After the global Covid-19 pandemic exposed the vulnerability of rare earth mineral supply, companies are looking to gain more independence when it comes to the essential supply of minerals needed for a range of technologies, including electric vehicles and smartphones.
One way to do that is to find new sources of the critical minerals in order to reduce the global reliance on China. This is especially important as the nation has once again threatened to restrict supply to the US amid a trade war which has only been made worse by Covid-19.
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While new rare earth projects in Australia have resulted in development of the sector, attracting essential investments for new projects could prove difficult, leaving questions remaining about the future of the rare earths supply.
Australia might have huge rare earths potential
Australia is mainly known for its rich deposits of aluminium ore, iron ore, lithium, gold, lead, and diamonds that have been highly commercialised over the years. However, experts believe that the country also stores a good amount of rare earth deposits, which have not been explored yet because of the Chinese dominance of the market and volatile prices over the years.
While a significant share of the country’s land is covered in sands, such minerals have so far been hard to find.
Nevertheless, Commonwealth Scientific and Industrial Research Organisation program director for mineral processing Dr Chris Vernon says that, fortunately, the industry has evolved enough to use tools able to predict where such minerals might be located.
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By GlobalDataHe says: “In 1990 there seemed to be next to no rare earths in Australia, yet year on year since then, we’ve added to what we know we have. Today’s inferred resources stand at more than 26 million tonnes, of which at least 4 million tonnes are economic to extract using today’s technology.”
Considering that the industry has not been around for a long time, this gives experts hope that more rare earth minerals are yet to be discovered in Australia, especially as mining technology advances.
“This is only about 3% of known world economic resources, but as I have said, we haven’t finished exploring yet and the number grows every year,” Vernon says.
Obstacles to investment in rare earths
While investment in the Australian rare earth industry has been scarce in the past, Vernon believes that this is about to change since traders are progressively seeking more diverse supply chains.
Some downsides of the market, however, still tend to discourage common investment as Vernon suggests that there’s a “market failure” which seems to turn rare earths into a riskier sector to invest in.
He says: “An investor might be attracted by comparative rarity and the opportunity to break into a growing market, but the volatility of prices and uncertainty about how the market operates will hold them back.
You might read articles about how the price of rare earths has gone up, or down, but there’s no public exchange mechanism. Most trading occurs privately and the price is not revealed.”
Another thing about rare earths is that very often, when exploring grounds, operators end up with cheaper minerals like cerium or lanthanum, even if they are targeting high-value praseodymium, neodymium, and dysprosium, which might be discouraging.
Also, compared to more traditional minerals like copper or nickel, Vernon highlights that rare earth marketing is far more complex. “You need to be able to sell all of your metals, and that’s unlikely to be to one buyer, except if you’re exporting a mixed concentrate to someone already in the business – and that’s likely to be in China,” he says.
These specifics of the market have had a negative impact on attracting substantial investment and they are likely to remain amongst the factors keen investors have to consider further, before taking a leap.
Australian rare earth projects gain momentum
Despite obstacles, a few significant projects stand out in Australia. These include: the Mt Weld Central Lanthanide Deposit in Western Australia, one of the highest grade rare earth deposits in the world, which is operated by Lynas; the Browns Range in Western Australia with its high value and high purity dysprosium, explored by Northern Minerals; and the Dubbo Zirconium project with large in-ground resource of zirconium, hafnium, niobium, yttrium, and rare earth elements, located in New South Wales and led by Australian Strategic Materials, a wholly owned subsidiary of Alkane.
When it comes to future projections about the development of the global rare earth sector, Vernon believes that no country could replicate the scale of China’s value chain for the time being, but cooperative work of countries could help bring balance to the industry.
“Australia, Canada, some African nations, and Denmark (in Greenland) have rich rare earth deposits. If these countries could process the ores into forms (separated oxides, or even metals) acceptable in the next part of the value chain in South Korea, Japan, the EU, and the US, then there would be a genuinely independent supply chain.”
Considering the recent problems of the existing rare earth supply chain, exposed during Covid-19, it has become evident that the current outlook of the market needs de-monopolisation and significant changes, which will most likely start with “more investment [outside of China], and genuine collaboration between trading partners,” Vernon concludes.
