Defense Metals (TSXV:DEFN,OTCQB:DFMTF) has signed a memorandum of understanding (MOU) with the Saskatchewan Research Council (SRC) to support the development of a domestic rare earths supply chain.

The collaboration was announced on Thursday (September 26) and has three main objectives.

The organizations will explore potential joint initiatives related to the processing and supply of rare earth materials, and will discuss the use of the SRC’s rare earths separation technology for Defense Metals’ products.

They also plan to pursue negotiations for a long-term supply agreement.

The SRC has developed proprietary technologies for rare earths separation, while Defense Metals is developing its Wicheeda rare earths project, located about 80 kilometers north of Prince George in BC, Canada.

Guy de Selliers, executive chairman of Defense Metals, emphasized the partnership’s strategic importance in enhancing North American supply chains for critical materials.

“By working together with SRC, we believe we can make substantial progress toward closing the rare earth supply chain loop and ensuring the availability of these critical materials for green energy and defense applications that are essential for national security,” he said in a press release shared by the company.

The agreement coincides with broader national efforts to reduce reliance on foreign sources for critical minerals.

The Canadian government is prioritizing the development of domestic mineral industries through its Critical Minerals Strategy, which seeks to support the country’s economic security and competitiveness in clean energy and defense.

The partnership is expected to contribute to national security objectives by ensuring the availability of key rare earths that are essential for a range of modern technologies, including electric vehicles and military systems.

The MOU with Defense Metals is one of several recent moves in the sector by the SRC.

The SRC recently achieved commercial-scale production at its rare earths processing facility in Saskatoon, Saskatchewan. The facility, which became operational this past summer, is now producing rare earth metals at commercial levels, with an initial output of 10 metric tons per month of neodymium-praseodymium metals.

The facility’s purities exceed 99.5 percent, and its conversion rate is reported to be over 98 percent.

This milestone makes the Canadian province the first jurisdiction in North America to achieve commercial-scale rare earths production. The SRC plans to ramp up production to 40 metric tons per month by December of this year, and aims to reach an annual production capacity of 400 metric tons by early 2025.

Last month, the SRC signed a similar MOU with Arafura Rare Earths (ASX:ARU,OTC Pink:ARAFF) to explore the processing of rare earth materials from Arafura’s Nolans project in Australia at SRC’s Saskatoon facility.

This agreement focuses on processing heavy rare earths like dysprosium and terbium, which are used in high-performance magnets for electric vehicles and other technologies.

The rare earths industry has gained increasing attention due to the growing demand for clean energy technologies amid the ongoing energy transition. However, the supply chain remains vulnerable due to China’s dominance.

Securities Disclosure: I, Giann Liguid, hold no direct investment interest in any company mentioned in this article.