Shared from the 5/30/2018 Financial Review eEdition

Northern Minerals eyes role in global EV boom


Northern Minerals’ Browns Range project in the East Kimberley region.

Eight years after first being conceived as a greenfields exploration discovery, Northern Minerals’ Browns Range heavy rare earths project is finally set to start production in a few weeks’ time.

When the project – located 160 kilometres south-east of Halls Creek in WA’s East Kimberley region – starts operations around June-end, it will become the first major non-Chinese production facility for dysprosium in the world.

The heavy rare earth element is a critical additive in permanent magnet motors that are used in wind turbines, industrial robotics, and increasingly in electric vehicles.

Currently, 98 per cent of the global supply of dysprosium comes from China.

‘‘Dysprosium has a 1500-tonnes-a-year market, which is growing based on the expectation of the uptake of electric vehicles,’’ Northern Minerals managing director George Bauk says.

The explorer identified the rare earths opportunity early, first drilling at the site in 2011. It completed a definitive feasibility study by March 2015, but the project stalled because economic fundamentals for the sector were not attractive at the time.

A decision was taken in April 2017 to first build a pilot plant with annual capacity of 72,000 tonnes of ore, that will produce 573 tonnes of total rare earth oxides per year, of which 50 tonnes will be dysprosium.

The pilot project, being constructed at 10 per cent of the potential full capacity, will operate for three years.

While this will make it a small player initially, Bauk says it was important to first demonstrate the security of supply outside of China.

‘‘The pilot plant is all about evaluating the technical and economic aspects of the project,’’ he says.

‘‘It is really important in industrial minerals to demonstrate that we can provide to the market a product within specification. We believe this process will give end-users more confidence in our capability.’’

The Browns Range mineralisation compares favourably to supplies from China, where lower grade is usually found within the top 15 metres of the surface.

On average, ore from China contains 500 parts per million of total rare earth oxide. Of this, 3-4 per cent, or about 20 parts per million, is dysprosium. To offset the lower grade, mining there involves the low-cost but environmentally damaging ‘‘in-situ leaching’’ process, using acid or alkaline solutions to dissolve the metals.

By comparison, the Browns Range ore is found in a hard rock setting that yields mineralisation with a grade averaging 6300 parts per million, of which 530 parts per million is dysprosium. It also uses traditional mining methods involving a processing plant and tailings.

The miner is looking to further improve the grade by implementing ore-sorting technology by the end of the year. It also wants to move into the downstream phase by implementing separation technology that will allow it to convert mixed rare earth carbonate into separated oxides.

‘‘Right now there is a limited market as to who can buy our product – mainly China with one or two clients outside,’’ Bauk says.

‘‘But with separated oxides, we can open up a significant number of markets around the world including US, Japan, Southeast Asia and Europe, and can also increase the number of potential customers in China.’’

Like other rare earths minerals, the electric vehicles market is expected to be the main volume driver for dysprosium.

Typically, every electric vehicle uses about 100 gms of dysprosium. That means by the time the industry size reaches 30 million EVs – expected by 2030 – demand for the mineral from the EV segment alone would double to 3000 tonnes.

With supply stockpiles believed to be decreasing, and with no major projects expected to come online in the next few years, analysts project a strong future for dysprosium, given its criticality in the EV evolution.

So far, dysprosium prices have not reflected this looming demand growth.

The rare earth element currently hovers around $US185 a kg, despite hitting a high of over $US400 a kg in 2013.

Based on the current price, each EV uses about $US18 worth of dysprosium, Bauk says.

‘‘People have told us that the market could afford up to $US100 worth of dysprosium in magnets for each car, without making a significant difference to the total price,’’ he says.

‘‘The key message is there is a significant opportunity for an increase in the price.’’

The short-term focus for Northern Minerals is to ensure an operation size that is sustainable and able to achieve positive cash flow at the current price, Bauk says, but the company is also working on longer-term targets.

It wants to reach full production of 300 tonnes of dysprosium, at which point it will account for 10 to 12 per cent of global capacity. It also wants to go downstream into producing separated oxides that will open up markets in the US, Southeast Asia and Europe.

‘‘We also want to evaluate the opportunity in light rare earths, so we can produce all of the key ingredients into the magnet industry,’’ Bauk says.

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