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.