Rare earths: Decarbonisation needs it and this company hopes to supply it
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The world’s increasing use of renewables is fuelling a new mining boom and critical minerals such as magnet rare earths (neodymium, praseodymium, dysprosium, and terbium) are expected to play a vital role.
Magnet rare earths are important in the manufacture of electric vehicle motors and wind turbines, two of the fastest growing industries of today’s global economy.
There’s a couple of kilos of rare earths magnets in every EV, and about a tonne in every MW of power produced by wind turbines.
As these markets grow so too does the demand for rare earths, but the pace of acceleration is what experts fear could lead to an outstripping of current sources, creating bottlenecks and straining fragile supply chains.
With the global rare earth market expected to triple from US$15.1bn this year to US$46.2b by 2035, former Arafura executive Richard Brescianini says newcomer Heavy Rare Earths (ASX:HRE) is looking to catch the next wave of interest in securing REE supply.
Brescianini spent nearly 14 years at Arafura Resources (ASX:ARU), the company behind Australia’s first, vertically integrated rare earths operation in the Northern Territory – the Nolans NdPr project.
As part of Arafura’s executive management team, Brescianini was involved in most parts of the supply chain from exploration to feasibility studies, product marketing, stakeholder engagement, government relations and upstream technical aspects of the project.
During this time, Brescianini was also right across what competitors were doing around the world and knew who was likely to come to market when, and what impact they would have.
In an interview with Stockhead, he says while China has historically dominated the sector, its mining efforts have been steadily declining just as the rest of the world begins to pick up pace.
“At the same time, we are starting to see more regular supply and demand dynamics flow into the market as China’s stranglehold on the supply chain is loosened, which is impacting pricing,” he says.
Rare earth prices reached their highest point in a decade back in February due to fast-growing demand and headwinds affecting availability from the main producing regions.
They only crossed US$100/kg in November last year, the first time they had reached that level since the last rare earths boom in 2011.
“Prices are in a really good space at the moment compared to five years ago which incentivises new investment in rare earths developments outside of China,” Brescianini explains.
Importantly, while China’s rare earths mining production has started to take a dip, Brescianini says it still accounts for around 85-90% of the market when it comes to the refining of that material.
“They are importing more rare earth raw material than they ever have, meaning that it’s quite difficult for the Chinese to switch supply on easily and quickly.
“It has also become much more straightforward for China to import raw material to feed into processing capacity, but Western governments are beginning to resist.
“China can’t satisfy the growing demand for rare earths using domestic supply alone, and the West is determined to build processing capacity outside China.”
Brescianini is now an executive director of Heavy Rare Earths Limited (ASX:HRE), a new and emerging rare earths play set to list on the ASX in the coming weeks.
The company will bring a 28Mt @ 625ppm TREO clay-hosted JORC resource to market at its Cowalinya project, halfway between Norseman and Esperance in Western Australia.
Around 25% of the rare earth composition are the valuable magnet rare earths which are expected to make up around 85-90% of the potential in-ground value of the deposit.
In its efforts to raise $6m at an issue price of $0.20 cents per share, Brescianini says within the first year of listing the company plans to substantially expand the resource base and advance a concept-stage metallurgical flowsheet for the project.
A 10,000m aircore drilling program comprising 300 holes will kick off in Q3 to explore for rare earths resources primarily to the west and southeast of the Cowalinya resource.
Cultural heritage surveys and drill line clearing have been completed in preparation for the drilling program.
Heavy Rare Earths has also applied for two exploration tenements northwest of Tennant Creek in the Northern Territory.
Previous exploration in the area of the application has been undertaken for Tennant Creek-style ironstone hosted copper-gold-bismuth and Olympic Dam-type copper-uranium-gold deposits but this will be the first time the area has been subject to systematic exploration for rare earths.
Rare earths are expected to be hosted in xenotime, a rare earth phosphate mineral that is enriched in strategically important heavy rare earths such as terbium and dysprosium.
A program of prospecting and surface geochemistry is planned for the first half of 2023 to initially verify the exploration model.