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These titanium and graphite plays could be just the critical minerals the US Department of Defense needs
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There are about 50 minerals listed on the United States’ 2022 critical minerals list that the country needs to shore up its critical minerals supply chain to bolster national security – oh, and the economy too of course.
Basically, a critical mineral is defined as a non-fuel mineral or mineral material essential to the economic or national security of the US and which has a supply chain vulnerable to disruption.
They are also characterised as serving an essential function in the manufacturing of a product, the absence of which would have significant consequences for the economy or national security.
The main concern is the offshoring of the strategic and critical materials sector in recent years, along with most other supply chains, which are vital to the military and industry.
Plus, there’s the booming demand for lithium battery technologies and the prominence of ‘adversary’ influence over supply (China and Russia) which makes the need to secure reliable – and preferably domestic – supply chains all the more vital.
The main game has been to secure the well-known battery metals like lithium, cobalt, nickel etc, but it looks like the US Department of Defense (DoD) has been asked to narrow its focus a little, with the US House Armed Services Committee pointing out several key critical minerals it wants the FY24 National Defense Authorization Bill to focus on – namely titanium, graphite, tungsten and magnesium.
Published today: the House Armed Services Committee Chairman’s mark-up for the FY24 National Defense Authorization Bill. Gives insights into what critical metals the US Department of Defense is asked to care about. 👀 pic.twitter.com/zGZHOfYbHT
— Alex Grant (@big_lithium) June 13, 2023
Titanium is predominantly used for metal alloys or as a white pigment, graphite is used for lithium-ion batteries, fuel cells and lubricants, tungsten is primarily used to make wear-resistant metals and magnesium is used as an alloy and for reducing metals.
It’s slim pickings for magnesium and tungsten stocks with a foothold in the country, so let’s look at which ASX stocks have a graphite or titanium play in the USA.
Graphite
Magnis Energy Technologies (ASX:MNS)
The company signed a deal in February with EV giant Tesla to supply a minimum 17,500tpa of active anode material (AAM) using Nachu graphite concentrate from Tanzania beginning in February 2025 from its yet-to-be-built-plant in the US.
The agreement is for a minimum term of three years at a fixed price with Tesla having the option to increase offtake to 35,000tpa.
The location of the commercial AAM facility is soon-to-be-announced, but it will be in the southwest of the US – chosen from amongst the sites undergoing an advanced review along with shortlisted sites in the Midwest and Southeast regions.
Proximity to logistics and key off-takers have been key considerations for the shortlisted sites that have completed evaluations for size, power, and infrastructure requirements, along with expansion possibilities.
Once the location is revealed, large scale pilot plant development for both AAM and Nachu graphite concentrate will then commence immediately.
The aim is to be producing AAM from a pilot plant by 31 March 2024, and commencing production from the commercial AAM facility by 1 February 2025.
The company has the Vidalia AMM facility in Lousiana and announced in April that the Definitive Feasibility Study (DSF) for the project had confirmed the expansion to a 45ktpa AAM production capacity “is technically viable, financially robust and is expected to generate significant value for Syrah.”
A 45ktpa AAM Vidalia facility is underpinned by the Balama Graphite Operation in Mozambique, which has a 110Mt Ore Reserve at 16.4% total graphitic carbon for 18Mt contained graphite – underpinning a 50+ year mine life based on Balama’s current 2Mtpa process plant capacity.
The DFS flagged an NPV of US$208–794 million, IRR of 13.9-22.9% and 4-6 year payback period from commencement of operations, assuming a flat AAM price of US$5,000-7,000 per tonne (2023 real).
The estimated EBITDA is US$103-192 million, with estimated all-in operating costs of US$3,023 per tonne and estimated total installed capital costs of US$539 million including a US$38 million contingency.
Notably, the company also snagged a US$102.1m loan from the US Energy Department (DOE) last year – and updated an offtake agreement with Tesla to supply an additional 17ktpa AAM from Vidalia (from 8,000tpa originally) at a fixed price and for an initial term of no less than four years.
The company also has a non-binding MoU with Ford and SK On to evaluate a strategic arrangement, including AAM supply from Vidalia to the BlueOval SK joint venture, with an offtake commencement date of no later than 2028.
Construction of Syrah’s large-scale, vertically integrated AAM production facility in Vidalia, Louisiana, USA, is well advanced.
The 11.25ktpa #AAM Vidalia facility is set to commence operations in Q3 2023 and will supply Tier 1 customers in the United States.$SYR #graphite pic.twitter.com/hby8RNFugx
— Syrah Resources (@SyrahResources) April 12, 2023
Novonix supplies graphite anode material out of its plant in Chattanooga, Tennessee and was selected for a US$150 million grant by the Department of Energy to support its expansion.
Specifically, the grant funds will be dedicated to the company’s construction of a 30,000tpa US manufacturing facility, including site selection, plant layout, and engineering design with capability for additional expansion.
The idea is to be ready for production by 2025, with potential to expand up to 75,000 tonnes capacity.
Last month the company announced a joint research and development agreement (JDA) with South Korea’s LG Energy Solution (LGES) which see the two companies join forces to research artificial graphite anode material for lithium-ion batteries.
