Critical minerals miners soar asgovernment loans flow
Shares in several critical mineralscompanies have soared after winning loans from the federal government as partof a push to make Australia a global leader in the massive global shift toclean energy sources and electric vehicles.
Inwhat was marketed as the federal government’s first cash splash in a rareearths sector, Hastings Technology Metals said it had secured a $140 millionloan from the Northern Australia Infrastructure Facility (NAIF), paving the wayfor the development of one of Western Australia’s next major rare earthsprojects.
Theconditional loan would form part of an up to $400 million debt funding packagefor the Yangibana project in WA’s Gascoyne region, which would make itAustralia’s second rare earths producer alongside major Lynas.
It came as the government revealed the first loans under itsrecently established Critical Minerals Facility worth a total of $239 millionhave been provided to graphite miners EcoGraf and Renascor Resources. Shares inthe latter soared 20.8 per cent to 29¢, while EcoGraf jumped 7.8 per cent to69¢.
HastingsTechnology Metals jumped more than 10 per cent in early trade before closing up7.7 per cent higher at 28¢.
At atime of booming global demand for smartphones, electric vehicles and othertechnologies, this commitment ... positions Australia strongly into the futurein the critical minerals sector,” Trade, Tourism and Investment Minister DanTehan said.
‘Amazingrare earths opportunity’
HastingsTechnology Metals chairman Charles Lew said the NAIF’s commitment would enablethe company to finalise the funding for Yangibana and move into full-scaleconstruction throughout 2022 before first production by 2024. The companyrequires total debt of $300 million-400 million to fund the project, whichincludes a mine and plant at Yangibana and a hydro metallurgical plant nearOnslow on the coast, with a final investment decision expected in “comingmonths”.
“Yangibanais an amazing rare earths opportunity that will supply the world’s highestcomposition neodymium and praseodymium concentrate to tier-one customers inEurope and Asia,” Mr Lew said.
CanaccordGenuity analyst Reg Spencer said the 12.5-year, $140 million loan was largerthan expected and followed the company’s securing of in-principle support fromexport credit agencies in Germany and Finland, and commercial banks.
“Weassume project capital costs of $590 million ... compared to [the company’s]prior $449 million plus 15 per cent contingency estimate in July 2020,” hesaid, noting the company also held $96 million in cash as at December.
“Ourassumption reflects current industry inflationary pressures, with finalisation of project capex (and updated project economic assessment) expected in the next month.“
Accordingto the company, the Yangibana project will meet about 6 per cent to 8 per centof global demand for the rare earth minerals neodymium and praseodymium used tomake permanent magnets, and benefit from the global boom in electric vehicles and decarbonisation of the energy sector.
Theserare earths, known as NdPr, account for around a third of global rare earthdemand by volume but more than 80 per cent by value at spot prices as themarket remains in deficit amid strong EV demand, according to analysts atMacquarie.
Even after China, the world’s biggest supplier of rare earths,this week unveiled higher than expected rare-earth production quotas for 2022 –lifting mining and refining quotas 20 per cent to 100.8 kilotonnes and 97.2kilotonnes, respectively – the analysts said demand would continue to dwarfsupply.
“Therare earth quota for the calendar year 2022 was higher than we had expected,however we still believe the NdPr market remains in deficit despite theincreased supply,” the analysts said.
OnMonday, Lynas said it had secured the “Ministerial Statement” for itsKalgoorlie rare earth processing facility under WA’s Environmental ProtectionAct, with the conditions for construction and operation in line proposals bythe company. Further approvals are still required, however.
NAIF,which has committed $3.2 billion to projects in northern Australia, said theYangibana project will create up to 750 jobs and more than $1.25 billion in“public benefit”.
“Thisproject will help meet the growing global demand for critical minerals,supporting Australia’s position as a world-leading producer,” Agriculture andNorthern Australia Minister David Littleproud said.
