The next mining boom? Rare earths and the rise of Australia’s ‘other’ minerals
Lithium, cobalt, titanium, rare earths – expect to hear more about them as we transition to green technologies. But what are they, actually? And what are they for?
Coal and iron ore are the heavy hitters of minerals in Australia. They’re our two top mining commodities by far, together accounting for 30 per cent of national exports.
But a handful of other minerals have become rather fashionable in recent times. They account for a small fraction of our export earnings and it’s mostly small operators that dig them out of the ground, with just a couple of big names in the mix. Yet they are rapidly becoming more important and edging their way into common parlance as result.
The sci-fi-sounding rare earths is one. Titanium is another.
“He’s a man of titanium,” US President Donald Trump declared of our Prime Minister, Scott Morrison, this year, adding a zeitgeisty, if incomplete, fast fact: “You know, titanium’s much tougher than steel.”
And no conversation about the future of energy would be complete without a knowing nod to lithium, nickel and cobalt.
The resources sector has found itself the target of growing pressure as activists and climate-conscious investors push for the reduction in emissions necessary to avoid the most dire and immediate effects of climate change.
But behind the heightened profile of these “other” Australian minerals is a simple fact: they are essential in many green technologies, from solar panels and wind turbines to electric vehicles and large-scale batteries.
So what are rare earths, titanium, lithium, cobalt and nickel? How much of the world’s supply of each do we contribute? Who buys these minerals from us and what do they do with them?
Two years is a long time in the volatile global commodities market. Long enough for the world’s biggest miner, BHP, to go from plans to sell off its Western Australian nickel assets to declaring instead that the lustrous silvery-white metal had now become one of its core businesses.
The decision to put its sale plans into reverse came after BHP conducted a routine analysis testing itself against “many divergent scenarios” for how the world might look in the future. In this instance, BHP was testing its assets against the electrification of the transport sector in a carbon-constrained world and the forecast boom in electric vehicles.
“Developments such as climate change and dramatic shifts in technology present both challenges and opportunities,” said BHP chief executive Andrew Mackenzie at a conference in Spain in May.
Due to the expected surge in demand for battery ingredients such as nickel, and the relative scarcity of nickel-sulphide supply, BHP determined its Nickel West assets in WA offered “high return potential” as a future growth option. It built a plant to begin processing the nickel into the turquoise-coloured nickel sulphate for use in batteries – a process currently carried out in Asia – and invested $50 million into nickel exploration activities across the state.
Nickel is used in lithium-ion batteries in the cathode – one of the pair of electrodes inside a cell through which current flows. When lithium-ion batteries have more nickel, they have greater storage capacity and therefore allow electric vehicles to travel longer on a single charge. As of 2019, BHP now sells more than 75 per cent of its nickel production to the electric vehicle battery materials industry. And, according to BHP’s estimates, nearly half of all light vehicles could be electric by 2050.
The promising outlook for nickel has also lifted the fortunes of other Australian nickel operations, even bringing some mines back from the brink. Canadian miner First Quantum Minerals had suspended mining at its WA Ravensthorpe mine in October 2017. But after the nickel price rebounded sharply in the first half of the year, the company now says preparations for a restart are underway.
The price of nickel surged in September to its highest point in five years after Indonesia, the world’s biggest nickel producer, announced a ban on exports would take effect from the beginning of 2020.
There are two main types of nickel deposits: lateride, found close to the surface but with a low nickel content, and sulphide, found deep below the ground and easier to extract profitably. BHP’s nickel sulphide ore is mined in open-cut and underground mines in the Northern Goldfields before being crushed, concentrated, dried and railed to the Kalgoorlie nickel smelter, where it is processed into a granulated matte product. It’s then sent by train to the Kwinana nickel refinery and converted into nickel metal before being exported overseas. Two-thirds of Australia’s nickel goes to Malaysia, Taiwan and China, according to WA’s mining department.
Australia’s “silver” coins are made up of 25 per cent nickel (and 75 per cent copper). But, more broadly, more than two-thirds of the world’s total nickel production is used to make stainless steel; nickel is what makes stainless steel so durable.
