I wrote about lithium in another note. There’s famously not enough of it, prices are climbing. Perfect for Australian mining companies.
Australia’s energy sector is winning big from the current macro situation. Russian commodities are off the table, the US and Europe are rebuilding supply chains, nobody wants complete dependence on China anymore. Perfect timing for Australia, especially in rare earths.
China dominates rare earths markets — the stuff you need for magnets that make electrification and renewable energy work. Mainly wind power.
Here we’ve got Lynas and Iluka as heavyweights you could invest in blindfolded. But what about the emerging miners still in exploration or development? How do you compare resources?
Clay, rocks, fragments — what matters in rare earths
Mining rare earths is expensive and complicated. China has lots of “ionic clay” hiding rare earths. On the ASX there’s “Ionic Rare Earths” — interesting company wanting to extract from clay deposits in Uganda.
“Ionic clay” is the magic phrase right now. But economically, only “in-situ leaching” works — basically washing hard rock to get at the rare components. Soon though, rare earth prices will climb enough to make clay processing profitable.
The new gold is very rare
Australian gold miners are jumping on the rare earths trend. Not particularly lucrative for them. They get 50-60 US dollars per gram for gold. Rare earths currently have a “basket value” of just cents per gram.
The most important thing to understand as a rare earths investor: PPM figures in drilling announcements. Parts per million. 800 PPM sounds fantastic, right? Except 10,000 PPM equals just 1 percent TREO (Total Rare Earth Oxides).
Rule of thumb: Less than 1 percent TREO and under 100,000 tonnes of TREO resource? Hard rock mining will be tough.
The earth isn’t just rare — it can be light or heavy
Clay can have much lower PPM (500-750), but you need massive resources to make it work. Also important: whether your resource is “light” rare earth oxides (LREO) or “heavy” (HREO).
With LREO, neodymium is the critical element. HREO are much harder to extract, therefore more valuable. HREO go into magnets — wind turbines, for example.
Australian rare earths companies are in full gold rush mode. It’s spilling into other areas too. I recently read a fascinating novel, “Opal Country”, where the whole theme gets a crime fiction treatment. Worth reading — like everything by Chris Hammer.
This started life in German on reinergaertner.de, my blog since 1997. The English version was AI-assisted. My German-trained eyes may have missed a few things along the way. She’ll be right.