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The Australian Government Steps into the Critical Minerals Supply Chain Ring

A recent monumental development within the mining and rare earths sectors is the Australian government’s financial endorsement of Arafura Rare Earths Limited‘s (ASX: ARU) rare earth mine and refinery project. This marks a significant step forward in the global pursuit of sustainable and secure Non-Chinese owned or operated sources for critical minerals. This move, underscored by an impressive A$840 million in loans and grants, signals a strong Australian governmental belief in the necessity and potential profitability of domestically sourced rare earth elements, vital for electric vehicle (EV) motors and renewable energy technologies.

Gina Rinehart’s Hancock Prospecting, alongside other private equity interests, has seen a notable appreciation in value following this announcement, illustrating the private sector’s growing confidence in rare earth ventures as a viable and lucrative investment avenue. This confidence is buoyed by government backing, which often acts as a catalyst for further private investment by demonstrating a commitment to the sector’s success and stability.

Australia’s strategic decision to support Arafura’s project, situated near Alice Springs, showcases its ambition to become a frontrunner in the production of rare earth elements, crucial for EVs and wind turbines. This initiative not only addresses the immediate financial hurdles faced by the mining industry but also aligns with broader goals of establishing Australia as a key player in the global supply chain for renewable energy technologies.

The involvement of figures like Gina Rinehart and Andrew Forrest, both of whom have substantial stakes in mining ventures, underscores a deeper shift towards mining as an investment that offers both substantial returns and strategic value in the context of the global green transition. Their investments in rare earths and the potential for vertical integration, as seen in the partnership between Forrest’s Hastings Technology Metals Limited (ASX: HAS) and Neo Performance Materials Inc. (TSX: NEO), highlight a keen understanding of the sector’s critical role in future technologies and energy solutions.

Australia’s proactive stance, contrasted with the more cautious approaches of other Western nations, illustrates a deep understanding of the strategic importance of rare earths and the necessity for domestic processing capabilities. This is not just about securing supply chains but also about capturing more value within the country, creating jobs, and fostering technological advancements in green energy and EV production.

Moreover, the broad financial and strategic implications of this government support extend beyond the immediate economic benefits. They underscore a pivotal moment for the global rare earths market, emphasizing the critical need for diversified, reliable sources of these essential materials. As tensions and competitions intensify on the international stage, Australia’s move represents a significant step towards greater independence and resilience in the face of geopolitical and market pressures.

In conclusion, this development is a clarion call to nations and investors alike to recognize the indispensable role of rare earths in the modern world. It is a testament to the vision and audacity of those like Rinehart and Forrest, who see beyond the immediate to the immense potential that rare earths hold for the future of technology, energy, and national security. As Australia forges ahead, it sets a compelling example for others to follow, highlighting the comprehensive strategy needed to fulfill the burgeoning demand for domestic sourcing of rare earth magnets, especially among European and American EV automotive OEMs.




Technology Metals Report (02.16.2024): Australia makes Nickel a ‘Critical’, Hastings Rare Earth Deal with Baotou, and Uranium Market Continues to Rise

Welcome to the latest issue of the Technology Metals Report (TMR), brought to you by the Critical Minerals Institute (CMI). In this edition, we compile the most impactful stories shared by our members over the past week, reflecting the dynamic and evolving nature of the critical minerals and technology metals industry. Among the key stories featured in this report are the Australian government’s decision to classify nickel as a ‘critical’ mineral, entitling it to support from a significant stimulus fund, and the emerging competitive landscape in Africa as Western countries endeavor to reduce China’s dominance in the critical minerals sector, particularly in cobalt production.

This week’s report also highlights various strategic collaborations and developments, including Hastings Technology Metals Ltd.’s (ASX: HAS) offtake agreement with Baotou Sky Rock for the Yangibana Project, and the U.S. Department of Energy’s funding allocation for projects aimed at extracting rare earth elements and critical minerals from coal-based resources. Furthermore, we cover the notable surge in uranium prices to a 17-year high and the strategic expansion plans by Energy Fuels Inc., alongside LG Energy Solution’s efforts to secure lithium supply through a second agreement with WesCEF. Lastly, we touch on the advancements in battery technology, such as the pilot production of battery-grade purified phosphoric acid by First Phosphate Corp. and the formation of the China All-Solid-State Battery Collaborative Innovation Platform (CASIP) by leading Chinese battery and automobile manufacturers, including CATL and BYD, aiming to propel the development of all-solid-state batteries.

