Elk Creek one more step toward niobium independence
Six weeks, then six months: that’s the game plan for American’s only primary niobium project, according to recent report in the Omaha World-Herald, the newspaper taking a great interest in this project seeing it’s located in Nebraska. Six weeks to do the drilling — the decks have been cleared for that with drill permits still in place and to take place as soon as the equipment can be organised at the site — and then the rest of the year to work on the feasibility study. Then the steel industry — which needs niobium to make high-strength, low alloy steel (known in the industry as HSLA) — has one more source from which to buy this critical metal.
And then there are the familiar faces: the Elk Creek niobium deposit in southeast Nebraska, itself; the original owner which did the extensive exploration work that puts the project in the advanced stage (Molycorp and its predecessor) and — to square the circle, so to speak — the man who is running the project, former Molycorp CEO Mark Smith, now in the top job at NioCorp Developments (TSXV: NB | OTCQX: NIOBF).
At present, the United States imports 100% of its niobium needs, as does almost every steel maker in the world, as the metal is mined only in Brazil (85% of global output) and Canada. So the move by NioCorp to accelerate development of Elk Creek is a welcome step to independence in niobium for the U.S. and diversity of supply internationally especially since there has not been a new niobium mine opened since 1976.
After the feasibility study is completed, NioCorp will clearly have the option of finding an off-take partner as part of process of raising development funds. This would be following in the steps of another company advancing to niobium output, Australia’s Alkane Resources (ASX: ALK | OTCQX: ANLKY); the latter has an off-take agreement with Treibacher Industrie AG, an Austrian metal alloy producer which has been in the business since 1916. Alkane is somewhat different a proposition to NioCorp: the Australian company’s project is not a primary niobium one, that metal taking a (slightly) back seat to zirconium and rare earths. Alkane plans to be in production in 2016 at the rate of 3,000 tonnes a year of niobium — in a world market now estimate to be around 80,000 tonnes a year.
Elk Creek in production would be music to the ears of anyone in Washington; in the view taken by American strategic analysts, niobium is a critical metal on par with the likes of tungsten, yttrium and tin. The Japanese and South Koreans would be interested, too. A consortium from those countries has taken a stake in the world’s largest producer, Companhia Brasileira de Metalurgie e Mineracao (usually just referred to as CBMM). Some time ago, Australian Geoscience averaged out all the critical metals list (mainly the ones from Britain, the U.S., Japan and South Korea) and found niobium was No. 7 in terms of criticality.
Drilling began at Elk Creek in the 1970s, so there’s quite a pile of geological data. Molycorp decided in the early 1990s to set aside Elk Creek in terms of corporate priorities so it could focus soley on the Mountain Pass rare earth project.
Apart from CBMM, the other producers are Anglo American (also in Brazil) and a subsidiary of IAMGOLD which has a mine in Canada. Niobium is an alloying agent; when added to steel it makes the latter stronger, lighter in weight and highly resistant to corrosion. Niobium-laced steel also has a higher melting point as a consequence. The lightness thing is why 23% of niobium goes into steel for auto bodies. Pipes for transporting oil and gas are the next most important use for niobium in steel. Demand for the metal has been forecast to double by 2020 as steel makers in developing countries, notably China, move to lift the amount of niobium opera tonne of steel.
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