In the mid-1800s, a new name for petroleum came into use. Black gold, they called it black because of its colour when it came out of the ground and gold due to the fact it rapidly became the dominant fuel of the 20th century, making everyone who discovered it profoundly rich.
These days, many in the mining industry think the next rush could be about to begin: for “white gold” or lithium. And Australia is the world’s number one producer, accounting for 47 per cent of global lithium output.
Mined from hard-rock mineral deposits and brine beneath salt flats, lithium is soft, silvery-white and the lightest metal on the periodic table.
It has traditionally been used in the manufacture of ceramics, glass and lubricants, and as a treatment for mental health disorders, but nowadays is best known as a component in rechargeable batteries used in mobile phones, laptops, electric cars and renewable energy storage.
The world’s appetite for lithium has been soaring alongside the accelerating take-up of electric vehicles. Since 2010, its value has tripled.
“Australia is well-positioned to capitalise on the significant opportunities presented by the lithium-ion battery era,” Austrade said in a report in 2019.
“Australia has the world’s third-largest reserves of lithium and is the largest producer of hard-rock lithium spodumene.”
Lithium resources occur in two distinct categories: lithium minerals, which come mainly from the lithium-rich hard-rock spodumene, and lithium from salts, largely brines in salt lakes. All of Australia’s lithium resources and production are from minerals, with several mines in WA, including Greenbushes, Wodgina, Mount Marion, Mount Cattlin, Pilgangoora and Bald Hill, with much of it sent to China as well as Japan and Korea.
But while the electric vehicle revolution is coming, for some lithium producers it isn’t soon enough. Timing is everything in this business: in China, which is the world’s biggest electric car market, electric vehicle sales fell nearly a third in September, the third consecutive monthly decline. The concern that new producers have added too much volume too quickly has undermined lithium demand and sent the price of lithium derived from Australian hard rock plunging more than 40 per cent over the past year.
While few dispute the long-term appetite for lithium, this year Bald Hill has been placed in the hands of administrators, and many other operators have scaled back production dramatically.
“Just a big demand signal is not enough to know that you will durably make a lot of money over the life of an asset,” explains BHP vice-president of market analysis and economics Huw McKay. Many battery raw materials including lithium, he says, are much smaller markets compared to nickel, which is difficult to find and less vulnerable to market changes due to its end use in stainless steel.
“They will be able to sell everything they produce, sure – but it could be very ‘whippy’ in terms of the actual price at which they can sell,” says McKay.
“There is no guarantee they will make a decent return on their capital.”
Rare earths are not that rare. A family of 17 obscure minerals found near the bottom of the periodic table, they occur everywhere in the Earth’s crust and in greater amounts than many other elements. Even the rarest of rare earth minerals, thulium, is more plentiful than gold.
Rare earths are rare in the sense they are sprinkled all over the planet in very small concentrations. And because they are fused with other metals, refining and extracting them is an onerous and expensive process.
Cerium, dysprosium, erbium, neodymium, praseodymium … all fly under the radar even though they form many of the vital components that power our modern world, via a catalogue of high-tech products we could barely live without.
Neodymium, for instance, is used to make powerful magnets for products such as computers and loudspeakers, as well as wind turbines and hybrid cars. Scandium is used in metal alloys for the aerospace industry. Compounds of cerium, lanthanum and lutetium are used in glass polishing or to manufacture telescope lenses and special screens such as those used on smartphones and cameras.
Australia has some of the world’s largest recoverable deposits of critical minerals and is the world’s second-largest producer of rare-earth elements including neodymium and praseodymium – a position that could prove decidedly advantageous in the context of the simmering geopolitical tension between the United States and China.
China, according to some estimates, is believed to hold up to 50 per cent of known global resources and accounts for 80 per cent of their production. This dominance has recently prompted growing alarm in Washington following warnings that Beijing may move to restrict shipments due to its trade war with America.
So, as the US seeks to loosen its reliance on China, federal Resources Minister Matt Canavan has been promoting the potential for the Australian rare earths industry to ramp up export ties with the US.
