I’ve written previously about the battle for so-called, future facing metals like copper, nickel and lithium. BHP’s recently rejected bid for Oz Minerals (copper / nickel) and Rio Tinto’s acquisition of the Rincon lithium project in Argentina, provides evidence of this increasing competition. However, a recent announcement has suggested that competition for another set of strategically important elements, rare earths, is also increasing.

Australian company, Hastings Technology Metals on 26 August 2022 announced that it had agreed ‘to acquire a 22.1% strategic shareholding in Neo Performance Materials Inc., a leading global rare earth processing and advanced permanent magnets producer listed on the TSX.’

The news release went on to say that ‘The acquisition is intended to be funded by a A$150 million cornerstone investment in Hastings Metals by Wyloo Metals, through the issuance of secured, redeemable, exchangeable notes.’

It’s important to understand that China currently dominates the mining (approximately 61%) and processing (approximately 87%) of rare earth elements.

NdPr Oxide (Nd – Neodymium and Pr – Praseodymium) for example, is key to the manufacture of permanent magnets used in electric vehicles (EVs) and wind turbines and China currently supplies over 90% of the world’s rare earth magnets.

Source: Lynas Rare Earths presentation (page 14), 26 August 2022.

Now, Wyloo Metals’ involvement in this rare earths transaction caught my attention. You might not have heard of this company, but they’ve been busy recently. In fact, in April 2022 Wyloo Metals completed the acquisition of Noront Resources, to gain control of a large nickel, PGM (Platinum Group Metals) copper deposit called Eagle’s Nest in Northern Ontario. They achieved this by outbidding the major diversified miner BHP, in the hunt for future facing metals.

So, who are Wyloo Metals? Well, they’re a private company owned by Tattarang. And according to Tattarang’s website ‘Tattarang is one of Australia’s largest private investment groups and is owned by the Forrest family.’ Ultimately, Wyloo Metals is owned and controlled by Australian mining billionaire Andrew Forrest, who made his fortune in the iron ore sector with Fortescue Metals.

Wyloo Metals’ acquisition of Noront in the nickel / copper space, and now their support of Hastings Technology metals in the rare earths sector, seems to suggest that Andew Forrest is thinking carefully about these strategically important elements. He also has the financial firepower to secure assets and appears to be stealing a march on the major diversified miners.

The rare earth sector is particularly interesting because of China’s dominance. In addition, high quality rare-earth deposits are harder to come by and processing is complex. Lynas Rare Earths, for example, is one of the very few fully integrated (upstream and downstream) rare earth producers outside of China. Lynas has a mining and concentration plant at Mount Weld, Australia and a refining facility in Kuantan, Malaysia. Also, such is the strategic importance of rare earths that on 14 June 2022 Lynas were awarded a US$120million US Government contract for a commercial Heavy Rare Earths Processing facility to be located in the US.

What Wyloo Metals appears to be doing with Hastings Technology Metals is bringing together the upstream mineral assets of Hastings Technology Metals, ie. the Yangibana deposit, with the processing capability of Neo Performance Materials.

As Hastings state “The acquisition provides a platform to explore potential partnership arrangements, with Neo utilising Yangibana’s feedstock in Neo’s downstream rare earth operations.”

The transaction appears to provide a path to another fully integrated supply chain for rare earths, outside of China.

This is a sector worth watching closely, particularly the NdPr permanent magnet space which is supported by the large structural drivers from the electric vehicle and wind sectors.

On reading through the announcement, I noticed that Hastings’ Yangibana deposit in Western Australia has an Ore Reserve containing 17.4 million tonnes of ore at grade of 0.95% Total Rare Earth Oxides (TREO).

I found this interesting since I’ve written previously about, and I own shares in, a Canadian exploration company called VR Resources (TSX: VRR). They’ve been drilling a deposit called Hecla Kilmer in Ontario looking for copper and gold. No significant grades of copper or gold have been found so far but interestingly, at the beginning of July 2022 they announced drill results showing 243 metres at 1.01% Total Rare Earth Oxides (TREO).

Approximately 20% of the Rare Earth Oxides are the valuable NdPr Oxides used in permanent magnets. The Hecla Kilmer system appears to be large, and a recent drill hole announced 18 August 2022 intercepted 25.5m at 1.13% TREO. This hole was located 1.5-2.5 kilometres to the south of the rare earth mineralisation discovered in the northern part of the complex.

The market, however, seemed disappointed with the lack of copper and gold.

It’s important to point out that this is early-stage exploration. But perhaps these Rare Earth Oxides discovered by VR Resources are more strategically important than the market has so far understood.

The competition for rare earths, I suspect, is going to increase.

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