Could rare earths take centre stage as Glencore’s copper mine closes in Mt Isa?

Glencore copper mine closure in Mt Isa spurs Queensland project development grants
Red Metal says rare earths projects like Sybella should be in the running for funding
Demand for magnet rare earths still strong, Adamas Intelligence forecasts

On a recent visit to Queensland, Prime Minister Anthony Albanese noted the important role rare earth elements (REEs) and critical metals exploration and development would play in revitalising Mt Isa’s local economy off the back of Glencore’s decision to close the Mount Isa underground copper mine.

The shutdown in the second half of this year will include the Enterprise, X41 and Black Rock mines, as well as one of only two copper concentrators in Australia and comes amid a long-term downturn in domestic metals processing.

The move is set to impact around 1200 local jobs, with the Swiss mining giant chalking it up to low ore grades and challenging geological conditions after 60 years of operation as one of two major domestic sources of the mineral since 1953.

The prime minister pointed to opportunities in other critical minerals – like rare earths – which could fill the economic gap the copper mine closure will leave in the region.

“One of the things that we’re doing is making sure that we back the critical minerals industry, rare earths and other opportunities that are here in the region,” he said.

“We know that there are vast supplies of not just copper, but other minerals that will be in demand during this century that will drive not just the Australian economy, but will drive the global economy in the years ahead.

“Minerals, not just copper, but vanadium, lithium, other minerals that are in abundance here in this great part of Queensland.”

The Queensland government has set aside $50m to ease the transition, with the Mount Isa Transition Fund to support affected workers.

There’s also a resource acceleration program of up to $30 million is being delivered by the Queensland Treasury in conjunction with the Department of Resources which is bringing several projects – and jobs – online sooner.

This follows last year’s announcement from the state government – along with the Queensland Investment Corporation – of a $100 million Queensland Critical Minerals and Battery Technology Fund to accelerate the pit-to-product supply chain and meet the growing demand for clean energy technologies.

Magnets, rare earths demand not slowing down

All that money flowing into the sector is great news, but as the doors shut on the copper mine, we couldn’t help but wonder, what would a supercharged rare earths landscape look like in Mt Isa?

On the global front, the demand story is strong. Adamas Intelligence forecasts that from 2024 through 2040, global demand for neodymium magnets will increase at a compound annual growth rate (CAGR) of 8.7%.

The Rare Earth Magnet Market Outlook to 2040 annual report credits this to double-digit growth for the robotics, advanced air mobility and electric vehicle sectors, adding that the demand growth for magnets translates directly into increased demand for critical REEs such as neodymium, praesodymium, dysprosium and terbium.

Adamas also forecast that total magnet rare earth oxide (MREO) consumption will increase five-fold by 2040 at a CAGR of 5.4% while prices are projected to increase at CAGRs of 4.3-5.2% over the same period.

It also sees potential for supply shortages of neodymium magnets due to the increasingly tight availability of upstream REE feedstocks – with CAGR estimated at 5.1% – and that aggressive supply increases would be needed past 2030 to keep up with demand.

This will require either China to increase annual production at Bayan Obo in Inner Mongolia nearly five-fold, which would also massively deplete its reserves, or for non-Chinese suppliers to develop 20-30 modest-scale mines by 2040 over and above those already expected to be developed.

Now, we all know that the costs of getting a project up and running and producing are generally prohibitive – Lynas’ past struggles have shown that – but if a project could get some of the state government’s sweet sweet financial assistance, that could help get things moving.

Rare earths opportunity abounds

The outlook is extremely positive for REE explorers such as Red Metal (ASX:RDM) with its Sybella project near Mt Isa, which has an easily accessible resource of 4.8Bt grading 302 parts per million NdPr and 28ppm DyTb that starts from surface and remains open below 100m depth.

Early mining opportunities are presented by the significant at surface resource of 788Mt at 297ppm NdPr and 28ppm DyTb contained within weathered granite. Early-stage drilling, metallurgical and comminution studies have indicated that a low-cost, low-capital, heap leach processing option may prove feasible while work has already produced a mixed rare earth concentrate with 48.7% total rare earth oxides and MREOs making up 39.5% of this product.

Managing director Rob Rutherford says rare earths projects like Sybella should definitely be considered for project acceleration grants from the state government.

“If testwork on Sybella remains positive and the demand for REE magnetics driven by global decarbonisation is close to what is forecast, then Sybella has the potential to be a long-life mining asset only 20 kilometres from the city of Mount Isa,” he said.

“Acceleration of this project should be a priority for the state government as it has the potential to offer jobs and future royalties to the region and even scope for value add industries such as rare earth oxide separation or even magnet production.”

Rare earths projects are typically expensive to get up and running, but at Sybella, the company is proposing to extract the REO using bulk mining and heap leach processing with ambient temperature sulphuric.

This compares with processing hard rock deposits in WA like Lynas and Iluka where acids have to be heated up to 800 degrees Celsius to liberate the rare earths from monazite.

“This is one of the lowest-cost, lowest-capital processing routes used in the mining industry,” Rutherford said.

“Many giant copper mines such as Escondida use a similar bulk heap leach technique that allows them to economically process very low grades.

“Early indication show we may be able to apply this low-cost low-capital method on the Sybella rare ore mineralisation, particularly the nearer to surface weathered granite ore type.”

Proving value through testwork

Rutherford said the plans for the project this year are to prove up the testwork – and show the market the value the company presents in the rare earths space.

“This year we will be fast tracking studies towards a mine scoping study by first optimising the leach test work on the weathered granite and then assessing the metallurgical variability across the 8km by 3km mineralised granite,” he said.

“Once this work is done, we should have a clear vision of what Sybella can deliver economically.”

Notably, when compared to ASX player with low-temperature leachable REO deposits in Brazil with market capitalisations of about $200-300 million, RDM’s market cap is only around $35-40m.

“If we can get Sybella into production we could produce as much REO as Lynas Rare Earths which have a market capitalisation of $6.5 billion.

“The upside for Red Metal is enormous if our leach test results remain positive, so watch this space.”

Who else has a REE play in Mt Isa?

Ark Mines (ASX:AHK) has the Sandy Mitchell project in northern Queensland, which has a measured mineral resource estimate of 71.8 Mt at 1,732.7 ppm monazite equivalent.

A recent scoping study for the project considered a base case of 20.8 megatonnes per annum (Mtpa) sand movement operating scenario and 3-4 year mine life, with annual net revenue totalling ~$120m-130m.

Based on a mine plan for the measured resource assessed to-date, Ark has calculated a post-tax capital payback of ~3-4 years from first rare earth mineral concentrate (REMC) production, with total initial capex (capital expenditure) of $120m-$150m (including an estimated 10% contingency).

The company expects to generate an annual EBITDA of $45m-$53m, and annual post-tax-free cash flow totalling ~$25m-$30m.

Further drilling to expand the resource (which accounts for just 4% of the broader exploration target) alongside ongoing metallurgical testwork is expected to unlock significant commercial upside in 2025.

There’s also DevEx Resources (ASX:DEV), which holds the Kennedy ionic clay project in northern Queensland that already hosts an inferred resource of 150Mt at 1000ppm TREO within unconsolidated clay-rich gravels from surface with no overburden.

Extensive leach testwork has demonstrated excellent recoveries of up to 73% collectively of the magnet rare earth elements praseodymium, neodymium, dysprosium and terbium.

At Stockhead, we tell it like it is. While Red Metal and Ark Mines are Stockhead advertisers, they did not sponsor this article.