Chinese magnet maker takes 9.8% stake in Aussie rare earths hopeful Hastings
\nHastings exec chair Charles Lew says ex-China magnet supply chain is not currently cost-competitive
\nYangibana debt package close, with concentrator construction forecast to begin Q4 2024<\/p>\n
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The owner of a large rare earths deposit in WA has issued a placement that will give the one of the world\u2019s biggest permanent magnet producers listed in Hong Kong, a near 10% stake.<\/p>\n
Hastings Technology Metals (ASX:HAS)<\/strong><\/a>, which also has a 22% share in TSX-listed magnet producer Neo Performance Materials, will rake in $7 million from JL Mag Rare-Earth Co. via the issue of 19.6 million shares at 36c.<\/p>\n A 22.8% premium to HAS\u2019 10 day VWAP up to July 5, the $3.1bn capped JL Mag will take a 9.8% stake, with the funds added to a $16m raising completed in April.<\/p>\n It\u2019s the second deal Hastings has inked with a participant in China\u2019s dominant rare earths supply chain after an offtake and toll treatment agreement entered into earlier this year with a rare earths processor.<\/p>\n Hastings previously announced an offtake deal via a binding term sheet that would see it sell rare earth concentrate at a minimum rate of 10,000tpa over Yangibana\u2019s first seven years to Baotou Sky Rock Rare Earth New Material Co., which would toll process the material into rare earths oxide in China.<\/p>\n While China\u2019s control of the rare earths supply chain, producing more than 90% of the world\u2019s rare earth derived permanent magnets, has become a hot button political issue in the West post-Covid, Lew said the concentration of infrastructure in China meant it remained the most realistic prospect to become a near term producer.<\/p>\n \u201cIn terms of the rare earth producers and the magnet producers, magnet makers, 90-95% of magnets are made in China, in terms of what we call permanent magnets,\u201d Hastings executive chairman Charles Lew said in an interview today.<\/p>\n Lew said the JL Mag investment and potential for collaboration down the track could set Hastings on a path to delivering a mine-to-magnet solution to establish itself in the rare earths market.<\/p>\n As of June, Hastings had spent $153 million constructing mine infrastructure for the Yangibana project in WA\u2019s Gascoyne. The whole thing is expected to cost $474m, with another $321m needed at June 13 likely to be sought in the form of debt.<\/p>\n Construction of a beneficiation plant is expected to begin in Q4 2024, eventually producing 37,000tpa of mixed rare earth concentrate from H1 2026 on.<\/p>\n Only Iluka has plans to produce separated rare earth oxides onshore in Australia at its $1.8bn Eneabba plant, while Lynas is in the process of beginning a partial processing step at an over budget and overdue cracking and leaching plant in Kalgoorlie.<\/p>\n \u00a0<\/p>\n Already the world\u2019s top rare earths producer by a country mile, China\u2019s efforts to gain a share of Australia\u2019s resources have been met with pushback from sectors of the industry.<\/p>\n Iluka Resources (ASX:ILU)<\/strong><\/a> MD Tom O\u2019Leary unusually used the ASX 100 firm\u2019s most recent AGM to rail against China\u2019s control over rare earths pricing and market dynamics.<\/p>\n His firm is facing cost overruns on a refinery at its Eneabba project in WA\u2019s Mid West at the same time as NdPr prices sit at cyclical lows.<\/p>\n Browns Range project owner Northern Minerals (ASX:NTU)<\/strong><\/a>, meanwhile, has spent much of the past year facing an attempt from a Chinese shareholder to take control of its board, with investors interpreted to be linked by the Foreign Investment Review Board ordered to sell their shares by Treasurer Jim Chalmers last month. A number of director applications, not endorsed by the NTU board, were knocked back at the company\u2019s recent AGM.<\/p>\n And Arafura Rare Earths (ASX:ARU),<\/strong><\/a> the most advanced Australian developer after Lynas, Iluka and Hastings, has received hundreds of millions in loan commitments not only from the Australian Government, but also from the export credit agencies of Korea, Canada and Germany, all keen to secure a non-Chinese source of the metals used in electronics, wind turbines and EV motors.<\/p>\n But other juniors have leveraged investments and offtake deals from Chinese producers in the hope of getting into production faster.<\/p>\n ASX-listed but Tanzanian focused Peak Rare Earths (ASX:PEK)<\/strong><\/a> is planning to sell all of its concentrate and 50% of its intermediate and final products over its first seven year to near 20% shareholder Shenghe Resources, a major Chinese rare earths company, which also holds the offtake contract for MP Materials\u2019 Mountains Pass mine in the USA.<\/p>\n Peak chair Russell Scrimshaw told the AFR <\/em>last year those not selling to China were \u2018twiddling their thumbs\u2019 waiting for infrastructure to process rare earths and produce magnets to be developed elsewhere.<\/p>\n Hastings\u2019 Lew said major OEMs he had spoken to were interested in sourcing around one-third of their supply outside of China.<\/p>\n But the rest of the world is so far behind that the prospects of sourcing material for aircons, EVs and wind farms without a major premium is currently remote.