Further information

For more information or to comment on this publication, please email: [email protected]

Project Team
Breanna Gasson, Caroline Lewis and Kate Martin

Acknowledgements
The authors would like to acknowledge the contributions of: Jee Karunarathna, Ralph Lam, Lauren Pratley and David Thurtell.

The publication also benefited from valuable feedback made by colleagues at the Critical Minerals Facilitation Office, Geoscience
Australia and the Department of Foreign Affairs and Trade.

© Commonwealth of Australia 2021

ISBN 978-1-922125-88-0
ISBN 978-1-922125-89-7
Outlook for Selected Critical Minerals: Australia 2021

Ownership of intellectual property rights

Unless otherwise noted, copyright (and any other intellectual property rights, if any) in this publication is owned by the
Commonwealth of Australia.

Creative Commons licence

All material in this publication is licensed under a Creative Commons Attribution 4.0 International Licence, save for content supplied by
third parties, logos, any material protected by trademark or otherwise noted in this publication, and the Commonwealth Coat of Arms.

Creative Commons Attribution 4.0 International Licence is a standard form licence agreement that allows you to copy, distribute,
transmit and adapt this publication provided you attribute the work. A summary of the licence terms is available from https://
creativecommons.org/licenses/by/4.0/

The full licence terms are available from https://creativecommons.org/licenses/by/4.0/legalcode

Content contained herein should be attributed as Outlook for Selected Critical Minerals: Australia 2021

Disclaimer
The Australian Government as represented by the Department of Industry, Innovation and Science has exercised due care and skill
in the preparation and compilation of the information and data in this publication. Notwithstanding, the Commonwealth of Australia, its
officers, employees, or agents disclaim any liability, including liability for negligence, loss howsoever caused, damage, injury, expense
or cost incurred by any person as a result of accessing, using or relying upon any of the information or data in this publication to
the maximum extent permitted by law. No representation expressed or implied is made as to the currency, accuracy, reliability
or completeness of the information contained in this publication. The reader should rely on their own inquiries to independently
confirm the information and comment on which they intend to act. This publication does not indicate commitment by the Australian
Government to a particular course of action.
Contents

04 04 06
1. Overview 1.1 Critical minerals: 1.2 Australia’s
strategic interest and current and
growth opportunities potential role

07 08 10
1.3 Focus of this 1.4 Summarised 2. Rare Earth
report findings Elements

19 26 32
3. Cobalt 4. Graphite 5. Vanadium
1. Overview
1.1 Critical minerals: strategic interest and growth opportunities
Critical minerals are metals and non-metals that have important economic functions, cannot be easily
substituted and face some degree of supply risk. Supply risks can stem from geological scarcity,
geopolitical issues, trade policy or other factors, resulting in critical mineral lists differing by jurisdiction1.

Critical minerals typically have an important role in industrial applications, but it is their vital, and rapidly
growing, role in new technologies that is sparking interest and expectations of faster demand growth.

Economic security and supply-chain reliability is also driving attention in critical minerals, as some
governments look to avoid the negative impacts of trade dependence and related market shocks.
Increasing awareness of mineral sourcing ethics, including environmental and social impacts,
is driving further interest in mineral supply chains (e.g. EU battery regulations and industry led
cobalt traceability measures).

Electric vehicles Renewable energy

generation
Global EV fleet size
is projected to increase Global wind capacity is
a year projected to increase
30% to 2050
6% a year
to 2050
Battery
Permanent
• lithium
magnets Permanent magnets use
• cobalt • rare earth neodymium, praseodymium
• nickel elements
and dysprosium
• graphite • copper

Energy storage
Global stationary battery
storage projected
to increase
a year
8% to 2050

1 For example US and EU lists (https://www.usgs.gov/news/interior‑releases‑2018‑s‑final‑list‑35‑minerals‑deemed‑critical‑us‑na-

tional‑security‑and, https://ec.europa.eu/docsroom/documents/42883/attachments/1/translations/en/renditions/native).
See also Australia’s list in Australia’s Critical Minerals Strategy (https://www.industry.gov.au/data-and-publications/australi-
as-critical-minerals-strategy). For definition of critical minerals, see Geoscience Australia webpage on Critical Minerals:
https://www.ga.gov.au/about/projects/resources/critical‑minerals.
Figure 1.1: Critical mineral deposits and major mines in Australia

Source: Geoscience Australia (2020)

 1.2 Australia’s current and potential role
Australia is home to a large array of critical minerals, and has a history of effective mineral
development and integration with world supply-chains (Figure 1.1). The development of lithium
over the last decade has seen Australia become the world’s top producer, with ongoing growth
prospects still to come following substantial investment in mine and refinery capacity.

Australia’s stable investment environment and governance arrangements (including environmental

regulations) make Australia an attractive choice when considering responsible and secure mineral
supply. Manufacturers around the world are increasingly responding to consumer requirements
regarding input traceability and Australia supports initiatives, such as those of the International
Organization for Standardization, for increased transparency of mineral provenance.

