Aussie rare earth miners pushing development deals

Country accounts for over half of new global projects; US-China trade spat spurs action

MELBOURNE • Rare earth developers in Australia say they are edging closer to signing deals with new customers that would drive forward their projects amid mounting global supply concerns over the minerals that are crucial to high-tech industries.

Australia has only 2.8 per cent of the world's rare earth reserves, according to the United States Geological Survey. But it accounts for more than half of the new projects in the global pipeline, according to data compiled by the Western Australian School of Mines (WASM) at Curtin University.

Rare earths are a group of 17 minerals critical to a wide array of industries from high-tech consumer electronics to electric vehicles and sophisticated military equipment.

Most of Australia's projects, however, have been stuck as developers struggle to secure financing because of the domination of China, which accounts for about 90 per cent of global rare earth processing capacity and one-quarter of the world's reserves. Even the projects closest to start-up are unlikely to begin operations until 2023 at the earliest, the WASM data shows.

Still, those projects may speed up amid the escalating trade war between the US and China. The US imports 80 per cent of its rare earths from China, where Chinese state-owned news outlets have reported it could cut its shipments to the US as part of the trade dispute.

Northern Minerals, which is developing the Browns Range project in Australia's north-west, last week said it was in "discussions with an internationally recognised industrial group" for supply. "The level of interest has increased since the increased news focus on the issue," a spokesman said this week.

Hastings Technology, which is readying its Yangibana rare earth project in Western Australia for late 2021 production, already has one preliminary supply agreement with Germany's Thyssenkrupp and signed another with automotive supplier Schaeffler last week.

 
 
 
 

"We are working on another German supply agreement," said Hastings' executive chairman Charles Lew. Additionally, Hastings is getting financing from Germany's strategic minerals procurement body, he said.

The prospects for Australia's rare earth industry are picking up based on growing demand expectations.

The US said this week it would look to Australia and Canada to develop rare earth reserves around the world to reduce the global reliance on China.

The reason rare earth projects outside of China have not advanced is because China's vast production, underpinned by cheaper labour and less stringent environmental regulations, means no one else can compete on cost, said WASM's Professor Dudley Kingsnorth.

Without government support, most new projects will struggle to see the light of day, said a resource companies analyst.

Australia's Lynas Corp, the only rare earth producer outside of China, has been supported by low interest loans from Japan's government. Last month, Lynas outlined expansion plans including building a processing plant in the US.

Prof Kingsnorth estimates the world will need 75,000 tonnes of rare earths per year to be independent of China by 2025. But his projections are that the rest of the world will only be producing 50,000 tonnes independent of China by that time.

"It's not about being competitive with China, it's do you get your metals or not?" he said.

REUTERS

A version of this article appeared in the print edition of The Straits Times on June 15, 2019, with the headline 'Aussie rare earth miners pushing development deals'. Print Edition | Subscribe