Australia Signs Critical Minerals Agreement with the U.S; Lynas and Northern Minerals to Lead the Front?

Australia sits at the top of abundant mineral reserves, which makes the country a significant contributor to the global commodity supply chains. Australia’s mining and resource sector makes over 8 per cent of the economy, and Australia contains the most diverse and ample mineral and energy reserves across the globe.

The industrial production cycle, which remained slow during the September 2019 quarter, is now picking up slight pace, which would eventually lead to a rise in demand for the minerals across the globe, especially for critical minerals such as of rare-earth metals, lithium, cobalt, etc.

While the forecasts of industry experts over critical mineral such as lithium, rare earth metals, etc., are indicating a surge in demand; the bottleneck in the supply chain is hurting the countries with little to no resources for such strategic metals such as the United States.

While the United States is leading the energy space with its large domestic production of oil amid its higher shale production, the resources of critical metals are limited in the nation, which is worrying the countries like the United States and others who are in either a trade issue or are in a diplomacy issue with China, which is currently dominating the critical minerals space.

To know, how the United States is topping the energy sector, Do Read: Aramco IPO To Be Larger Than Alibaba’s Iconic Offering? Or Oil Dynamics Could Play a Spoilsport?

While the lithium supply chain in the global market is strong with Australia and Chile leading the frontier, the worries over the bottlenecks in the supply chain of countries with limited resources of lithium such as the United States is now worrying them.

Also Read: Australia Vs Chile- A Race for the Lithium Crown

Apart from that, the increased footprints of the Chinese firms in the Australian lithium industry is also giving jolts to the United States amid the ongoing bilateral trade dispute, which is further prompting it to establish good relations with resource-rich countries like Australia.

To know more about China’s stance and increasing footprints of China in the Australian lithium industry, Do Read: China – A Strategic Investor In The Rapidly Growing Lithium Industry

In the status quo, Australia’s minerals agency- GeoScience Australia and its counterpart in the United States- the United States Geological Survey (or USGS) inked an agreement to better quantify the global supply of critical minerals.

The agreement between both the nations could be a landmark for countries in Europe, who have been trying to boost the supply chain of critical minerals, currently dominated by China.

Presently, China controls nearly over half of the global supply chain of critical minerals such as rare earth metals, and Australia and its large rare earth players outside china such as Lynas Corporation Limited (ASX: LYC) could be the most viable alternative for the countries such as the United States to secure the supply and avoid any future bottlenecks.

To know how China is leading the critical mineral space, and how the Australian miners such as Lynas Corporation could benefit out of it, Do Read: China’s Dominance Over The Rare Earth Space Boosts ASX-listed Lynas Corporation

The Australian Minister for Resource- Matt Canavan mentioned in a statement that the United States need rare earth metals for its domestic industrial demand, and Australia’s copious supply could be reliable. The news of the agreement broke post the visit of the Australian prime minister-Scott Morrison to the United States to build on an initial agreement signed by the nations a year ago.

Northern Minerals- Australia’s rare earth developer Northern Mineral Limited (ASX: NTU) would take a seat among the delegations from Australia to Washington to oversee the agreement, which would focus on mapping the potential critical mineral resources and developing of big data to further analyse the demand and supply dynamics of the rare earth metals.

Why Are Critical Minerals Important?

An electric vehicle typically contains 100g of dysprosium (or Dy), which is anticipated by Northern Minerals to witness an increase in demand to over 3,500 tonnes per annum by 2030, and China currently controls over 98% of Dy production, which is further raising a strong interest in the United States for new, sustainable sources of supply.

The Browns Range East Kimberley project of the company in Western Australia, which is a massive geological feature covering 1,500 km square, most of which have not been explored effectively. The Browns Range East Kimberley prospect could be a viable alternative for nations that are currently hunting alternative sources of critical minerals.

Progress Across the Browns Range Prospect in Australia

NTU inked an offtake agreement with thyssenkrupp Materials Trading GmbH for all mixed heavy rare earth carbonate from the Brows Range with an option for thyssenkrupp to participate in the potential full-scale project.

In August 2019, NTU announced the commencement of a Scoping Study to investigate separation technology on intermediate mixed rare earth materials produced at Browns Range to separate the rare earth oxides for the direct sale to the permanent magnet makers across the globe.

In the status quo, Norther Minerals announced that the testwork for separation of dysprosium oxide and terbium oxide at the K-Tech’s Florida laboratory (Stage 1) has been successful. The Stage 1 continuous ion exchange would now be followed by the Stage 2 continuous ion chromatography, where the initial separation by the group would commence.

For now, the first phase of Stage 2 continuous ion chromatography has also been successful, and the company would continue the testwork to optimise this stage of the separation and collect sufficient group rare earth samples to proceed to Stage 3, which would involve the individual separation and purification process.

Apart from making inroads to achieve a direct sale in the market, i.e., the downstream processing, NTU is also significantly investing in the source (the Browns Range) of the rare earth minerals.

Exploration at the Browns Range Dome

Post the discovery of the Dazzler prospect in mid-2018, NTU has been assessing and focussing on the area around the prospect, including an area (unconformity-related deposit) between the Dazzler and Iceman prospect.

The geologists of the company first identified the unconformity-related deposit as a mineralised zone and target post the geochemistry results, and in 2018, NTU encountered mineralisation in the Gardiner Sandstone, which is just above the unconformity deposit.

The company anticipates the mineralisation at the Sandstone to be structurally controlled with northwest-trending structures with significant potential mineralisation.

NTU now intends to drill a 4,000m RC (or reverse circulation), in which, about 60 per cent would be focusing on infill and step-out drilling at the ambit West and Cyclops deposits.

In a nutshell, China’s dominance in the rare earth market along with the leaching methods of extraction, which is responsible for contaminating the waterbed (climate issue), is now prompting critical minerals resources deficit nations, such as the United States, to join hand with Australia- a nation abundant with resources.

Australian rare earth mineral miners are getting set to take advantage of the current market conditions and change in rare earth market dynamics to take advantage, and miners like Lynas, Northern Minerals, etc., could act further to support the global rare earth market.

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