What are rare earths?
Wednesday, December 7th, 2022
Gina Rinehart’s Hancock Prospecting recently made a $60 million play for Arafura’s Rare Earths’ Nolans project. What’s driving this move?
Rinehart has set her sights on rare earths in a big way. Hancock Prospecting has pledged half of Arafura’s target price of $120 million for its Northern Territory mining venture, giving Rinehart a leg up in Australia’s rare earth space.
This investment alone would be impressive, but Hancock shows no signs of slowing down as it swats down its competing offers for ownership of Warrego, home of the promising West Erregulla gas resource in the Perth Basin.
Hancock’s ever-expanding foray into key mining projects is nothing new, but it’s the focus on rare earth that has generated chatter regarding long-term benefits and the distinction between critical minerals.
One key reason for Rinehart’s sudden investment in Australia’s rare earth market is a severe lack of Australian representation in the market right now. Two of the largest rare earth investors in the Western Hemisphere are Australia’s Lynas Rare Earths Limited (LYC) and the US’s MP Materials Corp (MP).
Rare earth elements include lanthanum, cerium, praseodymium, neodymium, promethium, samarium, europium, gadolinium, terbium, dysprosium, holmium, erbium, thulium, ytterbium, lutetium, scandium and yttrium.
Rare earth elements are primarily used in the manufacture of electric vehicles (EVs) and permanent magnets. The importance of the transition to EVs and cleaner energy is clear, and that is reflected in market prices for battery components and rare earth elements.
China owns almost 40 per cent of the world’s rare earth reserves, followed by Vietnam and Brazil, while Australia sits at sixth place with only 3.5 per cent. These smaller numbers may be the reason behind Hancock’s quiet $21 million investment in Brazilian Rare Earths.
But despite its relatively small reserves, Australia has still managed to nab a production value of 17,000 tonnes of rare earth as of 2020. As demand for rare earth elements grows, local production becomes more valuable.
Australia is looking to become a key player in the global sustainability market, but mining industry businesses lack the internal funding to fully utilise the rare earth reserves at their disposal.
Australian chief scientist Dr Cathy Foley spoke at the Rare Earth Conference in November, calling on leading industry businesses to invest in rare earths as an emerging market.
“If businesses stepped up to the plate, the government side of the equation could be properly focused on fundamental research,” Foley said. “That would put us in a much better position to solve the significant technological problems that remain.
“If you have a culture where industry is reaching into the research sector and investing in the science, the process of discovery and problem-solving becomes more integrated with real-world requirements.
“The demand for rare earth elements is expected to grow by up to seven times by 2040, driven by the demand boom of permanent magnets, electric vehicles and offshore turbines.
“If Australia is to reap the benefits of this boom, increase skilled employment and lift complexity in our economy, we need to move up the value chain.
“This mining opportunity is simply inseparable from the global climate ambition.”
Australia’s inclusion of critical minerals into its diet has been a healthy one. The Federal Government’s Resources and Energy Quarterly reveals the continued success of green mineral production.
Production of materials like zinc, lithium, copper and nickel place Australia high on the list of global production leaders. This sustained presence as an industry icon could be the incentive needed to expand to rare earth elements.
A combination of government backing, high market prices and business interest has finally given rare earths the attention they needs For Australia to grow its global market presence and take a bigger swing at decarbonisation, mining projects like Arafura are paramount in maintaining strides in rare earth production.