Nothing middle-of-the-road about Australia’s midstream processing

Upstream opportunities are extremely prevalent within Australia’s mining sector, as a nation well-endowed with minerals and natural resources and a long history of exploration. 

Yet, in its latest ‘Australian Critical Minerals Prospectus’, the federal government highlights the country’s burgeoning and advancing critical mineral processing capabilities. 

The prospectus outlines how midstream processing is touted as an increasingly important yet overlooked cog in the country’s minerals and metals supply chain.

A collaborative and supportive ecosystem in addition to a highly educated workforce means there are significant reasons to further develop Australia’s midstream processing capabilities. 

The non-exhaustive list of advanced midstream projects in the prospectus have been chosen by the government as they exemplify just how crucial this aspect of the market is across the critical minerals supply chain.

Burgeoning battery market

One such example is Greenstone Resources (ASX:GSR) and Conico (ASX:CNJ) which have helped Australia dip its toes into the battery precursor production sector, via its Mt Thirsty Cobalt-Nickel Joint Venture Project in Western Australia. 

The company’s Mt Thirsty project aims to become the first fully integrated cathode precursor producer. 

According to the Future Battery Industries Cooperative Research Centre, battery precursor production is considered a ‘crucial’ step to add value to the battery industry. At the same time, there are currently no facilities for this in Australia. 

In April 2023, the Mt Thirsty JV partners appointed a team of consultants to undertake a Scoping Study. While largely complete, the study assesses several optimisations, including the adoption of HPAL and production of Precursor Cathode Active Material (pCAM), a high-value product made of cobalt, nickel, and manganese. 

Precursor Cathode Active Material is an essential constituent used in the manufacturing of high-performance lithium-ion batteries and typically receives a 50% pricing premium over intermediatory products such as MHP and MSP given its added value and use and demand in application for battery manufacturing.

Comparable HPAL projects typically receive cobalt and nickel recoveries of 90% and 92%, respectively.

The project contains the Mt Thirsty cobalt-nickel oxide deposit with a reported mineral resource of 66.2 million tonnes @ 0.06% cobalt; 0.43% nickel and 0.45%.

In the Western Australian government’s ‘2023 Battery and Critical Minerals Strategy’, it is highlighted that nearly $9 billion has been invested since 2015 in projects manufacturing battery chemicals, such as nickel and cobalt, as well as separate rare earth oxides. 

Growing importance of rare earths 

According to the South Australian government’s Department for Energy and Mining rare earth elements (REE) are also ‘vitally important’ in modern technologies due to their unique electrical, magnetic, catalytic, metallurgical, nuclear, and luminescent properties. 

Geoscience Australia reports in 2018 Australia was marked sixth in the world’s economic resources of rare earths, totalling 3% of the world total. 

Iluka Resources (ASX:ILU) is one company that helps contribute to that 3%, as it aims to build a fully integrated rare earths refinery through its Eneabba Project in Western Australia. 

Eneabba will produce individual rare earth oxides initially from concentrate produced at Iluka’s 1 million tonne rare earths Eneabba stockpile. Subsequently, it will be fed by rare earths from the company’s Australian operations and from third parties, including the Northern Minerals’ (ASX:NTU) Browns Range Project. 

On 15 December 2023, the company announced the Front End Engineering and Design (FEED) for Eneabba will be finalised in Q1 2024, as the company and Fluor Australia are currently reviewing value optimisation measures and operational efficiency improvements. 

The company forecasts Eneabba to produce between 17,500tpa and 23,000tpa rare earths oxide. 

Eneabba is being funded through the help of the Australian government’s Critical Mineral Facility. 

In late October 2023, the Albanese government announced a $2 billion expansion in critical minerals financing, which took the government’s investments in Australian resources to $6 billion, helping companies develop projects such as Iluka’s Eneabba.

Meanwhile, New South Wales is an emerging state to host critical minerals projects in midstream processing stages. 

Australian Strategic Minerals (ASX:ASM) plans to build a vertically integrated mine and processing plant through its flagship Dubbo Project. Dubbo will produce individual rare earth oxides, zirconia, ferroniobium, and hafnium oxide onsite. 

In late 2021, Australian Strategic completed an optimisation study and in 2023 completed stage one engineering, procurement, and construction definition (EPCD).

Currently, Dubbo is construction ready, with all major permits approved. The project is forecasted to produce 1,342tpa neodymium and praseodymium oxide, 22tpa terbium, 142tpa dysprosium oxide, 16,000tpa zirconia, 2,650tpa ferroniobium, and 30tpa hafnium oxide. 

Australian Strategic Minerals says in the long-term, the materials produced from the Dubbo project will be used for refining into critical metals at its proposed metals plants, the first of which is in South Korea. 

Scandium in Queensland 

Alongside rare earths, scandium has been recognised for having a growing strategic importance in the world, as it was reflected in the US Government’s 2018 list of 35 critical minerals, as per Geoscience Australia. 

Geoscience Australia says scandium is used in the production of alloys for the aerospace industry, lighting applications, ceramics, lasers, and electronics. 

Australia’s scandium resources occur in Queensland, Western Australia, and New South Wales but none are currently mined. 

Australia’s scandium resources occur in New South Wales, Queensland, and Western Australia but none are currently mined

That is where Scandium International Mining Corp (TSX:SCY) comes in as the company plans to produce scandium oxide for use in soil-oxide fuel cells, 3D printing, and aluminium-scandium master alloys from its Nyngan Scandium Project in New South Wales. 

The company’s Nyngan project aims to be the world’s first scandium-only mine development project. 

