Australian investors, miners central as US rare earths race picks up
Jacob GreberUnited States correspondent
Jun 15, 2020 – 11.59pm
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Washington | A US-based rare earth mining investor backed by Australian money is finalising a deal with Arafura Resources to ship raw materials from the Northern Territory to Colorado for a pilot project that won a regulatory green light last week.
In a development which piles pressure on alternative projects that bypass China when establishing supplies of critical minerals - including one from Lynas, which is currently on hold - New York-based USA Rare Earth chief executive Pini Althaus said he had held talks with Arafura in recent days on volumes and timing.
Rare earths are used in everything from military weapons to smart phones and even COVID-19 ventilators. Trevor Collens
"As soon as they're ready to start sending it, we're ready to take it," Mr Althaus told
The Australian Financial Review on Monday (AEST). He said that should happen within "a couple of months".
USA Rare Earth - which Mr Althaus said was "about 50 per cent" owned by Australian shareholders - is vying to become the first commercial-scale producer on US soil of vital rare earth metals, used in everything from military weapons to smart phones and even COVID-19 ventilators.
The developments involving Australian investors and companies such as
Lynas - which was one of two chosen by the Pentagon in April to develop initial business plans for a processing plant in Texas - is being closely watched by both sides of Congress. The US is eager to establish supply of critical minerals that doesn't rely on China.
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Several members of Congress are pushing for explicit language to be included in this year's
annual defence appropriation bill about tax concessions and direct investment in such projects. That bill is set to be finalised in coming weeks.
While Lynas's plans have faced resistance from America-first politicians because of its ties to Malaysia, where it has a $1 billion processing plant, Mr Althaus said the company he led was "theoretically a year-and-a-half to two years" ahead of any competitor in establishing a viable US-based alternative to China.
"We're the only company outside of China that has demonstrated high-purity separation of rare earths" in the US, he said in an interview.
"We're a couple of years ahead of anyone else. We've done the work."
Mr Althaus questioned whether Lynas could deliver faster supply to the US than USA Rare Earth, which aims to develop a rare earth and lithium mine known as Round Top in West Texas with its US-listed partner Texas Mineral Resources.
"I'm happy to go on the record and state that Lynas will not be sending materials at the present time from Western Australia to Blue Line in Texas. It will still be sent to Malaysia."
"So you still have that issue of concern that members of Congress expressed when the cornerstone grant was given to Lynas and MP Materials," he said.
The
Financial Review reported last month that the Pentagon's granting of two "phase one" development deals with Lynas and another rare earth hopeful, MP Materials - which has heavy Chinese backing -
faces a backlash from powerful establishment Republican foreign policy hawks led by the 2016 presidential candidate Senator Ted Cruz of Texas.
Lynas announced on April 22 that it had received advice from the Pentagon of the department's intention to award the contract to the company.
On May 22, Lynas said the phase-one process - which involves developing engineering business plans for a processing plant in Texas with its partner Blue Line - was "on hold".
Crushed ore at a mine run by MP Materials, in California. Washington has a problem with the fact that the ore is sent to China for processing. Bloomberg
Two weeks ago Australia's ambassador to the US Arthur Sinodinos told the
Financial Reviewhe remained hopeful for Lynas and was pushing the company's case with members of Congress and the Trump administration.
Mr Sinodinos said "there was just a misunderstanding" among some people in Congress who didn't understand the Lynas plant would actually be in Texas.
The race to establish a viable, profitable and secure supply of rare earths in the US involving Australian investment, resources and know-how intensified after Canberra and Washington formalised an agreement in November to develop each other's critical minerals sector.That followed a 2018 deal between President Donald Trump and Prime Minister Scott Morrison to co-operate on strategic minerals exploration, extraction and research.
Mr Althaus's USA Rare Earth and Arafura announced their tie-up in December, saying it would see heavy rare earth concentrate from Northern Territory's Nolans Bore neodymium-praseodymium deposit sent to the American company's pilot processing plan in Colorado.
From there Arafura would sell the rare earth oxides to customers.
"Hopefully it helps their investor base... because they've got a viable place to start sending their materials outside of China," Mr Althaus said.
"If we can take the heavies off their hand and provide [finished oxides] for them it'll alleviate them setting up a rare earth processing facility of their own."
Mr Althaus said the benefit to USA Rare Earth of taking Arafura's stock would be to demonstrate and develop its ability to process materials from multiple sources, rather than a processing method that can only take stock from one mine.
Lynas' Mt Weld mine in Western Australia. Washington has problems with its links to Malaysia. Trevor Collens
USA Rare Earth and Texas Mineral Resources plan to invest $US360 million ($526 million) to develop their "Round Top" project southeast of El Paso.
Mr Althaus said the mine was expected to produce $US8 billion in output. A third of this would be rare earth metals, a third lithium for the burgeoning electric vehicle industry, and the rest aluminium and industrial sulfates.
He said the company has also bought a North Carolina neo-magnet manufacturing company formerly owned by Hitachi.
"We'll control our supply chain from beginning to end, from mine to magnet, and no other company has done that outside of China," he said.
USA Rare Earth said last week that it has received required permits for its pilot processing plant in Wheat Ridge, Colorado.
“This is an important step towards USA Rare Earth’s objective to build the first rare earth and critical minerals processing facility outside China and to bring the Round Top project into full commercial production," Mr Althaus said in a statement.
"Our Colorado pilot plant will have the ability to produce the full range of high-purity, separated rare earths as well as other critical minerals such as lithium."
(20min delay)