Australia, the red continent wants to massively expand its production of rare earths and other critical minerals. Buyers include the German electric car industry.
by Heiko Stumpf | Translated by 2M Language Services
Australia, the red continent wants to massively expand its production of rare earths and other critical minerals. Buyers include the German electric car industry.
Mining companies in Australia are currently planning a major expansion of their mining of rare earths and other critical minerals and the Australian government is providing financial support. For the customer countries, Australia is becoming an alternative source of supply to the People's Republic of China.
The global market for rare earths is currently dominated to a large extent by China. According to statistics from the US Geological Survey, the People's Republic is responsible for about 60 per cent of the mine production of rare earth oxides. In addition, much of the production from other countries is also sent to China for further processing. This means that China may control about 80 to 90 per cent of refined rare earths.
Efforts are underway in many countries to diversify supply chains for critical metals in order to increase security of supply. With its abundant resources, Australia is a logical partner. Cooperation with the United States already exists in the form of the US-Australia Critical Minerals Action Plan, which is working to explore and develop Australia’s rich deposits.
The European Union (EU) could also work more closely with Australia in the future. In September 2020, the EU Commission put forward an action plan on critical raw materials. It lists 30 materials, including not only rare earths but also titanium, tantalum and vanadium. Diversification of supply from third countries is an important component of this.
Australia is mentioned as a potential partner for a strategic partnership. In the network of European Raw Materials Alliance (ERMA), twelve Australian mining companies are already represented. They are pursuing a number of mining projects, which offer opportunities for the procurement of raw materials as well as for the supply of mining equipment.
Companies plan local processing
The Lynas Corporation is currently building a global supply chain. The latter already operates Mount Weld in Western Australia, one of the richest rare earth mines in the world. For the concentrate extracted there (around 66,000 tonnes per year), the company is building a modern processing plant for crushing and leaching the ore in the mining town of Kalgoorlie by 2023. The cost is expected to be around USD 350 million (AUD 500 million, AUD 1 = USD 0.6906).
The material processed there is shipped to Lynas' Kuantan refinery in Malaysia. In addition, Lynas is planning to build another separation plant in Texas, USA, to serve the US market.
The mining company Iluka Resources, which has been extracting high-grade rare earths (concentrate) from the tailings of a heavy mineral sand mine at the Eneabba site in WA since 2020, wants to become a second major producer. By 2022, Iluka plans to complete a feasibility study for an integrated processing complex that could produce about 20,000 tonnes of rare earth oxides per year.
According to estimates by the investment bank Goldman Sachs, the construction of a two-stage plant (first stage: crushing and leaching, second stage: refining) could cost around USD 550 million (AUD 796 million). Just like Lynas Corporation, Iluka appears to be open to cooperating with other producers regarding the use.
Iluka Resources is also developing the Wimmera Mine in Victoria. The plan is for Zircon and rare earths to be mined there from heavy mineral sands. The investment volume for the open pit mine could be around USD 280 million (AUD 405 million).
German companies discover Australia as a source of supply
Hastings Technology Metals, a mining company headquartered in Perth, is closely connected to the German economy. The company is planning the Yangibana Rare Earths Project in WA. The mining site, which will cost about AUD 310 million, will have a rare earth oxides production capacity of 3,400 tonnes. Hastings has already concluded purchase agreements with the German companies Schaeffler and ThyssenKrupp.
Schaeffler will purchase neodymium and praseodymium, which are required for the production of permanent magnets in electric motors or generators for wind turbines, for example. In addition, Hastings is in discussions with KfW IPEX Bank and Euler Hermes regarding financing for the mine project secured by untied loan guarantees (UFK guarantees).
ThyssenKrupp is already getting rare earths from Northern Minerals' Browns Range Project and Arafura Minerals is also negotiating with potential German customers for Nolan's Rare Earth Project.
Australian government provides funding
The Australian government is also supporting the development of critical minerals projects. To do this, the Department of Industry, Science, Energy and Resources (DISER) has set up the Critical Minerals Facilitation Office. In March 2021, Prime Minister Scott Morrison presented the Resources Technology and Critical Minerals Processing Roadmap. As part of the roadmap, funding is awarded to projects for the local processing of critical raw materials. The government can contribute up to 50 per cent of the project costs.
In addition, companies are eligible for funding through the approximately USD 3.5 billion (AUD 5 billion) Northern Australia Infrastructure Facility (NAIF) funding program. It provides concessionary loans for projects in the resource-rich northern parts of Western Australia, the Northern Territory and Queensland. The program is also open to mine operators. Hastings and Arafura Resources, for example, are looking to leverage their projects with the help of the NAIF.