In May 2016, a Definitive Feasibility Study (DFS) was completed, which highlighted the capital cost estimation for the project is US$87.1 million and the operating cost estimate for the project is US$557 per kilogram scandium oxide. 

The study concluded that Nyngan has the potential to produce an average of 37,690 kilograms of scandium oxide per year, at grades of 98% to 99.9%, generating an after tax cumulative cash flow over a 20-year project life of US$629 million, with a net present value (NPV10%) of US$177 million. 

Presently, the project requires suitable short to medium term offtake agreements with customers, for a meaningful portion of phase one product output, in order to take final investment decision and finance/construct. Scandium International Mining is continuing to pursue offtake. 

VIP vanadium: Very Important Projects

Another VIP commodity that contributes to seizing the renewable energy opportunity is the hard, silver-grey metallic element, named vanadium. 

Vanadium plays a role as a critical and battery metal and the demand for the metal continues to grow, as it is used to make steel alloys and incorporated into the medical sphere to treat a number of ailments. 

Australian Vanadium (ASX:AVL), which has a market capitalisation of $189 million, is focused on developing its namesake vanadium project, which forecasts production of 11,200tpa high-purity vanadium pentoxide and 900,000tpa iron-titanium (FeTi), which is 54% Fe, co-product. 

The Australian Vanadium Project consists of a ‘high-grade’ vanadium-titanium-iron deposit in the Murchison Province in Western Australia and covers a 200km-square area.

In 2022, the company completed a Bankable Feasibility Study (BFS), which confirmed the project as a potentially globally ‘significant’ primary vanadium producer targeting critical mineral, steel, and energy storage. 

The project’s anticipated initial mine life is 25 years and has a pre-tax net present value (NPV) of $833 million and equity internal rate of return (IRR) of 20.6% based on US$10.50 per pound vanadium oxide price.

According to Australian Vanadium, the project is considered one of the most ‘advanced’ vanadium projects being developed in the world. 

The vanadium project was awarded Federal Major Project Status by the Australian government in 2019 in recognition of its national strategic significance and State Lead Agency Status by the Western Australian government in 2020 due to its importance as a battery and critical mineral project. 

A second vanadium project of significance is Technology Metals Australia’s (ASX:TMT) Murchison Technology Metals Project (MTMP) in Western Australia, which comprises the Gabanintha and Yarrabubba vanadium projects. 

On 25 September 2023, Mining.com.au reported that both Australian Vanadium and Technology Metals agreed to a $217 million merger in a synergistic bid to become Australia’s ‘largest’ vanadium developer and the first operating primary vanadium producer. 

Technology Metals announced on 1 February 2024 that it had officially merged with Australian Vanadium and was removed from the Australian Securities and Exchange (ASX) the following day. 

Prior to the merger, Technology Metals was focused on developing the MTMP which has a forecast production of 12,500tpa high-purity vanadium pentoxide and 96,500tpa ilmenite. 

In late 2019, Technology Metals completed a DFS for Gabanintha, while the Yarrabubba integration study was completed in mid-2022. The study integrated the ‘high-grade’ Yarrabubba deposit into the MTMP mine plan, resulting in extending the mine life out to 25 years and generating a dual revenue stream of vanadium pentoxide and ilmenite. 

Combined, the  vanadium projects contain 153.7 million tonnes @ 0.8% vanadium pentoxide. 

In its latest ‘Australian Critical Minerals Prospectus’, the midstream processing portion also mentions cobalt projects including Cobalt Blue’s (ASX:COB) Kwinana Cobalt Refinery, Alliance Nickel’s (ASX:AXN) NiWest Project, Castile Resources’ (ASX:CST) Rover 1 Project, Australian Mines (ASX:AUZ) Sconi Project, Sunrise Energy Metals’ (ASX:SRL) Sunrise Project, and Queensland Pacific Metals (ASX:QPM) Townsville Energy Chemicals Hub. 

For lithium hydroxide production, Albemarle Corporation’s (NYSE:ALB) Kemerton Lithium Hydroxide Processing Plant, Tianqi Lithium Energy Australia’s Kwinana Lithium Hydroxide Refinery, and Covalent Lithium’s Kwinana Lithium Hydroxide Refinery. 

Precursor cathode active material projects include Pure Battery Technologies’ WA pCAM Hub, while battery anode material production projects include EcoGraf’s (ASX:EGR) Battery Anode Material Facility, Renascor Resources (ASX:RNU) Battery Anode Material Facility, and International Graphite’s (ASX:IG6) Collie Graphite Hub. 

Rare earth projects include Arafura Resources’ (ASX:ARU) Nolans Rare Earths Project, while high purity alumina projects include Alpha HPA (ASX:A4N) HPA First Project and Cadoux’s (ASX:CCM) Premium HPA Project. 

Vanadium oxide projects include Atlantic Lithium’s Windimurra Project, and magnesium metal projects include Latrobe Magnesium’s namesake valley magnesium project. 

As the federal government acknowledges this non-exhaustive list of ASX-listed companies and its midstream projects, it is further established that Australia is advancing its critical minerals processing capabilities. 

Critical minerals are indispensable elements needed for accelerating growth of clean technologies, which has been never more important. 

The critical minerals that have been recognised in this latest prospectus on developing the midstream in Australia are vanadium, scandium, rare earths, magnesium, nickel, lithium, graphite, and high-purity alumina. 

Write to Aaliyah Rogan at Mining.com.au   

Images: Australian Strategic Minerals, AVL, & Australian government
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Written By Aaliyah Rogan
Relocated from the East Coast in New Zealand to Queensland Australia, Aaliyah is a fervent journalist who has a passion for storytelling. When Aaliyah isn’t writing stories, she is either spending time with friends and family or down at the beach.