The announcement of 22 January 2024 re: breakthrough...

The announcement of 22 January 2024 re: breakthrough metallurgical results included the following dot point;

• the project has been selected to advance to the next phase of study and the company is engaged in discussion around funding and next steps.

We can make an educated guess that the next phase of study refers to Phase 2 under the EMBER program where DARPA had an option to award an additional US$9m for the follow-on phases. However, what is ARR alluding to in relation to discussions around funding and next steps?

I doubt that ARR were telegraphing the just completed placement so what other funding discussions could be underway? Its possible that the funding discussions need to be read in the light of the bigger picture of the US seeking to forge its own rare earth supply chain. For instance, the DoD awarded US$35m to MP Materials to build heavy rare earth separation capacity in the US at its Mountain Pass production site.

We need to be cognisant that globalisation is fracturing and that supply chains have to be re-established. The US DoD have a clear understanding that the capital requirements and operating cost of sourcing rare earths in the US is less material than losing access to rare earth supply altogether. For instance, the linked article refers to the requirement for MP Materials to bring HREE production costs on par with the international market within five years of production. Read another way, the price within the first five years is whatever it costs to produce a commercial supply of rare earth elements.

The linked article from the US DOD was dated 22 February 2022. At the date of publication DoD had already invested over US$100m in enhancing rare earth supply chain resiliency. Undoubtedly that number has only increased and who knows what they will be prepared to spend to guarantee supply that is immune from potential international sanctions.