Could the coronavirus fuel development of non-Chinese rare earth projects?
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Rare earths has drawn considerable attention in recent times thanks in no small part to its myriad uses in high tech products and China’s production dominance, which has raised concerns about the security of supply.
Australia and the US have formalised a partnership on developing critical minerals – including rare earths – supply chains.
Australia has also established a new Critical Minerals Facilitation Office to help grow the sector.
Japan, which currently imports 58 per cent of its rare earths from China, is looking to reduce this amount to 50 per cent or less by 2025.
The Nikkei Asian Review reported that Japan is in discussions with the US and Australia on a cooperation deal and is revising legislation to allow its resource investment company Japan Oil, Gas and Metals National Corp (JOGMEC) to take stakes in rare earths smelting projects.
The recent outbreak of the COVID 19 coronavirus has further highlighted these concerns.
Quarantines and fears around transportation into areas either identified or suspected as harbouring the disease have disrupted the flow of minerals into and out of the affected areas.
Last week, the Global Times in China quoted the manager of a large state-owned magnet producer based in Ganzhou, Jiangxi Province, as saying that most upstream and downstream rare earth companies in the city had not restarted work due to the lack of local labour resources.
Ganzhou is one of China’s two hubs for rare earths.
It also reported the Association of China Rare Earth Industry as saying that if production did not resume within a month, it would affect rare-earth exports to the US, Japan and Europe and weigh on global supply chains.
RareX (ASX:REE) executive director Jeremy Robinson told Stockhead that there have been delays in shipments, which will affect some downstream plants and that the news highlighted the fragility of the supply chain and how reliant Australia is on China.
“The sector needs to diversify its supply chain away from China,” he noted.
This view was supported by Arafura Resources (ASX:ARU) marketing manager Lloyd Kaiser who said that the reliance on Chinese manufacturing had placed a strain on companies that secured their supplies and components from just one jurisdiction.
“It has gotten more people thinking about how we can mitigate this in the future,” he told Stockhead.
And while there is a need to secure funding, cement the political will to get things done on the government’s end and environmental issues to address, there is no shortage of rare earths deposits to develop alternative supplies from.
“Although they are called rare earths, they are not actually all that rare,” Professor Hugh O’Neill of the Australian National University’s Research School of Earth Sciences said.
“Australia has enormous deposits of them that are at the moment not being exploited because everyone around the world has been quite content to allow China to produce as much as they like.”
He told Stockhead that there was no geological reason why Australia could not step into any gap in the market in the future.
Here are some of the companies that are angling to be an alternative to Chinese supplies of rare earths.
The Dubbo project has a very large in-ground resource of zirconium, hafnium, niobium, tantalum, yttrium and rare earths.
Meanwhile, Arafura is banking on growing demand for electric vehicles to drive demand for critical minerals such as neodymium and praseodymium (NdPr), which are used for the manufacture of ultra-strong rare earth permanent magnets that are essential components of electric motors.
NdPr makes up a little more than a quarter of the total rare earths content of the company’s Nolans project in the Northern Territory but is expected to produce 85 per cent of the project’s revenues.
Earlier this month, Arafura expanded its relationship with Talaxis, a wholly owned subsidiary of major Hong-Kong based commodities trader Noble Group, to drive development of the Nolans project.
Hastings Technology Metals (ASX:HAS) is progressing its Yangibana rare earths project in WA’s Upper Gascoyne Region towards production.
In the December 2019 quarter, Hastings increased ore reserves at the project by 18 per cent to 12.2 million tonnes at 1.13 per cent total rare earth oxide (TREO).
This also served to extend the estimated mine life by two more years to 13 years.
Havilah Resources (ASX:HAV) recently uncovered a potential new revenue stream at its flagship Kalkaroo copper-gold project in South Australia.
A review of older drilling identified the potential for rare earths mineralisation with a re-assay of two copper-gold mineralised drill hole samples showing elevated levels of higher value rare earths, like dysprosium.
More recently, independent expert Emeritus Professor Ken Collerson noted that Havilah had geochemical similarity to carbonatites from the giant Bayan Obo deposit in China.
Northern Minerals’ (ASX:NTU) operating pilot processing plant in the East Kimberley region of WA makes it one of the few non-Chinese producers of the rare earths dyssprosium and terbium.
The company expects its plant to achieve nameplate capacity rates in the coming months.
Recent drilling at its Dazzler prospect returned intercepts from surface of up to 7.71 per cent TREO including 7,502 parts per million dysprosium.
Also in the Kimberley, Rare X (ASX:REE) recently identified multiple drill targets after completing a seismic survey over its Cummins Range project.
Cummins Range currently hosts Australia’s fourth largest rare earth resource of 13 million tonnes grading 1.13 per cent TREO.
The survey identified four areas to the west, east, north and at depth that are adjacent to the existing resource envelope as well as the Southern Target, which is outside the resource envelope.
Robinson noted that the impact of the coronavirus on China’s rare earths operations should highlight the strategic value of its asset to non-Chinese parties.
Last week, Red Mountain Mining (ASX:RMX) decided to proceed with the acquisition of the Mt Mansbridge heavy rare earths project, which covers 324sqkm in the Kimberley.
It is one of the few Australian projects prospective for xenotime, a rare earth mineral that hosts the heavy rare earths dysprosium and terbium.
The company plans to kick off drilling in the second quarter of 2020.
Overseas, there’s Oro Verde (ASX:OVL) and its Makuutu rare earths project in Uganda, which is one of the few ionic clay-hosted deposits outside of China.
The company is re-branding as Ionic Rare Earths and recently kicked off a scoping study that will be led by newly appointed project manager Tim Harrison.
Preliminary drilling has confirmed the widespread presence of rare earth clays through a 26km corridor through the project area and the company expects to release a resource estimate this quarter.
Meanwhile, Zenith Minerals (ASX:ZNC) recently completed first pass metallurgical test work that demonstrated that both of the simple mineral separation techniques assessed would allow upgrading of the rare earths from its Laramie project in Wyoming.
Magnetic methods recovered 87 per cent of the rare earth minerals into 27 per cent of the mass while gravity methods recovered 76 per cent of the rare earths into 22 per cent of the mass.
Other projects include Pensana’s (ASX:PM8) low-capex, high-margin Longonjo NdPr project in Angola and Greenland Minerals’ (ASX:GGG) Kvanefjeld project in southern Greenland. Both are at advanced stages of pre-development.