kg for NdPr oxide, the company said.

Lynas said the letter of intent sets out a framework for a four‑year supply agreement supporting U.S. national security and supply‑chain resilience objectives.

The new offtake structure follows a mutual decision to revise the companies' earlier agreement due to uncertainty over whether the planned heavy rare earth processing facility in Seadrift, Texas, would go ahead, it added.

"Through this agreement, the U.S. Defense Industrial Base will continue to have access to Light and Heavy Rare Earth oxides that are essential for modern manufacturing," Lynas CEO Amanda Lacaze said.

Rare earths, and the magnets made from them, are embedded in small but critical amounts across devices from iPhones and washing machines to F-35 jets, and power everything from EVs to military systems.

The deal comes at a time when the United States has been pushing to secure critical minerals and reduce reliance on China, which produces around 90% of the world's rare earth magnets.

Lynas is the world's largest rare earth producer outside China.

(Reporting by Rajasik Mukherjee; editing by Diane Craft and Will Dunham)

((Rajasik.Mukherjee@thomsonreuters.com;))