Australia classifies nickel as a ‘critical’ mineral to protect ailing industry (February 16, 2024, Source) — The Australian government has recognized nickel as a critical mineral, making it eligible for support from a A$6 billion stimulus fund due to concerns over the nickel industry’s decline, exacerbated by a supply glut from Indonesia and falling EV demand. This move aims to protect thousands of jobs and key producers like IGO Limited (ASX: IGO) and BHP Group (ASX: BHP | NYSE: BHP) from the impacts of falling nickel prices, which have dropped 43% in the past year. BHP has announced a significant impairment charge on its Nickel West division, highlighting the industry’s dire situation. The government’s intervention, including potential low-interest loans and grants, is a response to the challenges posed by cheaper Indonesian nickel, driven by Chinese investment and a ban on nickel ore exports from Indonesia. This situation has led to reduced investment and operational suspensions in Australia’s nickel sector, threatening its survival and the country’s ambition to develop alternative supply chains to China.

West challenges China’s critical minerals hold on Africa (February 16, 2024, Source) — In a significant development in the global minerals market, China’s CMOC Group has surpassed Glencore PLC (LSE: GLEN) to become the leading producer of cobalt, primarily through its operations at the Kisanfu mine in the Democratic Republic of Congo. This surge in production has created one of the largest cobalt surpluses in recent years, despite a drastic fall in cobalt prices. Western countries, recognizing the strategic importance of cobalt and other critical minerals for clean energy and military applications, are challenging China’s dominance in Africa. They are particularly focused on the rich copper and cobalt reserves in the Copperbelt region, which spans Zambia and the Congo. Western entities, including companies backed by prominent investors like Bill Gates and Jeff Bezos, are venturing into this region, despite political and infrastructural challenges. The U.S. and other Western nations are supporting infrastructure and energy projects to facilitate mining and reduce logistical costs. Efforts to de-risk mining in the Copperbelt include upgrading rail lines and developing solar power projects. Meanwhile, the Congolese government is asserting more control over its mineral resources, revising deals with Chinese companies and aiming to formalize artisanal mining to secure a fairer share of the revenue from its mineral wealth. This marks a pivotal shift in the geopolitics of critical minerals, highlighting the strategic competition between the West and China over Africa’s mineral resources.

Hastings And Baotou Sky Rock Sign Binding Term Sheet For Integrated Tolling And Offtake Arrangement (February 16, 2024, Source) — Hastings Technology Metals Ltd. (ASX: HAS) has entered into a binding term sheet with Baotou Sky Rock Rare Earth New Material Co., Ltd for an integrated tolling and offtake arrangement concerning the Yangibana Project’s rare earth concentrate. This arrangement allows Hastings to toll treat its concentrate in China, transforming it into separated rare earth oxides, and sell them, improving Hastings’ revenue and cash flows beyond previous models. The agreement, lasting seven years with a possible five-year extension, guarantees a minimum of 10,000tpa of concentrate processing. This deal complements Hastings’ existing contract with thyssenkrupp and is part of negotiations with other potential customers for further offtake agreements. The updated financial model reflecting this integrated approach will support the project’s funding, showcasing significantly enhanced project economics, including a notable increase in post-tax NPV, IRR, and life of mine free cashflow, while reducing the capital payback period.

The Up and Coming Uranium Boom (February 15, 2024, Source) — In an interview with Hallgarten + Company’s Christopher Ecclestone and the Critical Minerals Institute‘s (CMI) Tracy Weslosky, the discussion centered around the uranium market’s burgeoning prospects. Ecclestone expressed skepticism regarding the effectiveness of a US ban on Russian uranium, suggesting that Russian uranium could be rerouted through Kazakhstan. He highlighted the challenges Western countries might face in replacing Russian uranium sources. Ecclestone described the uranium market as vibrant, contrasting it with the stagnation in battery metals, and emphasized uranium’s unique investment appeal. He advised investors to focus on proven assets from previous booms, cautioning against investing in new, unproven fields. Ecclestone also critiqued the hype around thorium and small modular nuclear reactors, advocating for their potential but also indicating a need for realism. Lastly, he mentioned Argentina and the Athabasca region as key areas for uranium investment, highlighting the importance of geographic and asset-based considerations in the uranium industry.

