No Acid Trips

Lynas is flailing around asking for help supplying it with acid now that Nickel West is closed. This includes begging, nay, demanding help with an acid plant from, who else? The government. It's almost exactly as predicted six months ago.

Here's the thing. I saw this coming even before Nickel West shuttered. I'm sure I'm not alone.

The Queensland government, faced with the closure of Mt Isa Mines in 2030, has confronted their own acid shortfall head-on with a White Paper on acid supply options, concluding a pyrite smelter and roaster is the appropriate solution (pun intended) to the sulphuric acid shortfall.

Now, barring as yet unannounced initiatives by whoever may be working on the problem behind the scenes and has not as yet come forward, the Western Australian government is not apparently dealing with the problem.

WA's Minister for Mining David Michael (and before him, Bill Johnston ) has dropped the ball, probably because AMEC (Association of Mining and Exploration Companies) didn't kick the ball into his court, illustrating both the power of industry lobby groups and the limitations of lobby groups, which typically pick champion causes of vocal members and act only strategically in defending interests, not in setting long-term strategic policy goals. Lobbying is a defensive and reflexive industry, which is at odds with setting long-term priorities. It just goes to show, your membership fees to the Perth Local 455 - Sophisticated Gambler's Union are only worth it if you have gold royalties to defend or it's something aboriginal or environmental.

(I'm not letting the Minerals Council of Australia off here, but we really shouldn't expect them to agitate for anything except tax exemptions, the venal bastards)

I really feel for the critical minerals companies which have been paying in to the Local 455 in order to cut green, black and red tape, thinking that was the only problem they faced, and now are sitting on gigatonnes of REE clay with fuck all chance of getting it processed, because acid. LOL.

Because we live in a society, the only segment of society capable of crafting a strategic initiative to secure critical minerals supply chains via supply of sulphuric acid is the government. As mentioned above, it's dropped the ball. To some degree, it probably drank the industry Kool Aid too much here, so we obviously blame the government for listening and taking industry propaganda at face value - the dopes! hahaha.

Oh wait, it's the same industries which told everyone including themselves, this cycle was somehow different, that now find themselves utterly kaput. Is it dumber to listen and do what the mining lobby wants, or to be the dumbasses telling the government on which foot to hop?

The Problems of Acid

In Western Australia, hydrometallurgy is a problem (at scale; don't come after the HPA project) for several reasons related to logistics, geology, tenure and ownership, and venality.

This is a logistical problem in short term, compounded by government inaction and EPA paralysis on port infrastructure. Anyone could name a half dozen port projects which have been promulgated in the past 20 years; Oakajee, Onslow, Freo expansion, Kwinana times a half dozen. Yet, 20 years and 3 mineral booms later, our ports are barely functional and a strategic too hard basket.

Generally, we have relied on Nickel West as a source of sulphuric acid as a by-product of the smelting of sulphide ores. It has been a valuable by-product and a neccessary sale product, as storage of acid in volume is prohibitively expensive. If you produce acid as a by-product, you take what you can get for it till it's gone.

This has kept a manageable lid on the price of WA sulphuric acid for decades, as Nickel West was dumping, and industry was taking, sulphur out of the system built up around Kambalda and nickel sulphide. That's all changed, seemingly overnight, and it is actually amazing it's taken till +/- December for the clients to scream. They should have been screeching in July.

Replacing this acid requires either constructing a local pyrite smelter, or importing it.

Building a pyrite smelter isn't going to be quick, but it obviously begs the question of whether Nickel West could merely be supplied with enough concentrate and converted to run as such. That's beyond my wheelhouse, but I would think that the conversion process would be technically feasible, but require a feasibility study. This takes time.

Given it's a (recently) functional smelter of nickel ores, converting it would require re-configuring it, which would then require further work to convert it back if BHP were to decide to restart smelting. BHP, not known for being nimble, would be unlikely to say yes because if you're studying the conversion, it requires assurances you aren't wasting your time from a quick restart snaggling you; and if BHP assured everyone that it would wait for a study to be done, it implies nickel is dead, and that's toxic politics. BHP would not want to be constrained either way, preferring strategic ambivalence.

This then implies a new purpose-built pyrite smelter must be commissioned, to run on as-yet undefined sources of barren pyrite. Defining those sources is an issue in and of itself, though I'm sure Russel Menenzes can tell us where all the barren sulphide in 150km of Kalgoorlie resides in about 5 minutes.

But so can I: under the Black Flag Group, by and large, in someone else's tenements, where metres of barren pyrite have been drilled in the search for nickel in the past. The problem being, obviously, that the tenement owners are unaware of it, largely don't care, are fixated on nickel or gold, and will demand way too much money, for too high a price, to give away the rights to their barren pyrite, which would go help someone else more than them.

Kimberley

The Kimberley has some potential for indigenous acid production, from locally-derived sulphides. There is definite potential, but importation would be difficult and costly, as ports in the area are very skeletal and poorly serviced.

