The city of Kalgoorlie, Western Australia, has been selected as the location for the new cracking and leaching plant to be operated by rare earth industry giant Lynas Corporation Limited (Lynas).

"Lynas has signed an option to sublease an industrial zoned property from the City of Kalgoorlie-Boulder. The terms of the proposed sublease are now being finalised.

"Lynas’ Kalgoorlie cracking and leaching plant will upgrade the Lynas Mt Weld rare earth concentrate that is currently exported to the Lynas rare earth processing facility in Malaysia," said the company in a statement today.

It said the move would create new jobs and would be the first step in establishing a critical minerals hub in the Goldfields region.

Known historically as the “gold capital of Australia”, the City of Kalgoorlie-Boulder is home to about 30,000 people and covers an area of 95,000sq km stretching all the way to the South Australian border.

Kalgoorlie was selected from the two shortlisted locations in the Goldfields region following extensive due diligence, and provides close proximity to the Lynas mine at Mt Weld as well as a skilled workforce and rich history in the mining and processing industries.

Lynas will also explore opportunities for the next stage processing (upstream solvent extraction) in Western Australia and facilitate investment in infrastructure and supply chain capabilities

Lynas CEO and Managing Director Amanda Lacaze said: “Lynas was built from the ground up as an environmentally responsible rare earth producer and we will take the same approach to our facility in Kalgoorlie.

Lynas is the world’s second-largest producer of rare earth materials and operates one of the world’s highest grade rare earth mines in Mt Weld.

However, it's operations in Malaysia have long been a centre of controversy with protesters calling for the closure of its rare earth processing plant in Gebeng, Kuantan.

The ruling Pakatan Harapan federal government has also experienced internal friction over the matter.