How ASM is overcoming funding and delivery challenges in the rare earth value chain

Rowena Smith Australian Strategic Materials (ASM)

Australia’s rare earth market potential is set for a boost, following the developments of two cornerstone projects, by Australian Strategic Materials (ASM).

Through facilities in Dubbo, NSW and Ochang in South Korea, ASM has been making headway with its unique ‘mine to metal’ strategy – in which it ushers rare earths all the way through the value chain, into the hands of magnet producers.

In turn, ASM is helping Australia tap into downstream markets, like wind turbines and electric vehicles, after long being stunted by rare earth processing limitations.

“ASM is uniquely positioned, in that we can take rare earth elements from our mining and processing plant in Dubbo and turn them into specialised high purity oxides. We can then convert them into metal and alloy at our metals processing plants. We already have our first established operating metals facility in South Korea that is taking products directly to market, which is fairly unique to Australia,” said CEO and Managing Director, Rowena Smith.

“At our Dubbo Project, we’ve done 15-plus years of development work on our flowsheet. We’ve got all the environmental approvals and we’re operating in a Tier 1 jurisdiction. So, internationally, that also makes us quite unique.”

A novel approach to project delivery

In addition, ASM’s delivery approach for its Dubbo Project – located near Toongi – is helping to minimise risk in the face of high capital requirements.

“Dubbo is a very capital-intensive project – around $1.7 billion AUD in total,” Ms Smith said.

“In recent months, we’ve been looking at ways to execute the construction stage in phases – getting just one of our seven products to market first. We have called this work the Rare Earth Options Assessment (REOA) and it could significantly reduce the capital requirements that we are looking at for the full flow sheet.

“Once we have the first phase up and running, we would use the revenue to fund the second phase of the project.”

So far, the Dubbo Project is ‘construction ready’, with all major permits approved, and with Bechtel Mining and Metals, Inc., (Bechtel) appointed to conduct front-end engineering design (FEED) services.

This appointment follows an optimisation study completed in 2021, which confirmed strong financial results.

Strong government and financier support

To further support the REOA work, the federal government has stepped in to provide a $5 million grant, and Ms Smith hopes the ensuing work will give ASM a pathway to more rapid funding approvals in the future.

“We’re progressing that work well with several partners and aim to have it complete by Easter. We’ve done extra drilling and test work and are looking at an alternate leaching first step in that flow sheet.

“We’re also working on what the CapEx and OpEx would be on that first phase. So, that will give us the confidence to proceed into the next phase of engineering. Assuming all goes well, it should serve as an impetus for more ready funding going forward.”

Alongside federal funding, ASM has received a letter of interest for debt financing of $600 million USD from US EXIM to assist with the construction phase; and an additional $32 million USD for the final engineering work.

They have also received conditional debt funding offers of $200 million AUD from Export Finance Australia (EFA) and $400 million AUD from Export Development Canada (EDC).

Conversations are also underway with the US Department of Defense, who have identified Australia as a ‘domestic source’ under the Defense Production Act Title III. In turn, this could mean additional funding support for the construction phase of ASM’s Dubbo project.

“We’ve been saying to the market we’re going to kick off that final bit of engineering after we’ve decided whether or not we’re going forward with the full flow sheet, or continue on with phased execution,” Ms Smith said.

Momentum is building

With operations in the Korean facility up-and-running, ASM is already beginning to reap fruit from its labour, having received several orders from both Korean and overseas magnet producers.

As downstream markets like wind turbines and electric vehicles grow, Ms Smith anticipates a hike in funding support and, along with it, a ramp up of operations.

“We are working with emerging magnet producers outside of China to be integrated into their supply chain, and are starting to see those orders coming through. We expect to see that continuing to ramp up through 2025 and 2026, which is really exciting for us.

“That, combined with our incremental delivery approach in Dubbo, will really help with any funding constraints. And with the existing debt funding commitments we have from the export credit agencies, we expect to build funding momentum more rapidly than I think the market is currently anticipating.”

Further insight

Sharing more on ASM’s strategy, along with key project updates, Rowena Smith will present at the upcoming Mineral Sands and Rare Earths Conference, hosted by Informa.

Conversations this year will involve market outlooks for zircon, TiO2, and rare earths; project updates from major industry players and future investment opportunities.

Delegates will also hear end-user perspectives; technological updates; and strategies around supply chain resilience, including sustainability initiatives, like site rehabilitation.

This year’s event will be held 26-27 March at the Pan Pacific Perth.

Learn more and register your tickets here.

About Rowena Smith

Rowena was appointed ASM Chief Executive Officer in July 2022, having joined the Company as Chief Operating Officer in 2021. Rowena’s almost 30 years’ experience in the mining and minerals processing sector includes a range of senior roles in strategy, operations and commercial. Prior to joining ASM, she was Chief Sustainability Officer at South32, accountable for sustainability strategy, risk management and HSE business processes.

Other past roles include Vice President Supply at South32, General Manager BHP’s Kwinana Nickel Refinery, and operational leadership roles within Rio Tinto’s aluminium smelting business.