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US pledges $1.28b for ASX rare earths stocks

Peter KerResources reporter

Mar 21, 2024 – 2.33pm

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The US government has signalled its desire to lend a further $1.28 billion to ASX-listed rare earths companies in a bid to break China’s stranglehold on the metals needed for decarbonisation and defence applications.

The US Export Import Bank (US EXIM) has given early stage “letters of interest” to Meteoric Resources and Australian Strategic Materials (ASM), which suggest it may lend them money at concessional rates in future.

ASM was given a non-binding pledge of $US600 million ($909 million) to help advance plans for a mine near Dubbo in NSW, while Meteoric was given a non-binding pledge for $US250 million ($379 million) to help it develop a rare earths project in Brazil.

Neither loan is certain to be issued and both would be tied to US companies winning contracts on the rare earths projects if they go ahead.

For example, when US EXIM loaned money to Gina Rinehart’s Roy Hill iron ore project in 2013, it was designed to help truck manufacturer Caterpillar win fleet contracts on the project.

The letters of interest add to the funding support that Washington and Canberra have already doled out to ASX-listed critical minerals stocks in a bid to create non-Chinese supply chains in sectors where China typically produces between 70 per cent and 100 per cent of global supply.

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US Department of Defence has awarded a $US258 million grant to Lynas to build a rare earths refinery in Texas, while AustralianSuper-backed graphite producer Syrah has also won US government money to build a coated spherical graphite factory in Louisiana.

Australia’s equivalent of US EXIM – Export Finance Australia – issued a $US533 million loan to Northern Territory rare earths aspirant Arafura Resources last week.

Australian lithium developer Liontown also got $230 million of loans from federal agencies last week.

The biggest taxpayer contribution to date was Export Finance Australia’s $1.25 billion loan to Iluka Resources to build a new rare earths refinery near Eneabba in WA, and more taxpayer funds may be needed to cover a cost blowout on the project.

The government funding is particularly well-timed for pre-revenue developers like Meteoric, Arafura and Liontown, given prices for lithium and rare earths have slumped over the past year.

The US government money will also provide a credibility boost for both Meteoric and ASM, whose projects involve geology different to that mined by Australia’s incumbent rare earths producer Lynas.

ASM’s Dubbo project was previously spruiked as a zirconium project, but the rising demand for rare earths has ensured the project is now more focused on other elements in the Dubbo ore such as terbium, dysprosium, neodymium and praseodymium.

ASM already has a metalisation plant in South Korea which performs the final step in the rare earths value chain; turning processed rare earths oxides into pure metallic elements for use in making semiconductors or industrial magnets.

Development of the Dubbo mine would allow ASM to become vertically integrated rather than relying on feedstock from rare earths producers in China or Vietnam.

ASM has previously said it would take a final investment decision on the Dubbo mine in December 2024.

Resources minister Madeleine King has this year visited both Korea and Washington and welcomed the support for the Dubbo project.

“This is great news and shows the results of the work I have been doing with our partners in the US to attract investment and secure supply chains of rare earths and critical minerals,” she said.

“Projects like this create jobs, help us meet our carbon reduction targets and our shared security needs.”

Meteoric wants to produce rare earths from ionic clays in Brazil’s famous mining district of Minas Gerais, rather than the sort of hard rock that Lynas has mined in Western Australia for more than a decade.

Meteoric is expected to take a final investment decision in 2025.

Support for Meteoric is a boost for high-profile critical minerals investor Tolga Kumova, whose private investment vehicle Kitara was listed as Meteoric’s biggest shareholder in the company’s most recent annual report.

Mr Kumova was previously the chief executive of Syrah and is also exploring for lithium in the Pilbara through ASX-listed Industrial Minerals.