Arafura Resources
Arafura Resources derives its name from the Arafura Sea, the body of water which lies to Australia’s north between the Northern Territory and New Guinea. The company has a number of assets, including:
- Nolans rare earths-phosphate-uranium project.
- Mt Porter and Kurinelli gold projects.
- Hammer Hill base metal joint venture with Mithril Resources Ltd and BHP Billiton.
- Jervois magnetite-vanadium project.
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Arufa well-placed to take advantage of China's tightening of rare earths supply
Australian junior miner Arafura Resources, which is developing the Nolans phosphate hosted rare earths deposit in the country's Northern Territory, is making great play of a draft report submitted by China's Central Ministry of Industry and Information Technology calling for a significant tightening of China's rare earths export market.
Currently China dominates, producing about 95% (some put it at 98%) of global supply, and any tightening could have a dramatic effect on industries which use rare earth elements which are incorporated into many modern technological devices, including superconductors, high-flux magnets, electronic polishers, refining catalysts and hybrid car components. With a huge increase in hybrid car production likely in the years ahead, control of the rare earths market may be vital to global advances in this type of technology.
Arafura says that the Chinese draft report, entitled Rare Earths Industry development Plan 2009‐2015, has been submitted to the China State Council for review and implementation in 2010, and outlines plans to restrict Chinese administration of rare earth quotas, totally banning the export of some rare earths and consolidating a large number of Chinese rare earth facilities.
Arafura's managing director, Alistair Stephens, believes the imposition of these dramatic controls is a reflection of the vital strategic nature of rare earths, a reflection of China's domination in the rare earths industry at present, and recognition that China's resource supply, while large, does not meet internal demand growth particularly in the medium term.
Rare earths are vital materials in energy efficiency and environmental pollutant reduction schemes. They are a key material for the hybrid car and electric vehicle industry and essential for energy efficient lights, plasma and LCD televisions, efficient wind turbines, and automobile catalytic converters, said Mr Stephens.
If China is to make inroads on its environmental standards and reduce pollution levels, then rare earths play a pivotal role. This is a signal that China's rare earths are for its own development, and that current recoverable reserves may not meet their own needs. The centralisation and strict regulation on rare earths production and industry consolidation will also concentrate the market structure, placing more power on price structures with fewer agents, said Mr Stephens.
The report indicates that China's current 35,000 tonnes per annum export quota for rare earths (REO) will reduce over the next six years, though no quantification of the degree of reduction is provided.
The report outlines plans to impose a total ban on the export of some rare earths materials. These include Dysprosium (Dy), Terbium (Tb) and Yttrium (Yt). Dysprosium is a critical material used in the enhancement of magnets in the electric systems of hybrid and electric vehicles.
The report suggests China should shut down 80 rare earth separation and metal smelting facilities reducing the number of participants from 100 to just 20, to consolidate the industry and improve efficiency. Each of these 20 remaining separation and metal producers would have to produce at least 8,000 tonnes a year REO to maintain a license to operate.
There are relatively few major rare earths projects under way around the world which makes Arafura's Nolans project, which could be on stream by 2012, particularly well placed to take advantage of any tightening of Chinese supplies.
Arafura reckons Nolans is enriched in high value rare earths and has a 40% revenue advantage compared with Chinese hard‐rock resources. It is being designed to produce 20,000 tonnes per year of rare earth oxides at a recovery rate of at least 80% and an expected mine life of 30 years. The project will also produce 160,000 tonne per year of technical grade phosphoric acid and a small by‐product of uranium (150 tonnes), another competitive advantage to any other rare earths project.
Other major deposits include Mountain Pass in the U.S. which is being rehabilitated by Molycorp Minerals (effectively a new privately owned company formed by Resource Capital Funds, Pegasus Partners IV, LP, The Goldman Sachs Group, Inc., Traxys North America LLC and Carint Group LLC which acquired the property, and the Molycorp name, from Chevron Mining late last year.) Molycorp has begun preparations for renewed mining at Mountain Pass which is located about 50 miles from Las Vegas in California's Mojave Desert. The company, which is currently producing approximately four million pounds of Rare Earth products per year, announced earlier this year that it was restarting production at Mountain Pass with plans to ramp up annual production to 40 million pounds of Rare Earth products over a three-year period.
In Canada, Great Western Minerals Group (GWMG) - (TSXV:GMG) - has the big, high grade Hoidas Lake rare earths phosphate hosted deposit 50 miles north of Uranium City, as well as a number of other Canadian rare earths plays and also the Steenkampskraal former rare earths mine in South Africa which is being rehabilitated.
Rare earth metals are also associated with some uranium ores and recently Japan's Sumitomo entered a deal with Kazatomprom, the Kazakh state uranium miner and nuclear company, to set up a refinery to extract rare earths.
China has been fighting hard to maintain its virtual rare earths global production monopoly, but its moves to cut back exports - also seen recently in a reduction in its quotas to supply Japanese consumers to an amount barely sufficient for demand from Toyota and Honda alone - is seeing a return to new, or rehabilitated, developments as seen above. But, with such supply dominance, China can also control the price and there are fears that to maintain its position China could always release sufficient to the markets at a low enough price to make some of these new developments economically unattractive. Depending on which way China moves the rare earths sector, which is facing rapidly growing demand, could become one of the hottest ones in mining for an increasingly strategic commodity.
These new regulations mean that Arafura's 100%‐owned Nolans Project is placed perfectly to meet the increasing global demands of rare earths which are vital for new technology that help deliver energy efficient and pollution reduction schemes.
Mineweb is a web-based international mining publication focusing on mining financial and corporate news and comment.
Other Arafura Resources news
- East China Mineral Exploration & Development Bureau increases stake Aussie rare earth producer Arafura to 25pct
2009-09-18 - Arafura Resources snags A$24m funding deal with East China Exploration for rare earths project
2009-03-13