Australia’s Lynas Corp, for example, is the biggest rare earths producer outside of China. Other Australian rare earths companies include Northern Minerals, Arafura and Alkana Resources.
The Minerals Council of Australia is excited about the “enormous potential” to grow national trade and investment through rare earths.
“Australia is well-positioned to extract and export the critical minerals the world needs for faster, smaller and more powerful technology,” says Minerals Council chief executive Tania Constable.
When miners in 16th-century Saxony were searching for precious metals such as gold and silver, they found cobalt instead. It looked like silver and they tried to smelt it but it emitted arsenic-containing fumes, hence the origins of the name, from the German kobold, meaning goblin or evil spirit.
Cobalt, usually a by-product of copper and nickel ore processing, is just one of five elements on the periodic table that is ferromagnetic, meaning it can be magnetised and retains a permanent charge. Today, it is the main power source for mobile phones and electric vehicles.
Cobalt is a key ingredient in lithium-ion rechargeable batteries – specifically, in the cathode, which is the positively charged electrode. It provides the stability and high-energy density that allows batteries to operate safely and for longer periods.
While the fast-growing electric vehicle market has led to a surge in cobalt exploration, its price has been rocketing in recent years before flattening in 2019 due to the same problem facing other battery raw materials – too much global supply too quickly.
Although the ninth-largest producer of cobalt, Australia has the second-largest reserves of it in the world. About 45 per cent of the world’s deposits come from the Democratic Republic of Congo, according to consultancy giant KPMG. Reports of child labour and human rights abuses connected to cobalt mining in the African nation are common and have raised concerns for customers, including some of the world’s biggest automakers, about the conditions in which the mineral is being mined.
In Australia, Cobalt has been produced by mines in Western Australia and South Australia.
Cobalt’s use dates back to ancient Egypt, in the rich, blue pigment decorating ceramics and glassware. But cobalt is also essential in the structure of vitamin B12, and it has been illicitly used to enhance endurance in athletes.
Research in the 1940s and 1950s showed mice produce more red blood cells and haemoglobin when given cobalt. The more red blood cells generated, the greater the ability to carry oxygen and this allows peak performance levels to be maintained longer.
Cobalt naturally appears in horses but racing authorities across the world set a threshold when stewards found cases of trainers upping the level of cobalt in their horses to enhance performance.
In the 1960s, beer brewers added a cobalt compound to beers to maintain the head on a beer for longer. But, after a rash of heart disease and deaths in heavy beer drinkers, the US Food and Drug Administration banned the substance after evidence showed cobalt was causing “cobalt-beer cardiomyopathy”.
As strong as steel but 45 per cent lighter, titanium is the ninth-most abundant element in the Earth’s crust. It occurs in what’s known as “mineral sands” deposits, particularly ilmenite and rutile, of which Australia is the world’s biggest producer.
Named after the Titans of Greek mythology, titanium is a relatively modern metal when compared to iron and copper, which have been around for thousands of years. First commercially produced in the 1940s, its strength, corrosion resistance and extremely high melting point make it ideal for use in aeroplanes, spacecraft, missiles, sports equipment and bike frames.
Most beach sands consist of the grains of the mineral quartz. Mineral sands, however, are old beach, river or dune sands, explains Geoscience Australia, that contain concentrations of rutile and ilmenite, zircon and monazite. These heavy minerals are heavier than common sand minerals.
In Australia, mineral sands deposits containing rutile and ilmenite are found mostly on the eastern, western and southern coastlines. Large deposits from old beaches, known as relic deposits, lie as far inland as Ouyen in Victoria (Wemen, Bondi, Kulwin deposits) and in south-western New South Wales (Ginkgo, Snapper deposits), according to Geoscience Australia.
Deposits also exist in the Eucla Basin around the Great Australian Bight. In WA, deposits are distributed from the southern tip of the state to Geraldton, at the present coastline or at old beaches up to 35 kilometres inland.
Titanium dioxide is one of the whitest and brightest substances known and is often used as a pigment in paints, paper and toothpaste.
Architect Frank Gehry also recognised titanium’s appeal: his Guggenheim Museum in Bilbao in Spain is covered in 33,000 wafer-thin titanium sheets.
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