The future of rare earths in Australia

Demand for rare earth minerals is set to skyrocket by 2030 in response to an uptick in automotive and computer production. Here’s why.

Australia holds the third largest rare earth oxide resource globally at 3.19 million tonnes, according to Geoscience Australia.  Despite this ranking, Australia is dwarfed by China, which holds around half of the world’s rare earth resources at 55.2 million tonnes.

However, the Australian Government is looking to boost the country’s position in the rare earths market with new projects progressing through the development stage, including Arafura Resources’ Nolans rare earth project in the Northern Territory.  The government will need to advance the country’s critical minerals projects through approvals as commodities such as coal begin to dwindle and decarbonisation becomes increasingly important to stakeholders and supply chains.

The only scale producer of separated rare earths outside of China is ASX-listed Lynas Rare Earths, which operates the Mt Weld mine in Western Australia.  Mt Weld is one of three rare earths mines in Australia, alongside Northern Minerals’ Browns Range site in Western Australia and Iluka’s Eneabba operation in Western Australia.

The push for development of more rare earths projects in Australia comes at a time when China is plotting to increase its stranglehold on the rare earths market even further.  According to Arafura managing director Gavin Lockyer, China’s Made in China 2025 strategy aims to transform the Asian superpower from a low-end producer to a high-end manufacturer.

This includes ambitions of a strong foothold on the electric vehicle (EV) market through the manufacture of components and production that require a steady supply of rare earth metals.

“Naturally the typical carmaker jurisdictions of Japan, South Korea and the European Union are extremely concerned about this,” Lockyer explains during a Sydney Mining Club presentation.

Lockyer says these carmakers are looking for alternative rare earth supply outside of China, with Arafura hoping to cash in on this growing demand by starting production at the Nolans project in late 2024.  Most rare earth mines have the minerals processed overseas in countries like China and Malaysia, but Lockyer hopes Arafura can show how Australia can be self-sufficient as a producer of them.

“Australia no longer wants to dig things up and ship it out – and the way we can change that, because we do have the critical minerals in this country, is by starting to do downstream processing,” Lockyer says.

“EV is the growing area (for rare earths) and most analysts are forecasting between eight-to-10 to 40 times of growth in demand over the next 20 years, and this will require six to 15 times more rare earth elements.

“China is becoming a much larger importer of raw materials and that is simply to meet its own demand requirements. There may be a point very soon where China can’t even produce material that it can export because it needs it for itself.”

Rare earths are used for magnets in EVs and require a small amount that is crucial to delivering an EV off the production line.  According to Wood Mackenzie battery raw materials director David Merriman, rare earth demand has moved more towards the magnet space instead of the ceramics industry.

“Between 2005 and the mid 2010s was seen as a fundamental change in the rare earths industry transitioning away from an industry largely dominated by the use of rare earths in ceramics in small volume but high value elements … and in the catalysts used in ICE (internal combustion engine) vehicles,” Merriman says.

Wood Mackenzie states that total rare earths production will reach almost 230,000 tonnes in 2021.  Adding to Australia’s downstream capabilities is Lynas’ proposal to commission a rare earth processing facility to support the Mt Weld mine.

The Western Australian Environmental Protection Authority (EPA) has recommended environmental approval for the company’s proposal for this project.  Lynas has sent its rare earths concentrate from Mt Weld to its processing plant in Malaysia since 2012. However, an Australian processing facility would crucially provide the company with an onshore alternative.

Perth-based Lynas has also signed agreements with the United States Government to develop a heavy rare earth plant and light rare earth plant, which would enable more downstream processing outside of China.  This aligns with Lynas’s 2025 growth vision, which focusses on delivering upstream processing close to its mine sites and downstream processing close to its customers.

The company’s growth will also focus on increasing Mt Weld’s rare earth supply in the coming years, with a new exploration campaign under way in the 2021-22 financial year.

“We are excited to have completed a one-kilometre-deep exploration drillhole into fresh carbonatite below the current Mt Weld open pit mine,” Lynas states.

“This is the first time we have drilled to this depth. Further detailed analytical work is being conducted and the drilling report for this exploration is expected to be completed in early 2022.

“The Mt Weld orebody is recognised as one of the richest known rare earth deposits and expanding our knowledge of the orebody will help us to plan for future expansion.”

An increase in rare earth demand will strengthen Lynas’ position as the only scale producer of rare earths outside of China.  This footprint is set to expand as it engages with the Australian, Japanese and United States Governments to build a larger supply of rare earths.

Lynas achieved a record $185.9 million in sales revenue in the June 2021 quarter due to strengthening demand for the NdPr oxide.

“Critical minerals, including rare earths, are essential to the manufacturing supply chains for future facing green technologies such as hybrid and electric vehicles and wind turbines,” Lynas states.

“We are already seeing market demand accelerating as economies recover and consumers choose lower carbon technologies.

“Rare earths provide excellent exposure to global megatrends that will shape economies and consumer behaviour over the next decade, such as sustainable mobility, electronics and industrial automation and renewable energy.”

Rising demand for rare earths will require more mines to be commissioned, and with ASX-listed companies such as Arafura moving forward in their developments, Australia is strongly positioned to provide a steady supply of the materials outside of China.

CREDIT – Australian Mining