Securing rare earth supply is now near the top of the defence agenda in Washington with US President Donald Trump signing an executive order declaring a national emergency and calling for a boost in domestic production.
Not only does Australia have an operating rare earth mine — Mt Weld in Western Australia owned by Lynas Corporation (ASX: LYC) — but it has a bunch of rare earth companies either with pilot plants or close to development.
At present the US has only one mine — Mountain Pass in California — but that operation has to send its concentrate to China for processing because the US has no downstream rare earth processing capability.
At present, the US imports more than 80% of its rare earth needs directly from China.
The 17 rare earth elements are critical to the US defence industry’s manufacturing of missiles and munitions, hypersonic weapons, and radiation-hardened electronics.
Mr Trump’s order states that the country’s “undue reliance on critical minerals, in processed or unprocessed form, constitutes and unusual and extraordinary threat which has its source in substantial part outside the United States, to the national security, foreign policy, and economy of the United States”.
Mr Trump has ordered officials to investigate means of generating domestic production including government grants, tariffs, quotas or other import restrictions on China.
China has used rare earths as political weapon
One senior senator on the Armed Services Committee, Republican Dan Sullivan of Alaska, called China’s dominance of rare earths “outrageous”.
He cited China’s use in 2010 of rare earths as a political weapon.
Chinese customs officials back then halted all shipments to Japan of rare earth metals after the Japanese coast guard detained a Chinese vessel fishing in waters controlled by Tokyo but claimed by China.
Chinese customs refused to allow any rare earths bound for Japan to be loaded on to cargo vessels, with a subsequent long standoff sending Japanese industries that relied on those metals for manufacturing into panic mode. The panic spread wider as rare earth prices quadrupled.
Clearly, Washington fears that China could withhold supplies to the US at any time.
It is also important to keep in mind that with the “Made in China 2025” policy, Beijing is pushing for more downstream processing in technology industries to be based in China, which means its own rare earth requirements will keep growing, leaving less for export.
Australian REE players
In April, Lynas announced it had been advised of the US Department of Defence’s intention to award it a phase one contract for a US based heavy rare earth separation facility.
Subsequently, on 22 May, Lynas advised that this process was placed on hold and Lynas is working to resolve those issues.
In its most recent quarterly report Lynas said it had progressed with the detailed design and engineering for the heavy rare earths plant and remains committed to developing a separation facility and providing the only source of separated heavy rare earths outside China.
The only other Australian company with a foot in the US rare earths door is American Rare Earths (ASX: ARR) with its La Paz project in Arizona.
Last month, this company reported on trench sampling that had struck rare earths, including scandium, with the company now planning follow-up drilling.
Vital Metals (ASX: VML) is at least in neighbouring territory with its Nechalacho rare earths project located at Yellowknife in the Northwest Territories of Canada.
The company is planning a processing and separating plant at Saskatoon with Saskatchewan provincial government and Saskatchewan Research Council last month signing a deal to provide C$31 million (A$32.5 million) for that plant.
Explorer RareX (ASX: REE) is hoping to make its mark in Australia’s rare earths space with its Cummins Range project in WA.
Earlier this week, the explorer reported “spectacular” thick and “ultra high-grade” assays from drilling at the project.
Assays returned 41m at 4% total rare earth oxides (TREO) from 29m, 36m at 4.6% TREO from surface, including an ultra-high-grade zone of 3m at 25.1% TREO.
Dysprosium metal produced
This week Australian Strategic Materials (ASX: ASM), with its South Korean partner, successfully produced high purity dysprosium metal at Ziron Technology Corporation’s laboratory.
Ferro-dysprosium alloy is key in the manufacture of neodymium-iron-boron (NdFeB) magnets.
Australian Strategic Materials’ pilot plant in South Korea has previously produced titanium and neodymium from Dubbo samples.
And then came news last month from Hastings Technology Metals (ASX: HAS) of some encouraging results in Western Australia, with drilling confirming high-grade rare earths extensions to the Frasers open pit at Yangibana.
In the June quarter, Hastings signed a binding master agreement with German automotive supplier Schaeffler Technologies.
In September Arafura Resources (ASX: ARU) said its customers had confirmed its rare earth oxide products were well within specifications.
The company said this validation paves the way for further commercial negotiations.
Arafura, which is developing the Nolans project in the Northern Territory, has been working with offtake partners in Europe, China and Japan.
Northern Minerals to re-open pilot plant
Northern Minerals (ASX: NTU) has already produced heavy rare earths from its pilot plant at Browns Range in Western Australia.
The plant was closed due to the COVID-19 crisis, but the company has now announced it will re-start the plant and work on developing further processing technologies.
Australian-owned projects in Africa
There are two Australian-owned projects in Africa.
Ionic Rare Earths (ASX: IXR) recently increased its ownership of the Makuutu rare earths project in Uganda to 46%. It has the right to earn up to 60%.
The project has an indicated and inferred resource of 78.6 million tonnes at 840 parts per million TREO.
Ionic expects to submit a scoping study to the Uganda Government by the end of this month.
Meanwhile, Peak Resources (ASX: PEK) continues to negotiate with the Tanzanian Government to clear the way for its Ngualla project
Serious money needed for development
Australia’s Federal Government in Canberra has made some progress in working to forge a strategic metals alliance with Washington, but the companies planning to produce in Australia need some serious money to attend to the lack of security when it comes to who processes their planned output.
The amounts are far beyond the placement or SPP level.
China now produces 80% of the world’s neodymium/praseodymium (NdPr) output, a combination of rare earth metals vital to the manufacture of high strength permanent magnets.
These magnets are used in the drivetrains of electric vehicles so the expected EV revolution will require growing supplies from rare earth miners.
Every EV drivetrain requires up to 2kg of NdPr oxide — but a three-megawatt direct drive wind turbine uses 600kg. NdPr is even in your air-conditioning unit on the office or home wall.
These magnets are three times stronger, and one-tenth the size of, conventional magnets.