Importing wet acid via port is currently impossible, I would think, and prill would be a struggle too; any conception therewith would require investment in the port infrastructure in order to facilitate the handling of these materials. Here, the government would be obliged to step in, including NAIF, and perhaps Royalties For Regions.

The Kimberley is also lacking customers, except for perhaps Speewah for fluorite. Which then indicates the development pipeline for Speewah, as a bulk fluorite export (straight to China); besides which, acidification of fluroite to make HF would be no joke, permitting wise, if you could concoct an import supply chain in order to feed sulphuric into it.

Pilbara

In the Pilbara, port access is like hen's teeth, and carved up by incumbent iron ore exporters. Incredibly efficient walled gardens, ostensibly accessible to third parties (like the rails) but never really available. No acid importation infrastructure or general freight (containers), means acid supply into the Pilbara is difficult, at best.

It is also worth pointing out the congestion of Hedland and other ports, and query whether enough prill or wet acid could make its way in without obstructing the iron ore. Not sure, but my feeling is no.

However, there are some possibilities for local production of sulphur via roasters, and the prime example is Hemi, which is sulphide-rich. it is difficult to divine the volumes of sulphur involved there, but clearly there's a lot of sulphur. A strategic acid supply chain would value that sulphur, and try (at least, try) to find a productive home for it.

The customer base for indigenously produced Pilbara acid is not entirely straightforward. High purity manganese sulphate monohydrate (HPMSM) is a good candidate given the manganese in the region. There's moderate heap leach capable VMS ores, though the cream of that crop has been clipped off (the VMS sulphides, perhaps, a source instead).

Gascoyne

The Gascoyne is one of the least sulphur-endowed regions in Western Australia, with no known massive sulphide deposits of sufficient scale, that I have ever even seen drill holes targeted towards. The reason is that the Gascoyne is dominated by continental (meta)sediments and granites, with little volcanic rocks and sparse deepwater, sulphidic sediments. What few there are, are cooked to within an inch of their lives.

Water is also scarce, the road system is almost entirely dirt, there is significant topography from a WA context, and it is extremely remote.

Logistically, the likelihood of doing hydrometallurgy here is low. There's a small port at Onslow, which is barely more than a jetty. Carnarvon deals mostly in bananas, Grey Nomads, and holidaymakers.

Contemplating importation of tens of thousands of tons of sulphur prill here inevitably involves trucking from Geraldton, at best, if not further afield.

West Arunta / Tanami

You're joking, right?

West Musgraves

LOL, what, NiCo gets Major Headache status and we think that Wingelinna is even remotely viable? I doubt it. Nearly 800km to get to it, sealed road or otherwise, for acid or prill, is what I would think of as nearly insurmountable.

Goldfields

The Goldfield has great potential for indigenous production of sulphuric acid from locally-sourced, organic and free range pyrite. As highlighted above, the problem is as much about the ownership of that exploration space, the venality of the owners, the difficulty in organising access even if one wishes to pay stupid prices, and the problems required to be resolved in permitting a pyrite smelter.

The customer base is also, relatively speaking, local. We have multiple nickel laterite projects which will need metric fucktonnes of sulphuric acid if they are to ever get off the ground. The problem being, obviously, in supplying tonnes in fuckload rates instead of bugger all (again, it's easier to conceive of buying or cooking 20Ktpa of acid vs 1Mtpa).

It's also apparent Lynas is not getting acid from a local acid plant in under 15 years, let's be honest. This is a new pit-to-portal pyrite smelter with a pyrite deposit to be explored and permitted. It requires a DFS, or at worst a PFS. The kit isn't hard, China can bang out a roaster in 6 to 9 months, probably. But the environment (flora and fauna), heritage, and community consultation process will, inevitably, take 2-3 years. Plus, you want to put your smelter in a strategic location, and you get into road, rail and proximity trade-offs.

Conclusions

Firstly, if Lynas, with a $6.3B market capitalisation, is asking the government for help, I really question why the C-suite is being paid at all. Come on guys and girls. You're allegedly the Big Brain squad. You have $6.3B market cap. Use it, you fools.

Why not do this.

1. Pay Russel Menenzes a quarter of a million bucks to cherry pick the best 5 pyrite deposits in the Goldfields. He can give me a solid kickback.
2. Use your market cap to roll over the cheapest EV owner in an all-scrip deal. Doesn't matter if it's $300M market cap, just go to town on them.
3. Employ me to drill it out fast, efficiently, and effectively. Well bang together a Mineralisation Report before we even get the assays, basically. Mining Lease Application ASAP.
4. Do enough metallurgy to define the operational parameters.
5. Next September you'll do the world's best and fastest flora and fauna survey, GPSing every blade of grass
6. Pay some vendors in China for a roaster, up front, and get it shipped over to Kwinana.
7. Job done.

Or, alternative plan, twiddle your thumbs waiting for the Western Australian government to lurch through its next political crisis news cycle looking for good news, and get a royalty relief on your ore, and leave the whole thing in the too hard basket.

I know what the likely choice is. Inertia, dullards, and corporate welfare.