Is Australia's role in critical supply chains as ever - we supply materials, they do value adding

By Peter Roberts

Some years into Australia’s newfound awareness of critical mineral supply chains and their importance to electrification and new technologies, have things changed all that much?

Mostly, despite the hype of our being a battery or other materials ‘superpower’, Australia still supplies the raw materials and others do the economic value adding in their home markets where the economic benefits such as employment, skills and technology development happen.

There are green shoots but also…consider a MOU just signed between the Federation of Korean Industries and the Australia-Korea Business Council which secures new high-quality critical mineral resources through co-operation with Australian partners.

Yes, it secures mineral resources, that’s all.

Other examples include Lynas Rare Earths, the world’s largest producer of critical minerals neodymium and praseodymium (NdPr) critical to manufacturing electric motors and all sorts of high tech products.

Lynas actually produces the valuable metals in Malaysia. Yes, they have brought back some processing home to a new plant at Kalgoorlie – but this merely returns the most environmentally dubious and radioactive part of the process from Malaysia which essentially required they be offshored.

Lynas is also building a heavy and a light rare earths processing plant in the United States, supported by the well funded Inflation Reduction Act.

Others that mine locally, refine overseas include:

Australian Strategic Materials is developing its Dubbo, NSW project to produce rare earths and has established a metal refinery in Korea. The Export-Import Bank of the United States recently backed the project suggesting more ore will be sent to the US for processing
Hastings Technology Metals was granted a $140 million loan from the Northern Australia Infrastructure Facility for its Yangibana project in Western Australia. Hastings has signed offtake agreements, with Qiandong Rare Earths, China Rare Earth Holdings, and Baotou Sky Rock Rare Earth, to sell 6,000 tonnes of Mixed Rare Earths Carbonate (MREC) per annum
And China’s Shenghe Resources has signed a memorandum of understanding (MoU) with ASX-listed Rare X to access production from the Cummins Range Rare Earths Project in the East Kimberly region of Western Australia.

Meanwhile China continues to flood world markets for critical materials forcing established western producers to the wall.

In July overproduction in Indonesia encouraged by China saw world prices for nickel plunge, forcing BHP to place its West Australian nickel division Nickel West, previously written down in value to zero, into care and maintenance.

Admittedly there are green shoots with Iluka Resources building a rare earths refinery at Eneabba in Western Australia (pictured) supported by a $1.25 billion loan under the federal government’s Critical Minerals Facility.

And Arafura Resurces is conducting a pre-feasibility study (PFS) of a potential Phase 2 expansion of rare earths processing capacity at its giant Nolans project in the Northern Territory.

Arafura and Ilkua’s are both big projects, but our biggest producer and the biggest outside China, Lynas Rare Earths, continues to export economic value adding.

Only time will tell but I wonder if our national commitment to value adding the critical minerals value chain is Australia centric enough, and whether it is big enough to make a difference in a world dominated by the Inflation Reduction Act and subsidies and policies elsewhere.

Picture: Iluka Resources Eneabba refinery

Further reading:
Lynas to extend range of heavy rare earths
US debt funding backs Dubbo rare earths project
Iluka progresses critical rare earths refinery
Yangibana rare earths project to be WA’s second
Arafura mulls major increase in rare earths processing capacity
Rare earths producer attracts Chinese interest
BHP suspends WA nickel production ‘temporarily’
Arafura mulls major increase in rare earths processing capacity

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