LGES is a leading global battery manufacturer with two standalone and five joint venture plants currently operating or being constructed in the US.
The company plans to maximise the benefits from the US Inflation Reduction Act (IRA) by expanding local battery production, as well as establishing a local supply chain for battery components.
“Our partnership with Novonix once again demonstrates LG Energy Solution’s determination to establish a solid battery supply chain in the US, complementing our local manufacturing network to meet our customer’s needs for IRA-compliant batteries,” LGES senior vice president of procurement center Dongsoo Kim said in the announcement.
NVX CEO Chris Burns said the company was excited to formalise its work with LGES and establish the path for NVX to become a supplier for its artificial graphite anode material in the US.
“This agreement demonstrates our leading position to establish a supply chain for high-performance artificial graphite for the battery industry in North America,” he said.
NVX also has an offtake deal with KORE power where it plans to reach synthetic graphite production capacity of 10,000tpa at its current Riverside facility, beginning deliveries to KORE Power in 2024 at an initial 3,000 tpa rate.
And there’s big goals in the pipeline beyond hitting 30,000tpa production capacity by 2025, with the company aiming to reach 150,000tpa of total production capacity in North America by 2030.
Hexagon Energy Materials (ASX:HXG)
While this company is focused on hydrogen, in the US, it has an 80 per cent controlling interest of the Ceylon Graphite project located in Alabama, over which South Star Battery Materials Corp (TSXV:STS) on 7 December 2021 signed an option to develop and earn-in up to 75% interest in December 2021 for C$750,000 in expenditure on the project.
So far, South Star has completed a 10-15 hole program, installed a piezo to monitor groundwater levels on site – and initiated the 43-101 Maiden Resource Report which is due Q1 2023.
Metallurgical work was also carried out during the December 2022 quarter, with three tonnes of ore being turned into RoM concentrate at North Carolina State University, 15kg of which will be tested for a variety of value-add/battery applications.
HEX expects that Q2 2023 will see mobilisation to complete an additional 1500-2000m of drilling with a preliminary economic assessment completed in Q4 2023.
MLS has the Lac Rainy graphite project in Quebec, Canada, where it recently reported exceptional results of electrochemical (battery charging and durability) test work on battery grade spherical graphite (SpG).
The SpG and electrochemical test work was carried out by the specialist graphite testing group, ProGraphite, in Germany, and returned grades up to 96.3% spherical graphite carbon (Cg).
MLS believes these results build on the spherical graphite test work already completed, which demonstrated that very high yields of high-quality spherical graphite can be purified to battery grade using the low temperature alkaline purification method with an acid wash – lifting the spherical graphite to premium battery-grade.
Having proven that Lac Rainy can generate high-quality spherical graphite with outstanding battery anode charging and durability qualities, MLS is now rapidly advancing the project towards development.
The plan is to begin a pre-feasibility study (PFS) and transition to a DFS imminently.
MNS, SYR, NVX, HXG and MLS share prices today:
Titanium
The company has its Rio Tinto Fer et Titane (RTFT) titanium processing operations in Sorel-Tracy, Quebec, Canada, where it’s working with the Government to decarbonise its titanium oxide operations by up to 70%.
The key is the BlueSmelting project, an ilmenite smelting technology that could generate 95% less greenhouse gas emissions than RTFT’s current reduction process, enabling the production of high-grade titanium dioxide feedstock, steel and metal powders while reducing the carbon footprint.
The mining giant announced last year the project is just one in a suite of green initiatives which will be covered in a C$222 million (US$162 million and $259 million) investment over the next eight years from its Strategic Innovation Fund.
To be fair, Rio is tipping in a fair bit of its own coin, with the total spend coming to C$737 million (US$537m or $854m).
The company is constructing a demonstration plant that will have the capacity to process up to 40,000 tonnes of ilmenite ore per year which is expected to be up and running by the first half of 2023.
The company is planning to build a 125tpa Titanium Demonstration Facility (TDF) which it expects to come online in 2024, with plans then to expand into its first Titanium Commercial Facility (TCF-1) of 1,125tpa located at the Southern Virginia Technology Park in Halifax County, Virginia by 2025.
The facilities would use IPX’s Hydrogen Assisted Metallothermic Reduction (HAMR) technologies to produce titanium metal powder.
Development of the TCF-1 to 1,125tpa production capacity would mean IperionX would have the largest recycled titanium metal powder production capacity globally, as the only titanium production facility using 100% titanium metal scrap as a feedstock.
It would also be the only such facility with zero Scope 1 & 2 emissions with the lowest carbon intensity for any commercial titanium metal powder product.
Notably, IperionX and Carver Pump, a leading American manufacturer of specialised high performance centrifugal pumps since 1938, have partnered to produce titanium parts for the US Navy via its planned Titanium Demonstration Facility in South Boston, VA.
Plus, the company also recently won the Air Force Research Laboratory (AFRL) Grand Challenge, hosted by the National Security Innovation Network and as a result, will be eligible to produce titanium metal powders from scrap materials and rejuvenate used or out-of-specification titanium powder for the AFRL.
RIO and IPX share prices today:
At Stockhead we tell it like it is. While Magnis Energy Technologies and IperionX are Stockhead advertisers, they did not sponsor this article.
