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OPERATIONAL REVIEW
DIGGeRs & DeALeRs PReVIeW MACA.NET.AU

ASM maintains Korean ties

ustralian Strategic Materials Ltd (ASM) “The support we continue to get from also ongoing with the same investors for a
Acontinues to maintain close ties with Korea and the industry is generally very five-year, 2,800t offtake agreement for neo-
the South Korean Government and its busi- strong,” he said. “Now they’re looking for us dymium magnets from the recently opened
nesses following the opening of a high-purity to deliver the product. metals plant.
critical metals plant south of Seoul this year. “I think what has been encouraging for “We had the investment into Dubbo for
The plant, located in a foreign investment South Korean business from ASM is that $US15 million at a very high premium which
zone, will produce metals and alloys includ- we’ve actually invested a lot of infrastruc- reflects the value they see in that integrated
ing neodymium, iron, boron and titanium. ture and capacity into their manufacturing. business,” Woodall said. “We’re really hap-
ASM managing director David Woodall We are receiving a lot of support from their py with that, it’s now non-exclusive which al-
said the opening marked just Phase 1 of Government, both provincially and feder- lows us to talk directly to strategic investors.
operations. ally.” “I think it’s very much a win-win. It’s a rec-
“Phase 1 commissioning is progressing, Opening such a plant is a cornerstone ognition of how an Australian-Korean part-
that’s a 2,200 tpa nominal capacity focus- of ASM’s “mine to metals” business model nership can work for both parties.”
ing on the permanent magnet alloy,” he told with future plants to take product from the ASM also awarded Hyundai Engineer-
Paydirt. “We’re also going to move onto do- company’s Dubbo rare earths project in ing Co. Ltd an EPCD contract for Dubbo in
ing some copper titanium. New South Wales. early June. An open book estimate on the
“That is a proof of concept. We work on Dubbo’s resource stands at 75.18mt @ project will follow the completion of works.
that, we get it up and running, we get the ef- 0.74% total rare earths oxide with a basket Meanwhile, with the recent change of
ficiencies right and improve where we think of zirconium, hafnium, niobium and tanta- Government Woodall has high expecta-
we can. Then we go into Phase 2 which lum. An optimisation report on the project tions for stronger Australian-Korean rela-
gets us to 5,200 tpa. last year estimated a pre-tax NPV of $2.36 tions.
“This will be the first of poten- Woodall said this would be
tially a number of plants that will important for both economic
be located strategically around prosperity and repositioning the
the world, so it has gone very resources industry beyond its
well.” current “dig and ship” model to
The plant’s opening ceremony support a decarbonising future.
in May saw the attendance of “Of what we hear from the
South Korean Government offi- new Australian Government,
cials and representatives from a there’s a much sharper focus
number of industries. on climate change and that’s a
Rare earths which the plant key component,” he said. “Up to
will produce are increasing in 25% of rare earths consumption
demand for use in permanent in the world today is in EVs and
magnets, wind turbines, batter- renewable energy. By 2035,
ies, high-tech devices, consumer that’s going to go to 50%. The
electronics and the defence in- question now for the Australian
dustry. Government is how that is going
Demand for rare earth oxides to be achieved.
could increase to more than “There are a number of pro-
300,000t by 2025, having sat David Woodall speaking at the opening of the critical metals plant jects in Australia that can be part
at around 200,000t in just 2019. south of Seoul earlier this year of that solution. We need every
However, researchers are fore- single near-term rare earths
casting an impending shortage on rare billion, pre-tax IRR of 23.5% and annual project to get into production, that’s a fact
earths by 2035. free cash flow of $435 million after ramp up if we’re going to deal with climate change.
Catalysts for the shortage include a lack of operations. It’s not just about rare earths, it’s also nickel
of new producers, an inability of current pro- Seoul-based KCF Energy Co. Ltd re- and copper.
ducers to increase output and a global de- cently invested $US15 million into ASM “There is a terrific opportunity for Austral-
pendence on Chinese production. Adamas due to an interest in Dubbo. Woodall said ia to pivot away from the dig and ship mod-
Intelligence estimates that China produces the investors were receptive to the vertically el, which we are exceptionally good at, but
up to 90% of the world’s neo magnets. integrated business model. it would help us support the manufacturing
ASM has long been fostering a business “The Koreans were looking at a vertically of new technologies and to be an enabler
relationship with South Korea – the home of integrated solution from Dubbo producing of that in Korea, the US and Europe. This is
rare earths hungry brands such as Hyun- metal oxides to a metal plant that can pro- about how you de-risk your supply chains.”
dai, LG and Samsung – to diversify global duce the alloys that go into magnets and go
sources of rare earths. directly into the OEMs,” he said. – Fraser Palamara
Following the metals plant’s success- The investment was made via a share
ful opening, Woodall expects the bond purchase at a premium of $8.90/share in
between ASM and Korean businesses to mid May when ASM shares were trading
grow even further. at around $5.75/share. Negotiations are

aUSTRaLIa’S PaYDIRT JULY 2022 Page 69