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MINING | Arafura Resources
ARAFURA RESOURCES Scaling up to be a globally significant rare earths supplier
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MINING | Arafura Resources
At the start of 2018, Arafura Resources announced it had been granted environmental approval from the Northern Territory Environment Protection Authority (NT EPA) for its flagship Nolans project in central Australia – a project of globally significant scale in the rare earths space. News of this environmental approval represents a major milestone for the ASX-listed company after an exhaustive two-year assessment process. Now Arafura is in a position to move on to the next stage of the Nolans project – attracting cornerstone investors or strategic partners to assist with funding the development. Many of these potential investors are likely to be major corporations with reputations to consider, therefore it was imperative for
The burgeoning EV industry is a major
Arafura to secure environmental approval
part of the aforementioned green energy
for the rare earths project which is set to
transformation and is likely to be one of the
play a key role in the pending clean energy
biggest markets for Arafura’s key NdPr rare
revolution.
earth product, so the importance of being able to prove to potential clients that its raw
The Nolans project contains an abundance
materials have come from a non-polluting,
of two specific rare earths – neodymium and
environmentally-friendly environment cannot
praseodymium (NdPr). Both have multiple
be understated.
uses across several disruptive markets including wind energy, robotics and electric
“We advanced our environmental studies
vehicles.
ahead of a lot of our engineering studies,
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knowing that environmental approval would
the assessments. The agency was also happy
enable us to have meaningful discussions
with Arafura’s risk management procedures,
with potential project financiers,” reveals
which are in line with all other mining
managing director Gavin Lockyer. “It’s a really
practises in Australia.
big milestone for our company.”
Passed with flying colours
Firstly, Arafura has committed to long-term management of radioactive material that occurs naturally in the resource. Essentially,
Lockyer says that the project passed the
they will extract the rare earths from the ore
environmental assessment with flying
before storing the radioactive residues in
colours, after the NT EPA concluded that
engineered tailings and storage facilities.
there were no significant risks identified in
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MINING | Arafura Resources “It’s a fairly standard process, many other mining operations like uranium, mineral sands or anyone mining a monazite material would have the same environmental processes and controls in place to manage it,” Lockyer says. “It’s not an onerous task and the Northern Territory has a long history of regulating it well.” Secondly, groundwater usage came under scrutiny through the environmental assessments as the host region of central Australia is a very arid part of the world and it has been estimated that the project will use up to 2.7 gigalitres of groundwater a year. As such, economical use of this limited resource is a vital obligation for Arafura. “Having said that, several years ago we spent over $3 million drilling in the desert where people told us there would be no water and we have found a significant new groundwater resource that’s not been tapped by any other user,” notes Lockyer. “So we are comfortable from all our studies to date that we’ll be able to access that water and manage the groundwater aquifers in a sustainable way.”
2017 highlights Aside from working closely with the EPA last year on attaining environmental approval, Arafura was also able to successfully raise capital and reached the halfway stage of its overall process flowsheet piloting programme. Throughout 2017, the company raised a total of $9.8 million from new investors and from
We will be one of the largest suppliers of NdPr magnet rare earths into the market, we are well advanced and this year we hope to build on all that good work we’ve done through the last couple of years” Gavin Lockyer managing director
Resource Global Network its shareholders, a significant result bearing in mind it was Arafura’s first market raise since 2012. “That was a good sign for us that capital markets were slowly opening up. As prices turned around for NdPr, it showed a renewed interest and a renewed confidence in our sector so that was a highlight.” The other highlight of 2017 from a technical aspect was the successful completion of three out of the seven phases of the flowsheet pilot programme for the Nolans project. The pilot regime is one of significant scale that will assess materials handling that is, how concentrate and other process flows move through several different types of equipment. Throughout the year, Arafura progressed through the beneficiation, phosphate extraction and bulk pre-leach phases of the pilot study and will look to complete the final phases over the first half of 2018, which should considerably minimise the commissioning risk attached to the project.
Strategic partnerships Arafura also strengthened its relationship with Korean chemical manufacturing giant OCI last year, with the signing of an extension to the existing MoU. “We have been in discussions with OCI regarding them providing us with our raw material requirements for our processing plant,” says Lockyer.
