Australia's Northern Minerals cancels rare earths deal with China firm, cites contract breach

Aug 6 (Reuters) - Australia's Northern Minerals Ltd NTU.AX on Tuesday terminated a rare earths supply deal signed over two years ago with China's Lianyugang Zeyu New Materials Sales Co Ltd, citing a breach in the agreement.

The company said the deal, initially signed in April 2017 for the supply of rare earths output from its Browns Range project in Western Australia, was terminated as Lianyugang had breached the agreement. It did not give further details.

Lianyugang was to make a pre-payment of A$10 mln ($6.77 mln) to the rare earths metal explorer under the deal, with the final value of the agreement depending on volumes delivered.

The cancellation comes amid speculation that China could cut off supplies of the rare earths metals, a key ingredient in high-technology consumer electronics and military equipment, to the United States as part of the trade war.

Lianyugang could not be reached for a comment.

($1 = 1.4765 Australian dollars)

(Reporting by Syed Saif Hussain Naqvi in Bengaluru; Editing by Joseph Radford)

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