Federal Resources Minister Madeleine King | Australian Markets
Federal Resources Minister Madeleine King has urged Australia might replicate the US authorities’s transfer to grab a massive shareholding in a uncommon earths company.
The US Department of Defense final month struck a landmark deal with the Gina Rinehart-backed MP Materials to amass a 15 per cent stake within the Las Vegas-headquartered company and buy some of its uncommon earth ingredient merchandise.
Uncle Sam took the extraordinary equity investment step — believed to be the primary of its sort since World War II — as half of its push to interrupt China’s stranglehold on the availability chain for uncommon earth parts.
These parts are used within the magnets that energy digital merchandise like precision-guided missiles, MRI machines, smartphones and electric autos.
Speaking on the Diggers & Dealers Mining Forum on Tuesday, Minister King mentioned the Albanese Government “certainly wouldn’t” rule out following within the footsteps of the US by instantly investing in an Australian-based producer of uncommon earths.
“I would say that the government special investment vehicles, a number of them, have been enabled, through changes in legislation, to take equity stakes for a number of years,” she mentioned.
“It’s a high bar to get over, (but) you certainly wouldn’t rule it out.”
Ms King mentioned the Federal Government would solely make an investment if there was confidence the quantity spent could be repaid in full.
“Because people would quite rightly comment, why should the Australian taxpayer fund minerals processing?”
Lynas Rare Earths, Iluka Resources, Australian Strategic Materials and Arafura Rare Earths could possibly be amongst these vying for the Federal investment.
As half of the US and MP partnership, the DoD has agreed to pay a minimal of $US110 per kilogram for MP’s neodymium and praseodymium for a decade.
The US price flooring comes amid sturdy strategies China has been purposely miserable the price of NdPr to about half of the $US110/kg flooring to put the Western World’s producers out of business.
Minister King late on Monday mentioned Australia would additionally think about setting a uncommon earths price flooring in offtake agreements that might feed into a $1.2 billion crucial minerals strategic reserve introduced in April that shall be targeted on uncommon earths.
“Pricing certainty means companies and investors are less exposed to volatile markets and prices, which are opaque and prone to manipulation,” she mentioned.
“Mechanisms for an appropriate price floor are under active consideration. The focus will be on creating national offtake agreements.
“Our critical minerals strategic reserve aims to play a role in providing price certainty for emerging critical minerals projects, which helps to de-risk and crowd-in private sector investment.”
Shares in ASX-listed uncommon earth corporations on Tuesday all surged following the announcement.
Lynas, which had initially been a critic of the stockpile, seems to have softened its stance in latest days and Minister King on Tuesday mentioned the Amanda Lacaze-led company was “participating” in discussions.
One of Australia’s key gamers within the uncommon earths industry urged that Australia ought to observe the US lead on the price flooring.
“If you wanted to pick a price that brings in investors, that has upside because it’s still below the incentive price, you would say $(US)110 per kilogram (for NdPr) is about right,” Arafura chief govt Darryl Cuzzubbo mentioned at Diggers & Dealers on Tuesday.
Mr Cuzzubbo mentioned the “incentive price” to develop new uncommon earth tasks was a neodymium and praseodymium price of between $130/kg and $160/kg.
Perth-based Arafura, which is developing the $1.9b Nolans project within the Northern Territory, mentioned a $US100/kg NdPr has been baked into the business case for Nolans.
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