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Australia’s critical position

26 August 2022 14:21

The United States’ Inflation Reduction Act is looking to kill two birds with one stone — it hopes to take action against climate change and the growing death grip rampant inflation has on the US economy, as it ramps ups domestic production of electric vehicles.

An increase in production will require an increase in the supply of the scarce but critical metals required for EV batteries, and this is where Australia steps up.

Home to one of the world’s largest supplies of essential battery metals, Australia has signed a deal with the US government to become the priority battery metal supplier for US automotive companies, giving the mining-friendly country a massive head start in this growing industry.

This deal has opened up an entirely new avenue for Australian companies who previously relied on China to process these battery-essential metals and provides incentive for domestic processing.

One company poised to take full advantage of this massive opportunity is Western Australia-based Arafura Resources, which could become a major player in this new market with the completion of its Nolans project.

Nolans will encompass both mining and processing of rare earth elements, including critical metals under the IRA, and has the potential to make Arafura one of the biggest REE suppliers in the world, sitting on a JORC mineral resources estimate of 56 million tonnes at an average grade of 2.6 per cent rare earth oxides.

Despite Nolans not being operational yet, Arafura has already signed a massive seven year offtake deal with automotive stalwart Hyundai for approximately 1000 – 1500 tonnes of neodymium-praseodymium annually when it reaches maximum production.

While the IRA deal specifically requires processed metals, it is an exciting prospect for Australia-focused explorers and miners as with growing demand for processed metals raises demand for the original.

First Development Resources’ chief executive Tristan Pottas believes junior explorers like FDR will bear a massive responsibility and play a critical role in Australia becoming a battery metal powerhouse.

“The whole supply chain right now is relying on our sector to set the platform to let us develop this brave new world,” he said.

FDR is hoping to get in on battery-critical minerals with its Selta project in Australia’s Northern Territory, prospective for REEs and showing signs of possible lithium mineralisation.

“There is such an insatiable demand for this type of metal that original equipment manufacturers are partnering with exploration companies in order to secure supply for these critical metals,” Pottas said.

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