London-based Benchmark Mineral Intelligence reckons not only is Australia well placed in lithium, but it is starting to see something similar in rare earths.
Benchmark is not normally given to extravagant predictions – it’s one of the world’s leading analysts of demand and supply, especially for key renewable materials such as lithium and rare earths.
According to Benchmark, “Australia is on course to becoming a major supplier (of rare earths) to markets over the next seven years – something the firm has been predicting for a couple of years now about the growth of Australia’s lithium sector.
It has long been in front of the pack about demand and supply of lithium and EVs and its optimism about Australia’s increasingly important place in the chain is now being well supported by the accelerating pace of change in the automotive world.
Benchmark’s Principal Analyst Cameron Berks told Share Cafe earlier this month that lithium prices are set to continue rising after the recent slide.
That’s supported by Albemarle’s attempt to buy Liontown for more than $A5 billion, as well as spend $A1.3 billion on expanding its Kemerton lithium hydroxide processing complex in southwestern WA as well as the $A15 billion merger between Allkem and Livent, the small US lithium producer.
Besides Kemerton, IGO and the Wesfarmers SQM are building hydroxide production facilities in WA, while Mineral Resources has bought half interests in two small plants owned by Albemarle in China.
Benchmark sees a rapid expansion pace for Australian rare earths which best known for use in wind farms, EVs and magnets in particular.
On Wednesday it published a bullish outlook for the Australian rare earths sector, making the point that “Australia is set to see the biggest expansion of rare earths mining projects outside of China, as the country increases cooperation with the US to build new clean energy supply chains not controlled by Beijing.”
The lure of the $US369 billion in subsidies and fees and other support in the US Inflation Reduction Act has been a driver not only of the extension of lithium EV boom, but also for rare earths and other renewable materials (graphite, copper, tungsten for example).
Geopolitical factors are also at work – China’s sabre rattling, support of President Putin’s invasion of Ukraine, aggressive behaviour in the South China Sea and harassment of Taiwan, has made more and more companies in the renewable space nervous about basing processing systems and factories in China, or relying on China for stable and guaranteed supplies.
That has helped nudge more and more business Australia’s way in lithium (and raised interest elsewhere: Chile, Argentina, in parts of Europe, the US and Canada, especially in Quebec).
But nowhere has China’s antics had a greater impact than in rare earths – as Benchmark said in its report this week, “The shift in Australia’s outlook has become notable this year. In April 2023, Australia’s foreign minister Penny Wong urged her country to diversify its markets away from China, citing differences of interest between the nations.”
“China’s overwhelming dominance in rare earths mining, processing, and magnet production is driving the US, Japan, and the European Union to attempt to secure alternative supplies.”
And Australia is rapidly shaping as the source of choice, so much so that at least five projects here will be up and running by 2030, according to Benchmark.
“Benchmark expects a total of five rare earth projects to come into production before the end of the decade, mostly to produce neodymium and praseodymium-bearing concentrates (NdPr).
“Output from the new projects are set to drive a significant portion of overall growth in Australian mined rare earths supply, expected to jump 249% between 2022 and 2027.
“Already, the prospect of a rare earths value chain spanning Australia and the US is on the cards after the countries announced a bilateral pact for critical minerals cooperation during the G7 summit last month.
Markets for key elements are set to go into deficit later this decade as supply will struggle to match rising demand. Demand for NdPr, an alloy of praseodymium and neodymium used to make magnets for EV and wind turbine motors, may climb 93% between 2023 and 2032 while supply in refined NdPr is set to grow only 47%, Benchmark pointed out.
Australian miner Arafura Resources notes that global consumption of rare earth oxides reached around 167,000 tonnes in 2020.
The company sees this figure jumping to around 280,000 tonnes by 2030, with the minerals occupying a critical component of increasingly commonplace technologies, such as mobile phones and clean energy infrastructure.
In 2021, Australia produced the fourth-most rare earths in the world. Its total annual production of 19,958 tonnes remains significantly less than the huge 152,407 tonnes produced by China, but that is a huge jump from the tiny 1,995 tonnes produced domestically in 2011.
Already Australia’s Lynas Rare Earths has been producing rare earths from its Mount Weld mine in WA, processing it in Malaysia and then shipping it to end users – especially in Japan and the US.
