The 2020 New World Metals Conference held in Perth this week drove home a very clear, bullish message – it is no longer a matter of if, but when the green revolution is coming.
While China is still the world’s largest EV market and manufacturer, it is becoming increasingly clear that there is huge appetite for growth in the EV market and manufacturing industry in Europe. This year, EV sales in Europe outnumbered diesel sales for the first time.
The European Union’s Ambassador to Australia, His Excellency Dr Michael Pulch, appeared via video link to address a packed New World Metals conference room of investors and media at Perth’s Ritz Carlton hotel.
Dr Pulch’s message was both optimistic and pointed – Europe has the infrastructure, the appetite and the domestic market for the world’s second largest EV market. What it needs is to confirm a secure and ethical supply chain.
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The European Raw Materials Alliance was created on 3 September to secure this supply from resources-rich countries such as Australia. The small contingent of Australian members includes Hastings Technology Metals (ASX: HAS) and Core Lithium (ASX: CXO).
“The first mission of the alliance is to build an open strategic autonomy for the rare earths and magnet value chain, as they are essential for electric car and wind turbine manufacturing,” Dr Pulch said.
“The EU relies heavily on imports from countries such as China, from where we get 98% of our rare earth elements. It is therefore time to boost our capacity for primary raw materials.”
Dr Pulch said that for the EU, the key driver in demand for critical raw materials would be the transition to a climate neutral and digital economy – the long-term objectives of the €1 trillion European Green Deal.
In the EU alone, lithium demand was forecast to increase 60-fold and cobalt and dysprosium ten-fold.
Australia’s Defence Minister Linda Reynolds echoed much of Dr Pulch’s sentiment in her address to the conference.
As a strong supporter of the rare earths industry in Australia, she argued that more collaboration between government and industry was needed.
But she also said strong collaboration within industry would help establish both a secure and ethical critical minerals industry in Australia.
“Each F35, the joint strike fighter, includes 417kg of rare earths. And from that fact alone, it is clear that securing supplies of these critical technological components is a national security issue,” Ms Reynolds said.
The strong interest and forecast uptick in rare earths prices play perfectly into the strategy of WA-based rare earths developer Hastings Technology Metals, one of the companies presenting at New World Metals.
The $180 million company is busy finalising resource and design work for its world-class Yangibana neodymium and praseodymium (NdPr) project in WA’s Gascoyne region. NdPr is a key ingredient in the permanent magnets used in electric vehicles, medical equipment and wind turbines.
The company expects to begin construction at Yangibana in the first half of 2021.
Hastings’ general manager of engineering and operations readiness, Nick Holthouse, told the conference that Yangibana was fully permitted, had a low capital cost and boasted some of the highest NdPr grades in the world.
“We’ve just sent the drill rigs home and there are some updates to be done in regards to resources and reserves,” he said.
“(And) our offtake (line-up) is looking very good.”
Hastings is timing Yangibana’s development to hit favourable NdPr market conditions from 2023 onwards.
Its shares closed the week at 14.5¢.
Hastings’ peer, heavy rare earths producer Northern Minerals (ASX: NTU), has highlighted equally bullish market conditions, telling the ASX earlier this week about a sharp uptick in the dysprosium price.
The dysprosium price was hovering around US$244/kg in January and by early this month had risen to US$297/kg.
Northern Minerals has already demonstrated that it can produce dysprosium and terbium as a rare earths carbonate – also used in permanent magnets – at its Browns Range operation in the Kimberley and is working towards separating the rare earths carbonate into individual rare earth oxide products.
Northern Minerals shares closed at 3.6¢ last night.
Silica sand, the key component in high-tech glass required for solar panels, has also captured the interest of investors.
Speaking at New World Metals, VRX Silica (ASX: VRX) managing director Bruce Maluish said Asia was quickly running out of silica sand at a time when demand for high-quality glass-making sand was at a premium.
Asia has seen a boom in solar panel sales abroad as countries move toward green and zero-emissions economies. Together with tightening supplies and ethical concerns around Asian sand mining, the demand is driving prices up to a point where it can be profitably mined and exported out of Australia to Asian markets.
Mr Maluish also spelt out VRX’s strong focus on green operating credentials.
He said VRX would use a vegetation direct transfer mining method at its Arrowsmith and Muchea projects. The process involves digging up topsoil and transporting it to the area just mined – a simple and effective method to continuously rehabilitate while mining is happening.
“The whole mining process we have is built around the rehabilitation process,” Mr Maluish said.
“It is remarkably better than any other rehabilitation processes that have been trialled beforehand.”
Mr Maluish said that the ultimate goal, especially with the company’s Muchea project, located about 50km north of Perth, was to entice a glass maker to set up in WA and kickstart a new industry.
“There is going to be a silica sand sector in WA, mainly because the supply is becoming an issue in Asia,” he said.
“We’re at least two years ahead of anybody else developing these projects. The economics are very good and only going to improve.”
VRX is steadily progressing its approvals, having recently been granted mining leases for Muchea and Arrowsmith, and is cashed up following an oversubscribed $7 million capital raising last month that was priced at 18¢ a share.
VRX closed the week at 26.5¢ a share.