The ASX players in the best position to help Europe meet its critical minerals shortfall
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The EU is the latest contender in the global battle for minerals to feed the green energy transition after the European Commission released the long-awaited Critical Raw Materials Act (CRMA) on March 16.
Rare earths, cobalt, lithium, platinum group metals, and vanadium are among the 34 raw materials listed on an expanded inventory of ‘critical minerals’, deemed as essential for Europe’s modern economy, technologies, and national security – although the supply chain may be at risk.
For the first time, ‘strategic minerals’ such as copper, manganese, and nickel – the elements which do not meet the critical raw material threshold – were also included on the list due to their relevance as an input for Europe’s green and digital transition, and the role they play in defence and space applications.
As a cornerstone of the EU’s Green Deal Industrial Plan, which sets a target for the EU to produce 40% of its own clean tech by 2030, the CRMA is Europe’s answer to the US Inflation Reduction Act (IRA).
And in turn, by offering of US$365 billion in subsidies, the IRA is a reaction to China’s dominance on mining and processing these minerals to meet global demand.
As it stands, China accounts for almost 90% of the world’s processing of rare earths, and 60% of lithium.
According to the European Commission leader Ursula Von der Leyen, the EU sources 97% of its lithium from China, 98% of rare earth supply from China, and 93% of magnesium from China.
‘🇪🇺 depends heavily on a few countries for critical raw materials.
We get 98% of our rare earth supply and 93% of our magnesium from China.
If we want to be independent we have to strengthen and diversify our supply chains with like-minded partners.’
— European Commission (@EU_Commission) March 15, 2023
But as a first step in trying to decouple the EU from its dependencies on third (non-EU) countries for critical and strategic raw materials, the Act stipulates minimum targets for domestic production where at least 10% of the EU’s annual consumption needs to be extracted in the EU, at least 40% of it processed, and at least 15% recycled.
On the flip-side, no more than 65% of the EU’s annual consumption of each strategic raw material at any relevant stage of processing should come from a single third country.
To fast-track the process and cut red tape, the Commission plans to establish ‘one-stop-shops’ within three months of the new Act coming into force, and permit applications for qualifying projects would be done electronically.
From this standpoint, it is worth taking a closer looking at the ASX companies with energy-transition-related projects, plants, or operations in Europe.
(Note: Data pulled from Iress on March 24.)
Commodity, location, market cap: Copper, Sweden, $16.95m
Alicanto Minerals is pursuing an aggressive exploration campaign in Sweden’s highly regarded mining region of Bergslagen, known for its large mineralised systems and highly developed infrastructure.
The company believes there is a major mineralised belt stretching over 10km from the world class Falun mine right through to Alicanto’s holdings at the Greater Falun project.
Falun was a monster in its day, producing 28Mt at 4% copper, 4g/t gold, 5% zinc, 2% lead and 35g/t silver over an estimated 1000 years.
It closed in 1992 amidst low commodity prices.
AQI says that despite its world class credentials, Falun has received little follow-up modern exploration since its closure. Its geologists are now poring over old mine data.
Commodity, location, market cap: Nickel-cobalt, Italy, $105.74m
Alligator Energy recently identified potential drill targets at the Piedmont nickel-cobalt project in Italy following a time domain ground electromagnetic survey.
Results from the EM survey, which have been processed and interpreted with the assistance of consultant geophysicists, have uncovered a ‘large-scale’ conductive EM anomaly located east of the historic La Balma prospect.
Completion of the survey marks the conclusion of the phase two farm-in work program with Chris Reindler and Partners (CRP) and secures Alligator a registered interest of 51% in the underlying licences.
The company will seek to establish a joint venture (JV) with CRP now that the survey has been completed.
Commodity, location, market cap: Copper-nickel-cobalt-palladium, Greenland, $13.54m
Conico owns two multi-commodity projects on the east coast of Greenland – the Mestervigs and Ryberg projects.
At Ryberg, a total of 11 diamond drill holes were completed across four prospects during the Greenland field season in November 2022, confirming high levels of copper, nickel, and PGE elements.
At Mestervigs, the Holberg and Nuldal prospects contain fault structures that host quartz-vein hosted lead-zinc-silver-copper- mineralisation analogous to that at the historic Blyklippen mine and the Sortebjerg prospect.
Conico intends to investigate possible third-party interest in collaboration, in some form, for both projects.
Commodity, location, market cap: Lithium, Austria, $95.31m
European Lithium has made a big statement in its bid to become the first on-shore producer of lithium hydroxide on the European continent, placing a US$1.5 billion post-tax NPV on its Wolfsberg project in Austria.
Backed by an offtake deal with BMW, the definitive feasibility study shows the mine and downstream processing operation will generate 8800t of lithium hydroxide monohydrate per annum for 14.6 years.
That would amount to some 129,000t over the life of mine from the completion of a hydrometallurgical downstream processing facility in 2026.
Commodity, location, market cap: Manganese, Czech Republic, $92.61m
Euro Manganese is advancing the development of the Chvaletice manganese project, about an hour’s drive out of Prague, which is a unique waste-to-value recycling and remediation opportunity involving reprocessing old tailings from a decommissioned mine.
The Chvaletice project is the only sizable resource of manganese in Europe, strategically positioning the company to provide battery supply chains with critical raw materials to support the global shift to a circular, low-carbon economy.
EMN entered into an offtake agreement with Verkor, a French-based low-carbon battery manufacturer early this month for the sale of high-purity manganese sulphate monohydrate.
Commodity, location, market cap: Lithium, Czech Republic, $119.27m
EMH’s 49% owned Cinovic lithium-tin project in the Czech Republic is now classified as ‘strategic’ by the European Commission, prioritising the near-term development for hefty EU grants.
