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Rare Earth Elements Tug-of- War- Why U.S. Is Looking Towards Australia

  • May 16, 2020 05:21 PM AEST
  • Team Kalkine
Rare Earth Elements Tug-of- War- Why U.S. Is Looking Towards Australia

Rare earth metals are drawing investor’s attention in the wake of its limited and controlled supply from China and a hoard across the globe to secure rare earth metals supply amid its large application in the military and energy technology.

To Know More, Do Read: China’s Dominance Over the Rare Earth Space Winged ASX-Listed Lynas Corporation.

Currently, China is the largest supplier of rare earth elements, and the troublesome trade between the United States and China is prompting the U.S to secure the pipeline of rare earth elements in order to avoid any future bottlenecks.

In order to cut its dependency on China and hammer China’s dominancy in the space, the United States is now turning its attention towards the development of its local rare earth mines and other nations with strong rare earth resources like Australia.

To Know More, Do Read: Australia Signs Critical Minerals Agreement with the U.S; Lynas and Northern Minerals to Lead the Front?

In a bid to revive the domestic supply chain for rare earth elements, the United States Senator Ted Cruz has proposed legislation aimed at providing tax rebate and other benefits to the local rare earth mine developers and manufactures.

Once approved, the legislation would allow local rare earth mining companies to deduct from their tax bill the costs of building rare earth mines along with the cost of building processing facilities and equipment purchases.

The proposed legislation would also allow electronics manufacturers to deduct 200 per cent of the cost associated with the purchase of U.S rare earth products. As per some media sources, the bill would also entail the US defence body to use the local rare earth products in all weaponry.

While there has been some similar legislation proposed previously, the United States local supply chain would take some time to meet the domestic demand, which in turn, is prompting the Pentagon to fund companies outside China, and the ASX-listed Lynas Corporation (ASX:LYC) is one of the major companies outside China to receive such funding.

How Could Australia Position Itself in The Race?

Australia, is among one of the world’s principal producers of several major mineral commodities such as iron ore, nickel, rutile, zircon, coal, copper, lead, and gold, hosts large resources of mineral; however, rare earth elements across the continent is currently being produced as a secondary product from major mineral production.

Considering the Australian expertise in mining and processing, one could infer that Australia could take a leap in the market for rare earth elements as well, but there lies significant challenges ahead.

For example, insufficient knowledge of critical minerals in Australian deposits, along with the absence of a definitive study concerning the rare earth elements behaviour during metallurgical processing poses a great challenge for the Australian miners.

Apart from that, the limited number of geological studies dedicated to assessing and facilitating the discovery of critical mineral resources is also a challenge along with the need for new mining technology and services to economically extract those elements.

  • Australia’s Potential Critical Mineral Resources

The Geoscience Australia assesses that here is a correspondingly large variety of mineral resources that are known to contain different critical minerals across the continent; however, the economic geology of most of them yet remains poorly understood.

Geoscience Australia estimates that at present, there are a number of deposits that have reported critical minerals in mineral resources under the JORC code while some are not JORC classified but are based on reasonable geological and geochemical data.

For example, as per the Geoscience Australia and independent publications such as Mudd & Jowitt, 2016; Mudd et al., 2014; Werner et al., 2017b, prospects which hold rare earth elements across the continent are as below:

While some of the above deposits are modest in size compared to their international counterpart, for example, the Mount Weld prospect in contrast to the Bayan Obo deposit in China, others are large resources, but not recoverable using current extraction technologies and commodity prices, for example, Olympic Dam prospect.

Furthermore, Geoscience Australia suggests that the existing base metal mines and mineral resources could be important sources of numerous critical minerals ahead, as many critical minerals are extracted from base metal concentrates at smelters or refineries.

The Critical Minerals Strategy

The critical minerals strategy, which points at promoting the local critical minerals sector and downstream processing, providing incentives or innovation to lower costs and increase competitiveness, and connecting critical minerals projects with infrastructure development, aims to place the continent as a world leader in the exploration, extraction, production and processing of critical minerals.

Some of the strategic actions under the critical mineral’s strategy are as below:

  • Identification of critical minerals prospect

Austrade, along with the support from Geoscience Australia, has developed a report on potential critical minerals mining projects and investment.

  • Taking it Internationally

Austrade is delivering various international roadshows in order to promote investments in the local critical minerals prospects, and under the strategic plan, the Export Finance Australia would provide with the finance required to expand the Australian businesses across the international front.

  • Seeding Exploration

In order to boost the resource exploration across the continent, the Government has taken a $100.5 million Exploring for the Future plans, which would assist explorers to target new mineralisation by imaging from the deepest roots of mineral systems through to the surface.

  • Joint Efforts

The $218 million MinEx Cooperative Research Centre is a 10-year research program aimed at developing and deploying the next generation of drilling technology and is a collaboration between industry, Government, and research organisations.

  • Australian Minerals

Australia Minerals, which is a collaboration of the federal, state and Northern Territory Government geoscience agencies is a unique group, which brings together all of the country’s chief geologists, and it is presently increasing investment in exploration, especially in greenfield areas.

  • Assisting With Approvals and Regulatory Help

The Major Projects Facilitation Agency has been created to provide a sole-entry point for chief project proponents looking for personalised information and facilitation of their regulatory approval requirements.

In a nutshell, the United States is planning to secure supply chain for rare earth elements outside China in the wake of bilateral dispute, and while the U.S. is talking and proposing measures to support the local mines and players, it is also looking towards Australia amid its strong mining records and large resources.

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