DOE Awards $17M To Conduct FEED Studies for Production of Rare Earth Elements, Critical Minerals (February 15, 2024, Source) — The U.S. Department of Energy (DOE) is allocating over $17 million to three projects for extracting rare earth elements and critical minerals from coal-based resources. Funded by the Bipartisan Infrastructure Law, this initiative aligns with President Biden’s Investing in America agenda to diminish reliance on foreign critical minerals vital for clean energy technologies, including solar panels and electric vehicles. Leveraging America’s substantial coal reserves and waste, the projects aim to foster a self-reliant supply chain, enhance national security, support environmental sustainability, and create quality jobs. This strategic move towards utilizing domestic resources for critical mineral production underscores a significant push towards energy independence, aligning economic revitalization with clean energy advancements.

India to Capitalise on Coveted ‘Critical Minerals Club’ to Acquire Overseas Assets (February 15, 2024, Source) — India is strategically enhancing its position in the global critical minerals market by focusing on acquiring overseas assets through collaborations with Western countries and leveraging partnerships within the US-led Minerals Security Partnership (MSP). This international coalition aims to ensure reliable critical mineral supply chains amidst global disruptions. India, which joined the MSP in 2023, is encouraging public sector undertakings (PSUs) like Coal India Limited, NLC India Ltd., and NTPC Ltd. to secure strategic assets in lithium, cobalt, and graphite to bolster its green energy transition and manufacturing capabilities in electronics, including electric vehicles and semiconductors. Deals have been made, notably with Australia and countries in South America and Africa, to secure these essential materials. The initiative reflects India’s ambition to become self-reliant in critical minerals crucial for the technology-driven world economy, particularly as it aims to accelerate its green energy transition and indigenous manufacturing.

Uranium Prices at a 17-Year High, Energy Fuels Rapidly Increases Uranium Production in 2024 (February 14, 2024, Source) — Uranium prices have surged to a 17-year high at $106/lb, driven by reduced supply and increased demand, with Energy Fuels Inc. (NYSE American: UUUU | TSX: EFR) poised to benefit significantly. The uranium market’s optimism is further bolstered by a commitment from over 20 countries at COP28 to triple nuclear energy capacity by 2050, highlighting a significant shift towards nuclear energy to meet clean energy goals. Additionally, 118 governments have pledged to triple renewable energy capacity by 2030. Energy Fuels, the leading uranium producer in the USA, has initiated production at three mines, targeting a significant increase in uranium output to over 2 million lbs by 2025, alongside exploring additional production avenues. With uranium’s strategic importance in the clean energy transition underscored, Energy Fuels is leveraging favorable market conditions and long-term growth prospects, underlined by its ambitious expansion and production plans.

LG Energy signs 2nd agreement with WesCEF to expand lithium supply (February 13, 2024, Source) — LG Energy Solution from South Korea and Wesfarmers Chemicals, Energy, and Fertilisers (WesCEF) from Australia have signed their second agreement to expand LG’s lithium supply chain. WesCEF will supply LG with 85,000 tons of lithium concentrate, expected to yield about 11,000 tons of lithium hydroxide, sourced from the Mt. Holland project in Western Australia, set to start in early 2025. This agreement builds on a previous deal for 50,000 tons of lithium hydroxide in 2022. Additionally, LG Energy is focusing on expanding its presence in India’s electric vehicle market, already leading in supplying battery cells to e-scooter makers. In 2023, LG secured a deal with Chile’s SQM for 100,000 tons of lithium for seven years, highlighting its efforts to bolster its supply chain amidst increasing lithium demand for rechargeable batteries.

First Phosphate Corp. Completes Pilot Production of LFP Battery-Grade Purified Phosphoric Acid (February 13, 2024, Source) — First Phosphate Corp. (CSE: PHOS) announced the successful completion of a pilot project that converts high purity phosphate concentrate into battery-grade purified phosphoric acid (PPA) for the lithium iron phosphate (LFP) battery industry. In collaboration with Prayon Technologies SA, the company has transformed phosphate concentrate into merchant grade phosphoric acid and then into PPA, conforming to food and battery-grade specifications. This achievement enables the production of LFP cathode active material and battery cells from a North American source of battery-grade PPA. First Phosphate aims to integrate its mining operations in Quebec, Canada, into the supply chains of LFP battery producers, emphasizing high purity, responsible production, and a low carbon footprint.

CATL, BYD, others unite in China for solid-state battery breakthrough (February 12, 2024, Source) — In a bold move to spearhead the electric vehicle (EV) revolution, China’s leading battery and automobile manufacturers, including CATL and BYD, have joined forces under the government-led China All-Solid-State Battery Collaborative Innovation Platform (CASIP). Established in January, CASIP aims to commercialize all-solid-state batteries by 2030, enhancing EV performance with greater energy density and safety. This initiative, uniting industry rivals and leveraging AI technology, seeks to position China at the forefront of the next-generation battery technology, challenging current leaders like Japan and Western countries. With the participation of major companies and state support, China is poised to transform the EV market and maintain its global leadership in automotive battery innovation.

