The big winners from the Australia-US critical minerals deal

The Australian mining sector was buzzing this week off the back of the critical minerals deal announced by US President Donald Trump and Australian Prime Minister Anthony Albanese in Washington D.C. on Monday. News of the deal filtered through on Tuesday morning local time, just hours ahead of the opening of Australia’s largest mining event, the International Mining and Resources Convention (IMARC) in Sydney, and it dominated discussions during the conference.Association of Mining and Exploration Companies CEO Warren Pearce told the conference the deal was much better than expected.“We’d hoped for a high-level agreement which would enable negotiations and hopefully lead to commercial contracts between American companies and Australian producers,” he said. “What we got was that, plus commitments of investment.”Two big winners While the deal boosted sentiment in the Australian critical minerals space, there were two big winners in Albanese’s announcement, Arafura Rare Earths (ASX: ARU) and a joint venture between Alcoa (NYSE: AA) and Sojitz Corp (TYO: 2768). It was a double win for Gina Rinehart-backed Arafura, which also received a letter of interest (LoI) from the Export-Import Bank of the United States (EXIM) for up to $300 million of funding for its $1.2 billion Nolans project in the Northern Territory.“I’ve never seen this level of cooperation between the tops of two governments working together in terms of matching supply and funding. It’s actually quite historic,” Arafura managing director Darryl Cuzzubbo told MINING.com from New York, where he had just completed 12 consecutive hours of investor meetings.“Essentially, through the agreement, Australia is giving somewhat preferential treatment to its critical minerals, to the US, and in return, the US is giving somewhat preferential treatment to funding and price mechanisms, particularly funding, both on the debt and the equity side.“And then secondly, the agreement spells out how the process can be sped up, which will allow projects to move into construction quicker than they otherwise would,” Cuzzubbo said. EXIM issued LoIs worth up to $2.2 billion to another six projects: Graphinex’s Esmeralda graphite project in Queensland, Northern Minerals’ (ASX: NTU) Browns Range rare earths project in Western Australia, La Trobe Magnesium’s (ASX: LMG) plant in Victoria, VHM’s (ASX: VHM) Goschen mineral sands and rare earths project in Victoria, RZ Resources’ Copi rare earths project in New South Wales and Sunrise Energy Metals’ (ASX: SRL) Syerston scandium project in NSW.Ready to buildThe Australian government announced a $100 million equity investment in Arafura’s Nolans project through Export Finance Australia.Arafura has already invested A$60 million ($39 million) in early works at Nolans.“We’re expecting to finalize our cornerstone equity by the end of this year, and that allows us to then finalize the rest of the funding early next year and then move into construction early next year,” Cuzzubbo said.Nolans has a three-year construction period and a two-year ramp-up phase. Once in full production, it will produce 4,440 tonnes per annum (tpa) of neodymium-praseodymium, 573tpa of mixed middle-heavy rare earths oxide and 5144,393tpa of phosphoric acid.“You’ve got Korea, the US and Germany trying to diversify away from China. At the same time, demand is doubling,” Cuzzubbo said.“Then you look at the rare earths supply pipeline, the number of projects that can move into construction, there’s not too many projects that are going to move into production in the next five to 10 years.”Gallium hopes boosted In August, Alcoa revealed it had signed a deal with Sojitz and the Japanese government to investigate the production of gallium as a by-product of alumina from its Wagerup refinery in WA.The Australian government announced up to $200 million in concessional equity finance for the project, which includes a right of offtake for the Australian government.The US government is also making an equity investment, though the amount is yet to be disclosed, with a right of offtake.Speaking on a conference call this week, Alcoa CEO William Oplinger said the Japanese would own 50% of the project, with the combination of the US, Australia and Alcoa to own the other half.Oplinger said negotiations were ongoing but conceded Alcoa may only end up with 5% ownership of the project.“The real strategic advantage of this deal is that it provides a supply chain outside of China for gallium that is around 10% of the world’s gallium market,” he said.“We are pushing to have first metal by 2026. We think we will be first to market outside of China on an aggressive schedule. The next step is that we need to get final documents signed, but we’re pushing to be able to extract gallium by 2026.”South32 (ASX: S32) has its own bauxite and alumina facilities near Alcoa’s in WA and is also considering gallium production.CEO Graham Kerr told the company’s annual general meeting in Perth on Thursday it had been more focused on working with the US government on its Hermosa project in Arizona and Ambler project in Alaska.“We do obviously have a list of different priorities and we’re ticking through those,” he said. “Gallium, we’ll continue to look at and study, but Alcoa are probably one step ahead of us on that.”Weiter zum vollständigen Artikel bei Mining.com Weiter zum vollständigen Artikel bei Mining.com