Michael Bennet | WA Reporter
February 2, 2022 – 2.31pm
Shares in several critical minerals companies have soared after winning loans from the federal government as part of a push to make Australia a global leader in the massive global shift to clean energy sources and electric vehicles.
In what was marketed as the federal government’s first cash splash in a rare earths sector, Hastings Technology Metals said it had secured a $140 million loan from the Northern Australia Infrastructure Facility (NAIF), paving the way for the development of one of Western Australia’s next major rare earths projects.
The conditional loan would form part of an up to $400 million debt funding package for the Yangibana project in WA’s Gascoyne region, which would make it Australia’s second rare earths producer alongside major Lynas.
Hastings Technology Metals jumped more than 10 per cent in early trade before closing up 7.7 per cent higher at 28¢.
“At a time of booming global demand for smartphones, electric vehicles and other technologies, this commitment ... positions Australia strongly into the future in the critical minerals sector,” Trade, Tourism and Investment Minister Dan Tehan said.
Hastings Technology Metals chairman Charles Lew said the NAIF’s commitment would enable the company to finalise the funding for Yangibana and move into full-scale construction throughout 2022 before first production by 2024. The company requires total debt of $300 million-400 million to fund the project, which includes a mine and plant at Yangibana and a hydro metallurgical plant near Onslow on the coast, with a final investment decision expected in “coming months”.
“Yangibana is an amazing rare earths opportunity that will supply the world’s highest composition neodymium and praseodymium concentrate to tier-one customers in Europe and Asia,” Mr Lew said.
Canaccord Genuity analyst Reg Spencer said the 12.5-year, $140 million loan was larger than expected and followed the company’s securing of in-principle support from export credit agencies in Germany and Finland, and commercial banks.
“We assume project capital costs of $590 million ... compared to [the company’s] prior $449 million plus 15 per cent contingency estimate in July 2020,” he said, noting the company also held $96 million in cash as at December.
“Our assumption reflects current industry inflationary pressures, with finalisation of project capex (and updated project economic assessment) expected in the next month.“
According to the company, the Yangibana project will meet about 6 per cent to 8 per cent of global demand for the rare earth minerals neodymium and praseodymium used to make permanent magnets, and benefit from the global boom in electric vehicles and decarbonisation of the energy sector.
These rare earths, known as NdPr, account for around a third of global rare earth demand by volume but more than 80 per cent by value at spot prices as the market remains in deficit amid strong EV demand, according to analysts at Macquarie.
Even after China, the world’s biggest supplier of rare earths, this week unveiled higher than expected rare-earth production quotas for 2022 – lifting mining and refining quotas 20 per cent to 100.8 kilotonnes and 97.2 kilotonnes, respectively – the analysts said demand would continue to dwarf supply.
“The rare earth quota for the calendar year 2022 was higher than we had expected, however we still believe the NdPr market remains in deficit despite the increased supply,” the analysts said.
On Monday, Lynas said it had secured the “Ministerial Statement” for its Kalgoorlie rare earth processing facility under WA’s Environmental Protection Act, with the conditions for construction and operation in line proposals by the company. Further approvals are still required, however.
NAIF, which has committed $3.2 billion to projects in northern Australia, said the Yangibana project will create up to 750 jobs and more than $1.25 billion in “public benefit”.
“This project will help meet the growing global demand for critical minerals, supporting Australia’s position as a world-leading producer,” Agriculture and Northern Australia Minister David Littleproud said.
https://www.afr.com/companies/mining/...nt-loans-flow-20220202-p59t7h |
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