Stockscope: What’s driving demand for NdPr in 2019?
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There’s been recent excitement around neodymium-praseodymium (NdPr) particularly because it is used to make high-strength permanent magnets required for electric vehicles – and there are plenty of predictions around what’s to come in that industry.
Stockhead spoke with Gavin Lockyer, Managing Director of Arafura Resources, an up and coming NdPr explorer in the Northern Territory about the opportunities in the sector and what investors in this sector can expect.
Rare earths isn’t as simple a market as the more traditional commodities like gold or silver.
And Mr. Lockyer said there is more ASX-listed companies could be doing to increase understanding among investors.
“The rare earth elements are a suite of elements – there’s 17 of them altogether and they all have different uses, so it is a bit of a confusing market,” he told Stockhead.
“People should just focus on the magnet material rare earths because they are the ones that have the most value.”
“For instance, Arafura’s deposit has 26 per cent of NdPr but that represents 85 per cent of our revenue, so that’s one way we can simplify the process, by narrowing the actual end-use markets the products go to.”
He also commented that many of the producers all use their own unique language as it pertains to their own deposit, which doesn’t help the market understand the process.
Much of the excitement about the potential for rare earths focuses on its use in electric vehicles.
But Arafura says NdPr is not limited to the EV sector.
Mr Lockyer says the magnet market has a variety of applications, such as in wind turbines, magnetic refrigeration, robotics and the wider automotive industry.
“Any standard motor currently uses a magnet if they want that application to be more efficient and the motor to be lighter. A conventional motor vehicle may have up to 50 little micro motors in it, to drive the electric steering or the brakes or the seats or the windscreen wipers.”
“Electric vehicles are one growth area, but the automotive industry as a whole is by far one of the largest users.”
Electric vehicle demand is expected to grow to in excess of 20 million vehicles per annum by 2025, so what does that mean for NdPr demand?
Mr Lockyer says as prices increase for NdPr, he expects to see more projects coming on board.
“I think you’ll see some of the illegal production historically that’s been closed down in China be cleaned up and fed into legal and environmentally friendly industries and you’ll see other projects alongside Arafura get up and running.”
“But there is a big growing demand and by all forecasts, China is looking to be a net importer of this material very soon, so the rest of the world needs to be mindful of this.”
As far as what it will take for Australia to fill that demand, Mr Lockyer says he hopes Arafura will be the ‘next cab off the rank’, following Lynas, which is already in production in WA.
“The Australian government has stated publicly that it would like to see development of these strategic minerals for use by our strategic partners, so I think that Australia has a big role to play in future supply to the rest of the world.”