China’s terbium dominance presents a key risk for West – but a major opportunity for this ASX explorer

Victory Metals’ North Stanmore project is rich in heavy rare earth metal terbium
Development could provide supply security against China dominance
North Stanmore could also produce gallium – exports of which have been banned by China – as a by-product

China continues to tighten restrictions on critical minerals. And concerns are now swirling around its potential to put more vulnerable but strategic metals in the firing line of an ongoing trade war.

That’s thrust a spotlight on one of rarest but most strategic metals on the market, terbium. Trading at around US$900/kg, terbium oxide is among the suite of rare earths used in permanent magnets.

The risks are heightened even more so than other rare earth products like neodymium and praseodymium since China accounts for some 94% of the world’s supply of the rare earth, one of the hardest to source in that basket of 17 elements.

Removing that supply could hit the world – particularly the US and the rest of the West – hard as terbium is critical to defence applications, used in naval sonar systems and in sensors.

Speaking to Stockhead, Victory Metals (ASX:VTM) chief executive officer Brendan Clark said while there were many other rare earths producers (or near-term producers) outside of China, these were generally light rare earths, not all of which were rare and/or valuable.

He acknowledged that while the magnet rare earths neodymium and praseodymium were in demand, there was sufficient production with an established supply chain.

“But dysprosium, terbium and other heavy rare earths like lutetium are a lot rarer. You don’t need a lot of them, but they are in so many vital products, especially through the defence and telecommunication sectors. They’re part of our everyday life and national security,” Clark said.

“Other than China – who are also running out of supply and that’s why they’ve gone over to Myanmar now to exploit that – and rare earth projects in Africa that are generally funded by the Chinese, there’s not a lot that will help the supply chain for those elements.”

North Stanmore a terbium standout

While there are certainly projects that have heavy rare earths in the mix, he noted that a distinction also had to be made between clay-hosted and hard rock projects. While Northern Minerals’ (ASX:NTU) advanced Browns Range project has both terbium and dysprosium, it doesn’t have the volumes contained in clay projects.

The right clay projects also tend to have simple mining and processing in their favour. Clark emphasised that VTM’s North Stanmore in WA’s Gascoyne is truly unique in having a higher proportions of heavy rare earths than any other clay project.

“To put it into perspective, Meteoric Resources’ Caldeira project in Brazil has got a higher grade than us, but we’ve got five-to-seven times more dysprosium and terbium in our mixture of carbonate than they do,” Clark added.

“I don’t know any other project that has the proportion of heavy rare earths like Victory does. That’s our true standout.”

North Stanmore near Cue, Western Australia, currently has an indicated and inferred resource of 247.5 million tonnes grading 520 parts per million total rare earth oxides.

Critically, heavy rare earth oxides make up a consistent 38% of the TREO in the indicated resource of 176.5Mt at 503ppm TREO.

VTM has also proven its ability to leach rare earths out of the clay mineralisation at the project with average recoveries of 92-93% putting it near the top of the pile.

“We have actually created the mixed rare earths carbonate and proven (we are) able to recover these heavy rare earths in that carbonate stage,” Clark added.

Once in production, he expects the project to produce about 250t of dysprosium and terbium in the first year.

“That’s not a lot of volume, but it’s a lot for what the world needs because only small amounts are required in each use.

“But they are used in an industry that turns into trillions of dollars.”

He also expressed his belief that VTM could be one of the lowest cost heavy rare earths producers in the country, if not the world, as there are no publicly listed entities with the same kind of mineralogy.

“Everything else is way more complex, way more capital intensified. They’re going to need billions of dollars. They don’t have the same recovery,” Clark said.

“I believe Victory has the potential to really help break that stranglehold that China has on the market and bring the West a significant part of the heavies that they need.”

The North Stanmore heavy rare earths project. Pic: Victory Metals

Benefitting Australia

Clark is also confident that projects such as North Stanmore give Australia a real advantage during trade discussions because the US needs these metals.

“Australia can really come to the table with something that’s very significant,” he said.

“There’s talk – and I’m a firm believer of this – that some of these elements won’t even be based on price, they are going to be based on security of supply no matter what the cost.

“People like the US Department of Defense can’t get away from these metals as there’s no substitute for them. It is going to be about security of supply and not about how much they actually cost.

“It just comes back to the West being at risk if we don’t continue to control our defence systems.”

Clark also pointed out that the largest problem facing the West is getting a reliable supply to market while the second had to do with downstream processing as China currently dominates this.

“We need to start dealing with that by at least looking at magnet manufacturing outside of China.”

Clark believes more export bans will happen as there are other heavy rare earths like thulium and lutetium that are critical for the defence sector, and markets where supply is also dominated by China.

“The market needs to start understanding how critical some of these elements are,” he added.

Gallium bonus and next steps

North Stanmore could enable Victory to benefit from another fractured supply chain, after the company revealed it could capture high grade gallium oxide in its mixed rare earths concentrate.

This recovery – 358g/t Ga2O3 – was achieved without any optimisation of the low-CAPEX leaching process, making it a bonus for the already lucrative project which could deliver net present value of $1.2 billion and internal rate of return of 52% according to a recent scoping study.

While developing a standalone gallium project would be challenging to say the least, VTM currently has the potential to extract the critical metal at no further cost alongside its primary rare earths product.

“It’s just a matter now of carrying out further downstream processing to separate gallium from the carbonate. That’s the next phase,” Clark said.

“What’s important to note is that while others have come out with gallium hits recently, which is very positive, this is actually recovery.

“We are totally blessed with the underlying nature of our deposit. We have very unique geology and that is what’s allowing for these excellent extractions of heavy rare earths and strategic metals like gallium.”

Over the next months, VTM intends to progress discussions with strategic offtake partners including Sumitomo, which signed a memorandum of understanding to take 30% of North Stanmore’s REE production.

“We have very good engagement with the US at the moment. I expect some positive news coming from that,” Clark said.

“We are also working with ways to secure funding for our next phases and we’re continuing to grow the resource.

“At the same time we’re doing all the stuff in the background, all the baseline studies, and we are currently updating our resource to include gallium as we move into the next stages like the pre-feasibility study.

“It’s a very exciting time and we are certainly emerging as the most advanced heavy rare earth clay project that is actually getting results in the country.”

“I think that positions us very well to be at the forefront of the clay space.”

At Stockhead, we tell it like it is. While Victory Metals is a Stockhead advertiser, it did not sponsor this article.