It is going to grow via a processing facility in WA, (and a mine expansion at Mount Weld) and a plant now underway in the US. The Malaysian plant has been given an extra six months to change the way it processes rare earths which will end up being a positive for the company.
Iluka has a huge $A1.250 billion processing plant underway in WA at Eneabba to handle rare earths and other beach sand minerals from there (from waste material) and from a beach sands mine in Victoria and another in NSW.
The two planned Australian rare earth sites with the largest forecast output are the 650 square km Yangibana project in WA, being developed by Hastings Technology Metals, followed by Nolans in the Northern territory, owned by Arafura Resources. Both are scheduled to start in 2025, although Nolans is still at the permitting stage.
Yangibana is located in Western Australia, already a major metals mining hotspot, including for energy transition metals. Rare earths at at the site are mainly found in monazite, a phosphate mineral.
The Nolans project, located in the Northern Territory, is set to include plants for beneficiation, extraction, and separation. Its deposits contain the rare earth-bearing minerals apatite, monazite, and allanite.
There’s also the Browns Range prospect (in the north of WA) where its ore will be mined and processed at Eneabba under a third-party agreement with Iluka. It will be the significant dysprosium producer.
The Dubbo prospect of Australian Strategic Minerals which has been developed with Hyundai. The Hyundai agreement links the mine to Japanese interests. As well, Australian Strategic Minerals plans to process its ore in South Korea. (As is Pilbara Minerals which has an interest in a hydroxide refinery with POSCO, the big Korean steel and resources group.
Benchmark says that if all projects come online as scheduled, their combined risked output is forecast to make up 4% of world mined rare earths oxide supply in 2027.
“A rare earths value chain that stretches between Australia and the US is now a possibility under the “Australia-United States Climate, Critical Minerals and Clean Energy Transformation Compact” announced at the G7 summit last month.
The pact came a month after Nikkei reported that Chinese officials are planning to ban exports in rare earth magnet technologies to limit the US ability to advance in the upstream segment of the value chain.
“Previously, there was not a huge issue with Chinese dominance over the rare earths supply chain due to the lack of criticality in end use applications, and the small size of the market. Now that the market is expanding massively, things are changing and supply is becoming tight,” explained Daan de Jonge, Benchmark project manager.
“The agreement promises to establish a ministerial-level Taskforce on Critical Minerals that will be responsible for securing supply in critical minerals “through the development of a shared energy industrial base”.
Australian companies are already involved in the US in deepening the supply chain for rare earths.
In 2021, the Pentagon awarded Lynas Rare Earths $30 million to build a light rare earths processing facility in Texas. The following summer, the Pentagon gave the company a further $120 million contract to build a commercial heavy rare earths separation facility in the same state through a joint venture with Blue Line Corp, a US firm.
The recent pact formalises this pre-existing collaboration while extending it into the fields of international climate and energy security. It also creates space for cooperation between more state and private actors across Australia and the US, Benchmark pointed out.
“With only one operating rare earths mine at Mountain Pass and a small pipeline, the US will likely depend on Australian minerals to meet its industrial ambitions without China.
“US mined output for 2023 is forecast to be roughly double Australia’s. However, Australian mined supply may overtake the US’ as early as 2025 if the planned projects start coming online as scheduled.
“There are some US mines at various early stages of development, but nowhere near as much as in Australia. We don’t really see a lot of greenfield mining capacity there in our forecast,” said de Jonge.
Nonetheless, the US is ahead of Australia when it comes to midstream and downstream capacity, according to de Jonge, putting it on course to become the largest non-China market for rare earth processing and manufacturing.
The US is seeing a lot of midstream and downstream capacity build-out currently. and Benchmark says MP Materials, the only US rare earths producer, is building a separation facility on-site and a magnet producing facility in Texas.
Lynas Rare Earths is working on constructing a Pentagon-backed separation facility in the same state. Other firms such as Ucore are also looking to build separation facilities.
There could also be US federal stimulus for the very upstream end of the rare earths supply chain. A bill proposed last month to US Congress would subsidise rare earths magnet production, a sector that was not covered by the Inflation Reduction Act. There have already been magnet producing projects announced, including in recycling, such as one by Noveon.
“Yet even with access to Australian reserves, it is likely that US rare earths industries will still need China for its supply of heavy rare earths. This sub-group of rare earths are generally bountiful in clays, whereas both Australian and US deposits are mostly hard rock,” Benchmark pointed out.
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