<\/p>\n \u201cThe<\/span> rhetoric<\/span> is<\/span> catchy<\/span> to<\/span> say<\/span> that<\/span> I<\/span> want<\/span> a<\/span> non-<\/span>China<\/span> supply<\/span> chain,\u201d Lew told Stockhead.<\/em><\/span><\/p>\n \u201cBut<\/span> the<\/span> problem<\/span> is<\/span> that<\/span> nobody<\/span> today<\/span> has<\/span> been<\/span> able<\/span> or<\/span> is<\/span> willing<\/span> to<\/span> invest<\/span> in<\/span> a<\/span> downstream<\/span> investment<\/span> into<\/span> a hydromet<\/span> oxide,<\/span> separation,<\/span> metallising,<\/span> alloying<\/span> and<\/span> magnet<\/span> plant<\/span> outside<\/span> of<\/span> China,<\/span> and<\/span> at<\/span> a<\/span> price<\/span> competitive (equal or a small premium),<\/span>\u00a0and<\/span> because<\/span> of<\/span> that <\/span>nobody<\/span> has<\/span> been<\/span> able<\/span> to<\/span> set<\/span> it<\/span> up<\/span> outside<\/span> of<\/span> China.\u201d<\/span><\/p>\n NdPr, the flagship rare earths oxide product and price benchmark, hit a record high of US$175\/kg in early 2022. But oversupply, rising interest rates and a waning Chinese economy saw that fall to around US$50\/kg over the past two years.<\/p>\n Hastings is pursuing a toll treatment model with Baotou in China to produce downstream materials. In a way it appears akin to what a number of Australian lithium companies such as Pilbara Minerals (ASX:PLS)<\/strong><\/a> and Mineral Resources (ASX:MIN)<\/strong><\/a> have done with spodumene sales in the recent past.<\/p>\n HAS is aiming to wrap up its debt package for Yangibana, which is already the recipient of an untapped $140 million Northern Australia Infrastructure Facility loan, in the coming quarter.<\/p>\n Lew said the toll treatment model will make the project easier to finance.<\/p>\n \u201cI think it\u2019s no secret to anybody that if we were to build our own hydromet plant and oxide separation plant in Australia and try and sell NdPr oxides based on Australian input costs, I can tell you that we haven\u2019t got a chance at $50\/kg,\u201d he said.<\/p>\n Lew said the JL Mag investment feeds into this broader narrative, with Hastings, which is still hoping to supply magnet producers outside China in the years to come, aiming to develop a business model that can weather cyclical lows.<\/p>\n \u201cThe commodity price can be US$50 today and US$150 tomorrow, and at US$150 everybody will make money,\u201d he said.<\/p>\n \u201cBut I need to think about, can Hastings survive at US$50 and (I believe) the answer is, with our business model, yes.\u201d<\/p>\n $60m capped Hastings has taken a 75% share price hit in the past year, but closed 4.5% up today at 35c.<\/p>\n \u00a0<\/p>\n Now to dealmaking that has nothing to do with China, and Ramelius Resources (ASX:RMS)<\/strong><\/a> has put the cue in the rack in its pursuit of deals with Westgold Resources (ASX:WGX)<\/strong><\/a> and TSX-listed Karora Resources.<\/p>\n The announcement late yesterday came in response to a decision from the Takeovers Panel not to make a declaration of unacceptable circumstances over clauses in Westgold\u2019s merger with the Beta Hunt mine owner, which Ramelius claimed had formed an improper barrier to its own hopes of acquiring its Mid West neighbour.<\/p>\n Some of that related to a standstill put in place after RMS and WGX had quiet chats in November last year, which were protected by a confidentiality deed.<\/p>\n No dice, and RMS is off to focus on its next concern, the waning mine life at its Edna May gold mine and complex scheduling to get the balance right at its flagship Mt Magnet project.<\/p>\n Mt Magnet is increasingly being filled from multiple different sources trucked to the mill, with the high grade Penny mine to make a big contribution in the next few years and the Cue gold project acquired from Musgrave Minerals last year also approved for development.<\/p>\n RMS also has a near 18% stake in Dalgaranga owner Spartan Resources (ASX:SPR)<\/strong><\/a> after a ~$180 million splash in the past couple weeks to get a seat at the table when it comes to the future of Spartan\u2019s exciting Never Never discovery, where a resource upgrade is due soon after more solid drill hits announced to the ASX today.<\/p>\n The materials sector closed the day up 0.59% despite higher portside inventories in China sending iron ore prices lower and a pause in central bank gold in Asia that hurt bullion.<\/p>\n \u00a0<\/p>\n Liontown Resources (ASX:LTR)<\/strong><\/a> (lithium) +5%<\/p>\n Vulcan Energy Resources (ASX:VUL)<\/strong><\/a> (lithium) +3.7%<\/p>\n Nickel Industries (ASX:NIC)<\/strong><\/a> \u00a0(nickel) +2.5%<\/p>\n IGO (ASX:IGO)<\/strong><\/a> (lithium\/nickel) +1.8%<\/p>\n \u00a0<\/p>\n WA1 Resources (ASX:WA1)<\/strong><\/a> (niobium) -7.2%<\/p>\n Resolute Mining (ASX:RSG)<\/strong><\/a> (gold) -3.2%<\/p>\n West African Resources (ASX:WAF)<\/strong><\/a> \u00a0 (gold) -2.8%<\/p>\n Westgold Resources (ASX:WGX)<\/strong><\/a> (gold) -2.7%<\/p>\n \u00a0<\/p>\n The post Monsters of Rock: Chinese firm loads up on Aussie rare earths and more Ramelius\/Westgold<\/a> appeared first on Stockhead<\/a>.<\/p>","protected":false},"excerpt":{"rendered":"Pushback from the West<\/h2>\n
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