Investor.News Critical Minerals Media Coverage:

Investor.News Critical Minerals Videos:

  • February 13, 2024 – Tom Drivas on the 3 world-renowned rare earths experts on Appia’s Critical Minerals Advisory Committee https://bit.ly/49bVMNj

Critical Minerals IN8.Pro Member News Releases:

  • February 15, 2024 – First Phosphate and Integrals Power sign Joint Development Agreement to Produce Environmentally Compliant Battery Grade Iron III Phosphate Precursor for the LFP Battery Industry https://bit.ly/3uDdslR
  • February 14, 2024 – Imperial Mining Announces Effective Date of New Trading Symbols after TSXV Approves of Name Change to Scandium Canada Ltd. https://bit.ly/48hRylO
  • February 13, 2024 – Western Uranium & Vanadium Mining Operations Update https://bit.ly/4bvDKHr
  • February 13, 2024 – Donald Swartz, CEO American Rare Earths, to speak at “The Future Panel” https://bit.ly/3UF2MO5
  • February 13, 2024 – First Phosphate Corp. Completes Pilot Production of LFP Battery-Grade Purified Phosphoric Acid https://bit.ly/3P51pF5
  • February 13, 2024 – Defense Metals Updates Metallurgical Test Work and Preliminary Feasibility Study Progress for its Wicheeda Rare Earth Elements Project https://bit.ly/3HYiV9R
  • February 13, 2024 – Power Nickel extends resource mineralization at Nisk Main https://bit.ly/49aJCE9
  • February 12, 2024 – F3 Hits 66.8% U3O8 over 0.5m within 42.4% over 2.0m at JR https://bit.ly/3HUa6Oa



Hastings Technology Metals Poised to Emerge as a Major Player in the Rare Earths Market

With all the talk of on-shoring, near-shoring, friend-shoring, or whatever is the popular term this week, it’s easy to lose sight of the fact that most commodities are global in nature. I know I’ve become fixated on North American solutions when it comes to critical materials and rare earths but that’s a somewhat myopic view. There are plenty of countries out there, near and far, that we consider our friends and who may or may not have cost advantages that overcome any incremental transportation fees to compete in our domestic market. Thus, we shouldn’t fall into the trap of thinking that just because the U.S. Inflation Reduction Act, and other similar legislation, look to limit parts of the world from contributing to “made at home” solutions, as perhaps, North American miners and explorers aren’t necessarily the best option.

One such example is Hastings Technology Metals Limited (ASX: HAS | OTCPK: HSRMF), a Company engaged in the exploration, development, and mining of rare earths and specialty metals in Western Australia. This Perth-based company is primed to become the world’s next producer of neodymium and praseodymium concentrate (NdPr). Hastings’ flagship Yangibana Project (which comprises a mine and beneficiation plant at the Yangibana site, and a hydrometallurgical plant at Onslow), in the Gascoyne and Pilbara regions of Western Australia, contains one of the most highly valued NdPr deposits in the world with NdPr:TREO ratio of up to 52%. The Project is permitted for long-life production, with offtake contracts signed and debt financing in an advanced stage. The first product to ship is targeted for H1/2025. Hastings also owns and operates the Brockman project, Australia’s largest heavy rare earths deposit, near Halls Creek in the Kimberley.

Earlier this month, the Company increased the mineral reserves at the Yangibana Project and it now has JORC-compliant Proved and Probable Ore Reserves of 20.93 million tonnes at 0.90% TREO which includes a 37% component NdPr, making it one of the largest and highest-grade rare earths projects in the world. The company has made significant progress in advancing the project over the past few years, with a Pre-Feasibility Study completed in 2018 and a Definitive Feasibility Study (DFS) completed in 2020. The DFS confirmed that Yangibana is a highly viable project, with low operating costs and strong economic returns.

But where I find this story gets interesting is all the various financial dealings that Hastings is involved in. More than half of ~A$400 million of total debt financing required for the Yangibana Project has been secured from the Northern Australia Infrastructure Facility (NAIF), which recently increased its financial support to A$220 million with a 12½-year tenor. Hastings also completed a Two-Tranche Placement to raise A$110 million in new equity to progress the Yangibana Project in October 2022. Nothing unusual about these two deals but here’s the one that intrigues me. On October 14, 2022, the Company announced the completion of the acquisition of an approximate 19.9% shareholding in Neo Performance Materials Inc. (TSX: NEO) for an aggregate price of C$134.6 million. The acquisition was funded by a A$150 million cornerstone investment in Hastings by Wyloo Metals.

