That's what we call strategic metals. Pic: Muhammad Owais Khan/Moment via Getty Images
Monsters of Rock: Aussie battery metals companies spread their wings overseas to build ex-China supply chains
Mining
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- ASM opens first critical metals plant in South Korea
- An FID is still to come on its Dubbo polymetallic critical minerals deposit in NSW, with an update expected soon on a ‘framework agreement’ with Korean investors
- Neometals JV signs lithium battery recycling ‘cooperation’ agreement with iconic German carmaker Mercedes-Benz
Australian companies and the Federal Government have been gung ho about promoting a critical minerals supply chain, but as capital has flowed into companies tethered to future facing metals many have looked overseas to make those investments as well.
Australian Strategic Materials (ASX:ASM) is an interesting case.
The $733 million market cap rare earths and mineral sands player spun out of longstanding ASX mid-cap Alkane Resources (ASX:ALK) a couple years ago is promoting its position as ‘vertically integrated mine to metals’ producer of critical metals.
Supported by Korean businesses, ASM owns the Dubbo project in New South Wales where it boasts the Toongi Deposit, a dizzying mix of rare earths, zirconium, niobium and hafnium with a 20 year project life, a blend of metals that sound and smell like ‘the future’.
ASM completed an optimisation study in December putting a $2.36 billion pre-tax NPV and 23% pre-tax IRR (20.1% post tax) on the development, but copped the brunt of some selling on release as its capex costs increased by almost $400 million on a 2018 estimate.
Its shares are off some 53% year to date to $5.26 after the company hit an all time high of $13.05 late last year.
While a final investment decision is yet to come for Dubbo, ASM did announce yesterday that it had opened its first critical metals plant in Ochang, South Korea.
The plant will produce ‘critical metals and alloys’ initially focused on titanium alloy and neodymium-iron-boron, the key material in permanent magnets used in wind turbines and EVs.
“We know that global demand for critical metals is predicted to outstrip supply. Our Korean Metals Plant represents a new source for these critical metals. Products from the plant will help to de-risk and relieve bottlenecks in the global supply chain,” ASM MD David Woodall said.
It comes amid concerted efforts by the Australian Government to strengthen mining and manufacturing ties with South Korea in areas like rare earths, where China holds an uncomfortably dominant share of the supply chain.
The two nations signed a new deal dubbed the Memorandum of Understanding on Cooperation in Critical Mineral Supply Chains on the 60th anniversary of the start of diplomatic ties between the nations in December last year.
“This plant also signals a new direction for Australia’s resource sector and our strategic collaborations worldwide. Australia can harness its world-leading reputation and expertise in the resources sector, moving into the clean energy sector with strategic global partners such as Korea.”
ASM signed a framework agreement last with a South Korean consortium which said it would invest US$250 million for a 20% equity stake in Dubbo, including the provision for 2800tpa of NdFeB allow from ASM’s Korean metals Plant.
The company entered a trading halt today “pending the release of an announcement in relation to an equity funding agreement and revisions to a framework agreement that are material to the Company.”
It’s due out on Tuesday, so we’ll see exactly what that means.
Neometals signs deal with Mercedes
Also heading overseas to do its thing is former WA lithium play Neometals (ASX:NMT), which has reinvented itself as a battery recycling stock since selling out of its minority stake in the Mt Marion mine a few years ago.
$750 million NMT was up 12.2% today after announcing it had executed a cooperation agreement with iconic German carmaker Mercedes-Benz’ recycling subsidiary LICULAR.
NMT’s 50% owned German subsidiary Primobius was announced back in March as LICULAR’s technology partner for the design and construction of a 2500tpa lithium ion battery recycling plant.
The company says the cooperation deal is conditional on LICULAR issuing a purchase order for the engineering, supply and installation of the necessary equipment for the Recycling Plant, which NMT expects to be near Mercedes’ Kuppenheim operations in southern Germany.
A big part of the cooperation appears to be R&D though, with Primobius giving LICULAR a non-exclusive technology licence for the recycling plant and the parties to jointly evaluate an industrial-scale operation during the initial plant’s operating phase.
“We are delighted to formalise our long-term cooperation agreement with Mercedes-Benz,” NMT MD Chris Reed said.
“The R&D collaboration is as important to us as successfully supplying the equipment. We are excited to work together to develop a more holistic recycling solution covering logistics, handling, compliance and sustainability. We are grateful for the opportunity and accept the challenge to futureproof our processing technology.”
