As Australia establishes itself as a hub for critical minerals, its relationships with nations such as China, India, Korea and Japan are also developing. Salomae Haselgrove investigates how international relationships in the critical minerals space will be unique.
Critical minerals, also called rare earths, are vital in futuristic spaces such as aerospace, electric cars, renewable energy, battery energy storage and electronics.
They include better known minerals such as cobalt, manganese and rutile, and lesser known commodities like ilmenite.
As an emerging area that has been dominated by China, the way Australia approaches producing and exporting critical minerals will be different to raw mineral commodities such as iron ore, gold and coal.
In demand by high value industries, primarily Asian trade partners in China and India, finding out who to form relationships with and what is needed from the partnership before starting it, is essential to success.
University of Western Australia Perth USAsia Centre research director Jeff Wilson says when it comes to critical minerals, the who is as important as the what, if Australian companies are to be successful traders.
“The economics of the industry internationally are very different from the ore-based metals that are Australia’s main exports,” Wilson tells Australian Mining. “Most other mineral commodities are traded at spot price.
“Because these critical mineral products are very small volume but very high prices and going into specialised electronic and scientific applications, you don’t just sell rare earth oxides.
“To successfully sell critical minerals, you need a particular supplier relationship already in place where you have the customers’ specific needs in mind because the products are all so unique.”
As Wilson explains, the critical minerals mining and selling processes are backwards to traditional Australian mining processes.
“It isn’t a matter of simply saying ‘I’ve got the world’s third best copper deposit, how do I get it to market?’, you need to work backwards and go back to the geophysics and through the various financing, marketing and engineering steps,” Wilson says.
The process therefore differs from Australia’s traditional raw mineral commodity exports, which are based on Australian mining and exploration companies finding mineral deposits, mining them and selling them.
In the critical minerals sector, companies need to know which companies they are selling the minerals to, what they intend to make with the minerals and find the trading customer first rather than the deposit.
Finding the most strategic regions and companies to build the relationships with is just the first step, with long-term relationships essential for exporting critical minerals, being such high investment projects.
With the cultivation of critical minerals having a much more customised end goal than other commodities, this makes critical minerals a potentially risky investment.
“The commercial risk of critical minerals is significantly higher,” Wilson says.
“There are a lot of extra risks in the sector that you don’t see in others.
“As the projects are tied to a specific customer or country, there’s the market risk that you will not be able to easily pivot from one customer to another if you make a product specifically for one customer.”
Despite these risks, growing the critical minerals sector is still a positive way forward for Australia with a huge potential to become a key industry.
“Because critical minerals are used in high-tech devices and all growth industries, it’s a big growth market with very nice prices to tap into,” Wilson says.
“Long term partnerships are the answers to the risks and the best way to develop those relationships is for your customers to have a financial equity stake in your success as a producer.”
Australia has a unique advantage over other key countries in this space due to it having the trust of powerhouse customers such as the United States, in addition to a positive social and environmental image.
Wilson attributes this to Australia not having any perception from outside countries of unfree labour or child labour as some third world country producers do.
Long-term sales relationships and contracts are also an advantage for customers, as well as the producer, Wilson explains.
“Volatility is hard for the consumer too,” he says. “They don’t want to price going up and down like a yo-yo, so using contracts to manage volatility is a good thing for both ends.
“Typically, critical minerals can be stocked in high volumes too, so the product can sit there for a couple of months and the processing plant can process two years’ worth of product because of it’s high value weight and volume.”
An exciting metal in the critical minerals space is vanadium, which is a steel industry micro-alloy heavily used in the Chinese construction industry, as well as in chemical processing, defence and aerospace applications and energy storage.
The vanadium space is dominated by China, which produces and uses about 60 per cent of the world’s vanadium internally. But similarly with other critical minerals, Australia is well-positioned to establish itself in this industry.
Australian Vanadium, which has a high-grade vanadium-titanium-iron deposit in Western Australia’s Murchison province, 740 kilometres north-east of Perth is a leader in the emerging vanadium sector.
The Perth-based company has the goal of splitting the offtake view to match global supply and demand requirements.
It plans to make relationships with Chinese sellers but also build on these working partnerships with other large steel producing countries such as North Korea, South Korea, Japan, India and some European nations.
The company’s deposit, known as the Australian Vanadium project consists of 11 tenements and has an estimated mineral resource of 208.2 million tonnes at 0.74 per cent vanadium pentoxide.
Australian Vanadium managing director Vincent Algar recognises these nations, particularly in Asia as vital new markets for the company.
He says they produce little to no vanadium themselves and are reliant on feedstocks from China or other producers such as Russia, South Africa or Brazil.
“Critical minerals such as vanadium require more specialist attention and benefit from additional processing,” Algar tells Australian Mining.
“Here in Australia, we are able to add value before we sell the products overseas, which is a benefit to us and also for countries looking for a quality product.”
Vanadium offers not only exciting market opportunities, but also futuristic energy storage opportunities that are often overshadowed by the capabilities of nickel and lithium.
High-purity vanadium can be used to produce a vanadium electrolyte, which is used in the Australian-invented vanadium redox flow batteries (VRFBs).
As Algar explains, these may not be as well-known as lithium-ion batteries but are much simpler to build and far more enduring than their lithium counterparts.
“Vanadium is perfect for the delivery of renewable energy,” he says. “What happens in a VRFB is you have a liquid storage device, the vanadium, dissolved in a light sulphuric acid mixture.
“Solar panels pump electricity into the battery and through a membrane and puts charge into the vanadium electrifier that stores enough energy for 100 kilowatts, which for a domestic house is 20 or 30 hours’ worth of storage.”
This process is continuous and so long as the pump is running, can last for more than 20 years.
“Lithium achieves the same thing but degrades over time, like with mobile phone batteries, it will start to lose charge,” Algar explains.
“Because of the nature of vanadium, it doesn’t have this issue as it never loses charge.”
With this exciting potential use for vanadium, Australian Vanadium is working to push for further usage of vanadium for energy storage, particularly in remote Australian communities.
With its ability to withstand extremely high temperatures and harsh weather conditions, vanadium is also essential for high-wearing parts of defence and commercial aircraft, as well as regular tools like spanners, which sound simple, but keep the world’s construction industries going.
Pure vanadium is also useful in producing a catalyst for acid production during chemical processes, which again, allows industrial production to continue.
Algar says with Australia’s traditional allies such as the United States and its very good track record in mining, the nation is a perfect partner for the vanadium and wider critical minerals sectors.
“Australia is a Tier 1 nation and our mining knowledge is regarded as the top nation in the world,” he says.
“Our operating costs are well-known for being really spot on, we use technology well and the ability to make new discoveries is there, which makes us a perfect partner from a North American perspective.”
Despite the fact there is no current production of vanadium in Australia, Algar says the nation’s future in this space is positive, with several companies, including Australian Vanadium, working to re-start old projects or bring new ones into production.
“With the strength of our team, the unique quality of the ore body and our knowledge, we feel that Australian Vanadium has the best opportunity for success,” Algar concludes.
“The development of new applications and markets locally, specifically around large scale renewable energy storage using VRFBs offers upside for jobs, technology development and market growth internally and for Australian Vanadium and Australia as an exporter.”
This article also appears in the June edition of Australian Mining.