At 7.39Mt LCE, the Cinovec resource is bigger than all the other hard rock projects in the EU combined, EMH says.
The integrated mine and processing operation would produce 29,386tpa lithium hydroxide over an initial 25 years at operating costs of $US5,567/t, according to a recent pre-feasibility study (PFS) update.
This would give it an $1.9bn NPV based on a lithium hydroxide price of just $US17,000/t. It would cost $US644m to build.
Commodity, location, market cap: Lithium, Spain, $45.79m
Infinity Lithium has successfully produced battery grade lithium hydroxide as part of testwork in studies on its San Jose lithium project in Spain’s Extremadura region.
An underground scoping study in 2021 projected the mine would deliver 19,500t of lithium hydroxide annually over the 26-year mine plan at life of mine C1 cash costs of US$6399/t.
It has initiated a mining licence and EIA permitting process after receiving approval to lodge an exploitation concession application for the San Jose project in January.
Commodity, location, market cap: Lithium-nickel-cobalt, Germany, $315.06m
Neometals is an emerging sustainable battery materials producer with plans to produce nickel, cobalt and lithium from production scrap and end-of-life LIBs in an incorporated JV with leading global plant builder, SMS group.
Dubbed the ‘Primobius JV’, the company operates a commercial disposal service at its 10tpd Shredding ‘Spoke’ in Germany and is the recycling technology partner to Mercedes Benz.
Commodity, location, market cap: Nickel, Finland, $29.95m
The Finland-focused nickel sulphide explorer has two main projects, Pulju and Maaninkijoki 3 (MJ3).
At Pulju, NLL has defined an initial 133.6Mt resource for 278,520t nickel and 12,560t cobalt at the Hotinvaara prospect, based on historical near surface drilling only.
Mineralisation here remains open along strike and at depth, with a recent NNL survey picking up some juicy conductors at ~400m, ~800m and ~1500m depth.
The 800m deep conductor is enormous at 1.2km by 1km.
More importantly, NNL says the prospect covers just 2% of the project area.
A drilling program is currently underway, with first assay results expected within 8-10 weeks.
Commodity, location, market cap: REE-lithium, Finland, $2.1m
Prospech is preparing for drilling and sampling activities across its portfolio of European critical mineral projects after signing an earn-in acquisition agreement to acquire Finnish company Bambra Oy.
This allows Prospech to earn 100% interest in the Jokikangas REE, Korsnas REE and Saarenkylä lithium projects.
The Finnish projects feature targets which have been explored and prepared since 2018 and add to the company’s portfolio of six underexplored precious metals projects in Slovakia.
Access to rich databases will result in cost effective exploration with walk up drill targets and, as such, generate a strong pipeline of results.
Commodity, location, market cap: Copper, Spain, $2.65b
Sandfire officially became the owner of MATSA copper complex in Spain in February 2022, capping its transition from an Australian mid-tier to a global producer of the red metal.
The 100,000tpa operation, which includes a 4.7Mtpa central processing facility surrounded by three underground mines, will become the cornerstone of Sandfire’s business over the next decade – and potentially more.
While it has an initial mine life of 12 years based on known reserves and resources which can be converted, former Sandfire boss Karl Simich was open in his belief additional resources around the MATSA project could establish a mine life of 20 years or more.
Commodity, location, market cap: Graphite, Sweden, $560.78m
This project developer, which was added to the ASX 300 in early March, is building a European battery materials supply chain with a focus on offering products critical to the green transition.
The company recently raised $40 million through a placement to fund early works at its Vittangi anode project in northern Sweden, which will help fund electric vehicle anode production and commercialisation of its ‘Talnode-Si’ silicon anodes.
Talnode-Si is a composite of graphite, graphene and 50% silicon, which has been designed to boost battery energy capacity when blended with existing commercial graphite anode materials.
The Talnode product has been in development since 2018 at Talga’s facilities in Cambridge, UK, with commercial samples being produced at its pilot facility in Rudolstadt, Germany
Talga expects to soon finalise its negotiations with European battery maker Automotive Cells Company (ACC), hoping to form a legally binding agreement regarding the supply of graphite anode from Talga’s Vittangi Anode Project in Sweden.
The company is already in talks with other leading global EV manufacturers to secure agreements on supply volumes, which will be crucial in the next phase of the anode producer’s development.
Commodity, location, market cap: Graphite, Germany, $16.45m
Evion’s recent scoping study for its Maniry graphite project in Madagascar built a compelling case for the development of a battery anode material plant in Germany, where graphite concentrate would be processed into uncoated spheronised purified graphite (SPG) for use in lithium-ion batteries.
The company is already in discussions with strategic stakeholders about finance options, grants, offtakes, and location options within Germany.
Commodity, location, market cap: Lithium, Germany, $804.67m
Turning to another player in the race to bring lithium hydroxide production to Europe, Vulcan Energy wants to produce what it calls “Zero Carbon Lithium” from geothermal brines using wells that also generate non-fossil fuel geothermal energy.
One of the hottest stocks on the ASX a couple of years ago, the $900 million market capped Vulcan has to prove to investors its unique extraction method actually will work, and at the costs designed.
It is targeting production on the Insheim licence by the end of 2025 for the first phase of the project, with operations at a demonstration plant in Landau due to commence in mid-2023 following two years of pilot testing.
But the reliance on foreign sources is inevitable.
In order to diversify the Union’s imports of critical raw materials, the Commission says it will need to strengthen its global engagement with reliable partners to develop investment and promote stability in international trade.
To achieve this goal, the EU will set up trade actions, including the establishment of a Critical Raw Materials Club for all like-minded countries willing to strengthen global supply chains.
At Stockhead, we tell it like it is. While Alicanto, Conico, Evion, European Lithium, and Infinity Lithium are Stockhead advertisers, they did not sponsor this article.