Looking strong, page-259

Try again for ALL text

Concerns about rare earths supply have been raised again after the Chinese government released a draft bill to strengthen control of the group of critical minerals that are so crucial for the manufacture of high tech products such as electric cars and mobile phones.

Heavier rare earth elements such as neodymium and praseodymium (NdPr) are used in the permanent magnets required for the motors in electric vehicles and wind turbines.

Under the bill, companies will be required to follow control laws and regulations for the export and import of rare earths.

This is widely seen as an extension of its export control law, which was aimed prohibiting exports of the nation’s cutting-edge technologies and products that could be diverted to military use.

Public opinion is currently being sought on the new bill, which is expected to be implemented as early as this year.

NikkeiAsia quoted an executive at a foreign company operating in Japan as saying that there were concerns that China would use the new rule to counter a US move to build a network of partners to hem in China on the tech front and elsewhere.

However, the Chinese state-run Xinhua News Agency claims the draft regulations prohibit the purchase and sale of rare earth products that are exploited and extracted illegally.

Given that China accounts for more than 60 per cent of the world’s production and that it had in 2010 restricted exports of rare earths to Japan over a territorial dispute, it is not surprising that consumers are concerned.

Major Chinese producer Southern Rare Earth has already raised prices for heavy rare earths even as rare earth permanent magnet plants expand output since the second half of 2020 to meet demand.

New resources and supply chain security

The need to ensure supplies have led the US and Australia to work together towards creating an alternative supply chain.

Additionally, the outgoing Trump administration had in 2018 sought to increase the resilience of its rare earths supply chain while the incoming Biden administration is likely to maintain a strong interest due to its commitment to strong environmental policy.

Likewise, Japan has flagged that it is looking to reduce its reliance on Chinese imports from 58 per cent to 50 per cent by 2025.

Australian rare earth opportunity

The renewed concerns about rare earths supply chain security highlights the efforts that a number of Australian companies have taken to develop alternate sources.

Arafura Resources (ASX:ARU) has been progressing offtake and financing agreements for its development ready Nolans NdPr project near Alice Springs.

A feasibility study with extensive flow sheet pilot testing is already in place for Nolans and potential customers have already qualified Arafura’s product range.

The company has also secured all Northern Territory and Federal government environmental approvals along with a Native Title agreement with traditional owners.

Nolans has a 33-year mine life on a reserve of 29.5 million tonnes grading 2.9 per cent total rare earth oxides (TREO). High demand and valuable NdPr makes up 26.4 per cent of the rare earths content