Global PrNd oxide market to see strong demand in the coming five years
----Interview with Lloyd Kaiser
GM of Sales & Marketing
Arafura Resources Limited
Arafura Resources Limited is devoting to develop their 100% owned NdPr Project in the Northern Territory of Australia. Nolans deposit owns a mining life of no less than 33 years and is rich at NdPr and owns a highly desirable rare earths mix, and contains 56 million tons of mineral resources at an average grade of 2.6% rare earth oxides (REO) and 26.4% PrNd. Rare earths are primarily hosted in the calcium phosphate mineral apatite, and the company is planning to produce around 4,400 tpa of PrNd oxide, 600 tpa of SEG-HRE (middle-heavy rare earth) carbonate, 8,380 tpa of cerium hydroxide, and 135,800 tpa of fertilizer-grade (54% P2O5) phosphoric acid for sale. The company aim to start the commercial production in 2024.
Asian Metal: Thanks for accepting my interview, Lloyd. Would you please give us some update of your Nolans Project?
Lloyd: After confirming low operating costs and robust financial metrics through a Definitive Feasibility Study in 2019, Arafura has advanced negotiations to secure finance through export credit agencies and other sources. We have received strong support from the Australian Government through sovereign infrastructure debt options and recently awarded the Front End Engineering Design works for the hydrometallurgical plant to global engineering firm Hatch. Our Integrated Project Management Team is progressing all other pre-construction works with the company targeting a final Investment Decision in the second half of 2022. Product Offtake and project funding are key priorities for the company with advanced discussions taking place with offtake partners and financiers.
Asian Metal: Why did your company decide to enter rare earth industry?
Lloyd: Arafura’ development of the Nolans rare earths project was driven by the market opportunity to be a leading strategic supplier of rare earths from a geopolitically stable jurisdiction to meet end user requirements. The emerging NdPr supply gap over this next decade and the need for future ex-China supply options to meet global growth and compliance created strong interest by Arafura to develop the Nolans project.
Asian Metal: When do you plan to start production of PrNd oxide? How many tons you plan to produce in total?
Lloyd: As Arafura completes its pre-construction design works and secures funding and offtake agreements, we will be able to make a final investment decision in the second half of 2022. With that timetable, we would be producing by 2024.Production output is planned at 4,400 tonnes NdPr oxide per year.
Asian Metal: Would you please share your production cost of PrNd oxide? What you see as the advantage of your company to reduce production costs?
Lloyd: Our production cost for PrNd oxide is US$24.76/kg. The advantage for Arafura is the ultra-low operating costs offset by the production of a valuable phosphoric acid by-product.
Asian Metal: What do you see as a most promising application of PrNd oxide in the coming two years?
Lloyd: PrNd oxide remains the leading rare earth product for permanent magnets with strong CAGR for several applications such as wind generator, EV motors, electronic devices, e-bike and emerging technology such as robotics and drone applications. The next two years show strong growth for EV traction motor with demand for EVs growing in Europe, China and other regions through electrification investment and the green energy transition.
Asian Metal: Under the background of insufficient supply of chips, how do you think about the prospect of electrical vehicle industry in the coming two years?
Lloyd: The global semiconductor shortage has caused production closure and lower capacity output across many OEM’s and this supply disruption has driven changes in procurement strategy to build reliant supply chains to avoid any future supply risks on key critical materials. This current chip shortage mostly driven by COVID related shutdowns is expected to continue for some time. The electrification plans across global entities is likely to expand and replace ICE output and any shortfall in auto production will sacrifice ICE production.
Asian Metal: Chinese PrNd oxide prices showed uptrend in general over the past one year .Current prices reached USD146-148/kg, with an increase of around USD80/kg from the beginning of 2021. Would you please introduce your opinion about the price trends in the coming three months?
Lloyd: The PrNd oxide remain at prices that reflect supply deficit and strong domestic and global demand across various sectors. Domestic Magnet demand has grown in the past year and capacities are high with growing interest to expand in the future. Rare earth processors are carrying low stock and inventory amongst the supply chain is also low creating a supply shortage that will continue in the upcoming three months.
Asian Metal: Are you confident about PrNd price trends and demand in the coming five years?
Lloyd: Demand for magnets that use PrNd Oxide is driven by renewable and green energy applications and several emerging applications such as industrial robotics and drones will experience growing demand. Electrification plans of leading OEM’s and across trucks, buses and marine will expand over this decade driven by strong government policy and push for decarbonization. This strong demand and inability for new supply to enter the market quickly will create supply constraints and pricing for magnet feed will continue to remain high or increase in the future as the supply gap widens.
Asian Metal: What’s your opinion about electric vehicle development prospect in the coming five years?
Lloyd: Forecast show that EV outlook looks promising with several OEM’s investing in electrification with goals of having 50 to 100% EV platforms by 2025. Policy shift towards eliminating ICE and reducing emissions is playing a key role in shaping the industry and many participants in the supply chain are investing heavily to reduce supply chain risk and cost to make EV’s attractive and to increase uptake globally.
Asian Metal: Thanks for your time and great opinions! Looking forward to hearing more updates from Arafura in the future!