It would appear that the management team at Hastings does not doubt that this mine is moving forward. The NEO acquisition provides Hastings with a strategic stake in NEO and exposure to the global downstream processing of rare earth materials into magnets, critical components of environmentally friendly products such as electric vehicles and wind turbines. Additionally in October (seemingly a very busy month for the Company), Hastings signed a non-binding offtake Memorandum of Understanding (MOU) with Solvay, a French-based global leader in Materials, Chemicals, and Solutions. The deal outlines the intent of both parties to enter into a binding commercial offtake agreement for the supply of Mixed Rare Earth Carbonate (MREC). Under the agreement, the supply of an initial 2,500 tonnes per annum of MREC will be sent from Hastings’ Yangibana Project to Solvay’s plant in La Rochelle, France. Deals like this might explain why NAIF was comfortable increasing its financial support for the project.

Lastly, it’s worth mentioning that Hastings has implemented rigorous environmental and social sustainability standards to ensure that its operations are in line with international best practices. This commitment and transparency were recognized with an exceptional ESG risk rating by Morningstar Sustainalytics with Hastings ranked 4th out of 159 companies rated in the Diversified Metals Mining subindustry category and placed 9th out of 193 companies in the Diversified Metals industry category. Hastings also undertook an EcoVadis assessment and achieved 68/100 which placed the company in the top 5% of companies assessed. This has not only helped the company attract investment from socially responsible investors but also win recognition for its efforts.

Hastings Technology Metals looks ready to take on the rare earths supply market and become a force to be reckoned with. The Company had A$172.2 million in cash and equivalents as of December 31, 2022 and seemingly no issues raising additional capital as needed. Agreements are in place for ~70% of production for the first 10 years and there is still plenty of blue-sky exploration upside to further expand the resource at Yangibana. It appears I need to start looking past my own backyard for resource opportunities that are world-class.




Neo Performance and Hastings – Will Wonders Never Cease?

The term “Holy Moley” is seldom, if ever, used by us but our powers of speech are severely hampered by trying to digest the implications of the latest deal in the rare earths space. Neo Performance Materials Inc. (TSX: NEO) has now succeeded in flooring us twice in two weeks.

First, there was its announcement that it was acquiring a rare earths elements (REE) mining project in Greenland and making all the right noises as if it was going to move that forward (and if anyone can, it would be them). And then we have the shock announcement that Hastings Technology Metals Ltd (ASX: HAS), the sometime REE developer in Australia, is to acquire a 22.1% strategic shareholding in Neo Performance Materials. We need not remind investors that Neo is not only a leading global rare earths processing and advanced permanent magnets producer, but it is THE leading global rare earths processing and advanced permanent magnets producer outside China, with a string of plants around the world and most particularly its Silmet plant in Estonia, which is a cornerstone of the monazite sands processing strategy of Energy Fuels Inc. (NYSE: UUUU | TSX: EFR).

The market cap of Neo, on the eve of this announcement, was CAD$605 million. The acquisition has been agreed at a price of CAD$15.00 per Neo share, representing a total consideration of CAD$135 million. Bargain basement, indeed, in our view.

According to the release, the acquisition is intended to be funded by an AUD$150 million strategic investment in Hastings by Wyloo Metals through the issuance of secured, redeemable, exchangeable notes.

Interestingly, the stake is not a de novo investment by Hastings but rather the purchase of a stake from an affiliate of Oaktree Capital Management. Those with long memories will recall that this stake dates back to the ancient history of when Molycorp went spectacularly bust just under ten years ago and Neo was reconstituted bigger and better out of the ruins. The stake being vended by Oaktree consists of 8,974,127 common shares in Neo, representing a 22.1% shareholding.

The proposed acquisition provides Hastings (and Wyloo) with a strategic stake in Neo and exposure to the global downstream processing of rare earth materials into magnets.

We have written about Hastings’ Yangibana deposit so long ago that we must fight through a veil of cobwebs to find what we wrote. The company claims that the project remains the key priority for Hastings, “with good progress being made on funding initiatives and other key milestones.” But they would say that, wouldn’t they?!

The acquisition of the Neo stake, and in particular the Wyloo investment, are subject to shareholder approval (50% voting threshold). All this begs the question as to whether Canada (or indirectly the US) will allow the crown-jewel (indeed the Queen on the REE chessboard) to pass into the hands of Wyloo Metals.