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MINING | Arafura Resources
Resource Global Network Both parties are also discussing the location
and wind turbines, with around 1.7kg of the
of the processing plant, which is still planned
material required for every EV.
to be built in South Korea, but Arafura is keeping its options open and is considering
Therefore, if you believe in the EV revolution
having sites in Australia and other parts of
and the widescale electrification of energy
the world, with the view that OCI would toll
supply, you believe in NdPr.
process the final rare earth products at the refining, or separation plant.
However, Lockyer thinks the future value of NdPr is not well reflected in their current
“We have a really good relationship with
prices and its true value will not manifest
OCI and we will continue to work with them
until China’s domestic rare earth market can
throughout 2018, with the aim of reaching a
no longer supply its magnet industry.
more binding arrangement.” China has dominated global NdPr supply for This partnership has certainly helped
many years but has recently been clamping
Arafura lay the foundations for striking
down on illegal production and polluting
further commercial deals, which has been
mines and smelters.
highlighted as a key focus for the company this year.
This campaign, along with sharply rising domestic magnet production, has led many
Lockyer explains that the firm will require
analysts to predict that it will soon become a
a ‘big brother’ to help with project finance
net importer of NdPr.
over the crucial next stages and this will be underpinned predominantly by product
“I was reading a report just recently that
offtake arrangements. “We’ll be ramping up
China increased its magnet production
those strategic partnerships and strategic
by 11% in the last 12 months. If all the
offtake arrangements with target customers
predictions are correct around the
throughout 2018,” he declares.
electrification of transport around the world,
An electric future The gradual electrification of huge industries,
I think by the mid-2020s China will become a net importer of magnet materials, because it just won’t be able to supply its own industry.
including the global automotive and energy markets, is slowly pushing up demand for
“Then I think you’ll see prices for NdPr really
NdPr, owing to their properties as magnet
start to take off. It’s extremely important for
material rare earths.
us as a developing company to make sure that we are ready to go when that market
NdPr is a key component of high strength permanent magnets that are utilised in EVs
opportunity arises,” stresses Lockyer.
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The NdPr supply opportunity
“Nolans is going to be a significant potential supplier into the market,” he proclaims.
Achieving first production in 2020 would put
“What’s more is that this production figure
Arafura in a great position to capitalise on
equating to 5-10% of global supply is only
the increased demand for magnet materials
represented in about 60% of our potential
such as NdPr, with a multitude of projections
reserve.”
suggesting that the start of the 2020s will yield some real dynamic changes in supply
Therefore, there is significant scope to
and demand.
increase the current capacity at Nolans, which could turn Arafura into an even larger
For Arafura, the sheer scale of the Nolans
global NdPr supplier.
project demands attention from a global audience.
Factor in an expected life-of-mine of 30 to 35 years and it becomes clear that with the
“We have a world-class asset in terms of
Nolans project, Arafura has the required legs
size and longevity. Our target production is
to sustain a leading position in NdPr supply
14,000 tonnes of total rare earths, including
while global industries undergo a major
3,600 tonnes of NdPr, and that would
transformation towards electrification.
represent about 5-10% of current global supply.
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Roadmap to production
“We will be one of the largest suppliers of
Arafura plans to award its feasibility
NdPr magnet rare earths into the market,
engineering study contract in the coming
we are well advanced and this year we hope
weeks with completion of its definitive
to build on all that good work we’ve done
feasibility study (DFS) the first part of
through the last couple of years,” says a
this. At this stage, delivery of the DFS and
bullish Lockyer.
project financing are the only barriers left to overcome ahead of construction
When considering the scale and longevity
commencing.
of the Nolans project, along with the steady progress made on the project in the last year,
“This year, we are really focused on
it is difficult to quibble with Lockyer’s grand
completing our feasibility studies, advancing
vision of Arafura as a globally significant
our offtake arrangements and engaging with
supplier of NdPr, a strategic material that
strategic partners for capital equipment and
is key to powering the electrification and
project financing.”
automation of major global industries.
abj
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Published by Anderson Murray Media Ltd
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