Special Report: The ‘weaponisation’ of rare earths in the ongoing US/China trade war has triggered a fresh wave of global investment interest in Australian miners and explorers.

The fact that China dominates the global rare earths trade — vital in the manufacture of things like smart phones, computers, and electric vehicles — has prompted the US, in particular, to actively look for alternative sources.

The goal of the plan, a senior official told Reuters, was to pool expertise and resources “to make sure there’s a stable and secure global market that’s not easily disrupted by shocks and outside influences.”

But it’s not just the US running the ruler over Australian projects – the interest is global.

China, for instance, is cracking down on illegal and environmentally destructive supply and imports from places like Myanmar. All this points to China actually becoming a net importer of rare earths.

READ: Which commodities cross the line into 2020 as winners?

This provides Australia with the opportunity to become a world leader in rare earths production and downstream processing, says David Grabau, Austrade’s senior investment specialist — resources and energy.

“We are the world’s second-largest producer of rare- earth elements (including of neodymium and praseodymium which are used in permanent magnets) and have the world’s sixth largest rare -earth elements resource base,” he told Stockhead.

“Developing our critical minerals capabilities will also lead to greater diversity in the global supply chain, which will ultimately benefit consumers.

“The market for some critical minerals is relatively mature but other minerals markets are largely underdeveloped, and Austrade is working with Australian producers and developers to seize this opportunity.”

READ: When China talks on rare earths, the world listens

Austrade is “actively attracting international investment” into critical minerals by leveraging its extensive offshore network, close working relationships with other government agencies (both state and federal), and direct connections to project owners, Grabau says.

“Austrade, through our commercial focus, has a mandate to elevate Australia’s rare earth elements profile under the whole-of-government national critical minerals strategy,” he says.

“We have been working with project proponents to identify investment, financing and offtake opportunities.

“We’ve also led international business missions to the US, Canada, and the EU, and have been engaging closely with government and industry in other important markets.”

Who stands to benefit?

Arafura Resources (ASX:ARU) is an emerging supplier of neodymium-praseodymium (NdPr) – rare earths used in high-strength permanent magnets in EVs, wind turbines and mobile phones.

Arafura’s world class Nolans Project in the Northern Territory could supply up to 10 per cent of the world’s demand for NdPr when in full production.

The Company has signed two non-binding memoranda of understanding with Chinese magnet manufacturers for NdPr offtake from Nolans.

Arafura is now in discussions with potential customers around the world for the rest of its planned output.

>> Learn more about Arafura Resources

 Arafura chairman Mark Southey says NdPr supply will have to grow by about 25,000 tonnes by the end of the next decade to meet demand.

“The facts are plain: China accounts for 80 per cent of rare earths production and is cracking down on illegal and environmentally destructive supply; it is curtailing imports from other countries like Myanmar; and there are limited new projects globally,” he says.

“All this points to China becoming a net importer and we have seen the impact this can have on a commodity’s price such as iron ore, and thermal and metallurgical coal in the late 2000s.”

 

>> Now watch: 90 Seconds With…Gavin Lockyer, Arafura Resources

 

This story was developed in collaboration with Arafura Resources, a Stockhead advertiser at the time of publishing.
This story does not constitute financial product advice. You should consider obtaining independent advice before making any financial decisions.

 

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