Australia can punch above its weight in critical metals — both with mining and processing
Research and development programs are underway to drive investment beyond mining.
Australia has just 3.4% of the world’s rare earth element (REE) resources but is the fourth largest producer in the world, with other minerals also posing significant future potential for the country.
And that is just from one mine, Mt Weld in Western Australia — while several other projects are at the advanced development stage, promising to turn this country into a rare earth power house
In cobalt, lithium, vanadium and graphite, too, Australia has significant future potential for expansion.
This is one of the takeaways from the latest report from the Chief Economist in Canberra.
The other one message contained in “Outlook for Selected Critical Minerals — Australia 2021” is a clear signal that this country is also starting its journey towards downstream processing.
A road map to new downstream industries
Take lithium as an example when it comes to assessing the downstream potential.
By 2025, it is projected that Australia will have 38% of a $26 billion sector producing lithium concentrate from hard rock and brine.
By that year, too, this country could be processing concentrate into lithium hydroxide, with the report estimating we could have 4% of a $63 billion industry.
However, by 2025 we still will not be at the next stage which is producing precursors for lithium-ion battery makers or, as the Chief Economist puts it, Australia will have 0% of a $385 billion industry.
Same story with battery cell production (worth $550 billion by then) and the final stage, battery pack assembly (an industry expected to be worth $1.7 trillion in 2025.
But the report assures us that research and development programs are under way to get investment into stages beyond mining.
“Development of Australia’s cobalt, graphite and vanadium resources (as well as lithium) and associated downstream investment could see the battery value-add supply chain expand in Australia.”
“Domestic lithium refining is rapidly expanding, there is potential for rare earths refining, and for domestic manufacturing of vanadium batteries and graphite anodes,” the report states.
Emerging rare earth players will propel Australia’s ranking
We may have only 4% of the world’s REE resources but, as previously stated, we are already the world’s fourth largest producer thanks to Lynas Rare Earths (ASX: LYC), which has plans to process dysprosium and terbium at a new plant in Texas.
But the rankings are deceptive: Australia is the world’s largest producer independent of China.
This is because number two producer (the US) and number three (Myanmar) send their output to China for processing (and value-adding), which explains why China has 57% of the world’s REE in the ground but is responsible for 85% of the globe’s refining.
And Australia’s share is going to increase, with much of it to be sold to end-users other than China.
Northern Minerals (ASX: NTU) is producing dysprosium and terbium, among other REE, with a pilot plant. The scale-up to full production is now at the definitive feasibility study stage.
Northern Minerals has plans to produce 3,100 tonnes a year rare earths oxide at stage three, with offtake by Germany’s Thyssen-Krupp.
Hastings Technology Metals (ASX: HAS) has its Yangibana project at feasibility stage with two German offtake contracts and further ones planned using European Union funding.
Iluka Resources (ASX: ILU) is planning to produce REE from monazite at its Eneabba heavy minerals project and is also undertaking REE feasibility studies in Victoria’s Wimmera region.
Arafura Resources (ASX: ARU) is at feasibility stage at Nolans in the Northern Territory, planning output of 4,000tpa of neodymium-praseodymium.
And Australian Strategic Materials (ASX: ASM) has already produced metals at laboratory stage in South Korea and is now working on a scoping study for a metals plant and magnet production.
Cobalt: big resources with growth potential
Australia is already the second largest producer of cobalt and is backed by 19% of the world’s resources — but that output is lagging.
Because, in a reversal of the REE story, this country produces only 4% of mined output, with the number country being the Democratic Republic of Congo with a 67% market share.
The Chief Economist’s report says that there is “significant future potential” for Australia’s cobalt, with the rising demand for EV batteries, particularly with manufacturers seeking reliable and responsible alternatives sources (to DRC) of supply.
It notes that Australia’s mined cobalt is typically a by-product of nickel laterite resources, while refined cobalt is currently exclusively in the form of cobalt metal.
“Australia currently produces no refined cobalt chemicals, after production ceased in 2015 with the closure of the (Clive) Palmer nickel and cobalt refinery, Queensland Nickel,” the report adds.
Several new cobalt projects on the way
Three plans have been publicly announced regarding cobalt, one each by Aeon Metals (ASX: AML), Ardea Resources (ASX: ARL) and Australian Mines (ASX: AUZ).
The last mentioned has another cobalt project, Sconi in Queensland, which is at feasibility stage with plans to produce 200,000t over a 30-year mine life.
Others at feasibility stage include Barra Resources (ASX: BAR), Sunrise Energy Metals (ASX: SRL), Cobalt Blue Holdings (ASX: COB), GME Resources (ASX: GME) and Queensland Pacific Metals (ASX: QPM).
Graphite: ‘only direction is up’
When it comes to graphite, the report sums it up with the headline: “The only direction for Australia’s graphite production is up”.
The Chief Economist takes the view that Australia has “moderate geological potential for graphite”.
To date, exploration has delineated the world’s seventh largest economic resources in Australia, mostly in flake form.
South Australia hosts 65% of Australia’s economically demonstrated graphite resources, followed by Queensland (17%) and Western Australia (18%).
There are no producing graphite projects in Australia yet, however there are a number of development projects underway.
The Uley mine in South Australia produced for a year in 2015, before closing — for the second time, after being made uneconomic in the 1990s by China’s dumping of graphite on the world market.
No vanadium production in Australia — yet
Australia does not currently produce vanadium, although it has 18% of the world’s reserves.
However, the report advises that the country does have advanced projects, which are pitched towards the energy storage market via vanadium redox flow batteries (VRFB).
“Production of vanadium in Australia may also include battery production for the local market,” it adds.
Technology Metals Australia (ASX: TMT) is investigating downstream processing in Australia, with the aim to produce VRFBs.
The company is looking at producing vanadium electrolyte from its proposed Gabanintha mine.
Australian Vanadium (ASX: AVL) is also assessing downstream processing to produce VRFBs for the energy storage market from its proposed mine.