Australian critical mineral firms flock to US markets

Despite Australia's efforts to develop its domestic industry, some of Australia's leading critical mineral producers are moving ahead with plans to build facilities in the United States.

Last week, an Australian delegation of companies that produce critical minerals visited Washington and New York to meet with senior officials and investors. ASX-listed companies such as Australian Strategic Materials and Ionic Rare Earths are interested in expanding their operations in the U.S.

They said that the size of the U.S. client base was a major draw, especially given the rapidly growing electric vehicle, defense, and advanced manufacturing industries as well as the cheap energy and subsidies the country is planning to implement.

Annaliese Eames, Chief Legal Officer of ASM said that the company is looking to expand its operations beyond its rare earths plant in Korea.

ASM, a $85 million company, conducts detailed due diligence in Oklahoma and South Carolina, which includes reviewing sites.

ASM was attracted to the U.S. by more than just strong incentives and support from federal and state governments. She said that the commitment to growing the ecosystem was what attracted ASM to the U.S.

The national security of some minerals companies that supply customers in the defence industry requires them to be located nearby. This is due to the complex process of converting raw materials into magnets, which are used for everything from missiles to wind power.

Tim Harrison, the Managing Director of Ionic Rare Earths said that the company is currently in advanced talks with Tennessee to replicate magnet recycling technology developed in Belfast.

There are other states which can offer very low-cost power... He said that they also had a lower cost of labour and both the federal and state government were willing to provide huge funding.

Andrew Worland, CEO of International Graphite said that the company is looking into options for building in the U.S. or Europe to better align with the needs of its customers.

China's April restrictions on rare-earths exports galvanized the U.S., which has since supercharged its rare-earths industry. Higher Western world prices have also emerged and are attracting investors.

Access to U.S. financing is still expected to be very competitive. Lynas Rare Earths in Australia, the largest supplier outside China warned last month its heavy rare earths processing plant may not be built after the Trump Administration provided multi-billion dollar funding for its U.S. competitor.

POLICY CHALLENGES This trend highlights the critical policy challenges that Australia faces in developing new markets for its fossil fuels. According to a PwC study from 2023, this opportunity would be worth A$170 Billion ($112 Billion) to Australia's economy by 2040.

Amy Lomas, PwC Australia's chief economist, said: "Australia is struggling to establish the crucial minerals industry beyond primary mining."

Major miners complain that Australia's high labour and power costs and its cumbersome approvals processes are slowing down growth and decreasing the country's competitiveness internationally. The closure of Australia's auto industry in 2010s has stunted the growth of advanced manufacturing, which is still a relatively small sector.

Where do we sell materials to an Australian company that wants to build it in Australia? Where are the magnets, metals and alloys being produced? "Ionic's Harrison stated that it is not being manufactured in Australia due to our high cost base and lack of advanced manufacturing industries.

Australia has passed a A$17billion production tax credit that will provide 10% off for key minerals processors starting in 2027. Lomas said that Australia is building partnerships for critical minerals with allies such as Japan, India, and Britain, which could increase its customer base.

She said: "This will allow Australia to operate a lot more efficiently, especially for midstream and downstream processing."

(source: Reuters)