Australia’s potential in these minerals extends from mine production to downstream investment
in value-adding processes. With research and development investment, geographic proximity
and complementary infrastructure, investment beyond mining projects is underway. Development
of Australia’s cobalt, graphite and vanadium resources (as well as lithium) and associated downstream
investment could see the battery value‑‍add supply chain expand in Australia: domestic lithium refining
is rapidly expanding, there is potential for rare earths refining and for domestic manufacturing of
vanadium batteries and graphite anodes.

As Australia commences its journey into downstream processing of lithium, cobalt and other
commodities, it is worth noting that the value multiplier along these paths is significant (as has been
shown for the lithium battery value chain Figure 1.2). Additionally, auto manufacturers have invested
heavily in the transition from internal combustion engines (ICE) to electric vehicles (EV), and therefore
it is in their interests to recoup their investment as quickly as possible. Currently, auto manufacturer’s
planned capacity increases to 2025 exceed the requirements of announced government policies
(Figure 1.3). This available capacity presents an opportunity for accelerating EV production,
as well as the demand for minerals used in EV production.

Figure 1.2: Projected value of lithium battery value chain

Mine/ Refine/ Precursor/ Battery cell Battery pack

Concentrate Process elec chemical production assembly

Hard rock vs brine LiOH,Li2 CO3 Li(NixMnyCO2)02 Sinter/Assemble Manufacture,

Graphite deploy, manage
In 2025:

Australia has 38% Australia has 4% Australia has 0% Australia has 0% Australia has 0%
of $26b industry of $63b industry of $385b industry of $550b industry of $1.7t industry

Source: Porteous et al, Office of the Chief Scientist (2018) Taking Charge: The Energy Storage Opportunity for Australia.
Department of Industry, Science, Energy and Resources (2021).

6 | Outlook for Selected Critical Minerals: Australia 2021

Figure 1.3: Manufacturer announcements compared to EV stock projections in two IEA scenarios

250

Battery pack
200 assembly
Millions of vehicles

Battery cell
150 production

100

50

0
2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030
Range of manfacturers declarations (estimate)
Stated policy scenario
Sustainable development scenario

Source: IEA, OEMs’ announcements compared to electric LDVs stock projections, 2021‑2025, IEA, Paris;
https://www.iea.org/data‑and‑statistics/charts/oems‑announcements‑compared‑to‑electric‑ldvs‑stock‑projections‑2021‑2025

1.3 Focus of this report

The 2019 Outlook for Select Critical Minerals publication provided a market outlook for six critical
minerals. Since then, markets have progressed (albeit in an interrupted fashion due to COVID-19),
as digital transformation accelerated, premiums for low-emissions technologies continued to decline
rapidly, and countries announced ‘green’ stimulus measures and net‑zero emissions targets.
This 2021 report provides an additional contribution, with coverage on rare earths used in permanent
magnets; a supply chain analysis and an update on Australia’s development projects in this space.

The four critical minerals chosen for this report — rare earth elements, cobalt, graphite and vanadium
— have been investigated due to Australia’s relatively favourable resource endowment and the
prospects for strong market growth. These minerals are featured in the official US, EU and Canadian
critical mineral lists, reflecting their importance in terms of future consumption and economic security
requirements. While these minerals have important uses in conventional applications such as steel
production, catalysts, pigments and other uses, these minerals are all used in battery and electric
vehicle (EV) applications, meaning expectations of transport electrification and energy storage
advancements could significantly impact the respective markets.

For further analysis of other minerals in which Australia conducts significant mining activity, such as
lithium, copper and nickel, please see the Department of Industry, Science, Energy and Resources
quarterly publication, Resources and Energy Quarterly, available at: https://www.industry.gov.au/req.

Outlook for Selected Critical Minerals: Australia 2021 | 7

 1.4 Summarised findings
The broad market outlook for these minerals is promising — a rapidly transitioning EV and battery
storage sector is expected to see consumption growth outpace production growth — elevating prices
to the benefit of producers. However, sharp price rises are usually not sustained, as shown by the
volatile history in the cobalt price. Instead, the gap between expected and actual consumption growth
will pivot on availability of supply, resulting from production uncertainties relating to ore body quality,
processing technology, high operating costs and waste management issues.

These findings show Australia is well placed to provide raw materials, and potentially refined,
product to the world, given appropriate market conditions. Across all minerals, consumption growth
is dependent on low‑emissions technology uptake, which is influenced by effective and secure policy
settings, as well as the cost and scale benefits that are becoming apparent in the EV transition. Of
the rare earth elements, neodymium, praseodymium, dysprosium, are expected to see consumption
growth. Competing against established producers may prove difficult, but some diversity of the supply
chain could provide strategic advantages.

Of the battery minerals — cobalt, graphite and vanadium — consumption is expected to grow,
although will likely be broadly matched by production growth over the medium term. These production
increases may include output from Australia, as well as the rest of the world. Mined cobalt production
is expected to more than double by 2030, to meet the increase in consumption. Such a trend will
require the development of significant additional mine capacity, including price‑sensitive production in
the Democratic Republic of the Congo. The graphite market is expected to see some market tightness
around the middle of the decade, before new production capacity comes online. There is particular
upside pressure on vanadium prices in the short‑term, which are expected to spike before 2023, and
then stabilise amidst rising production. It is worth noting that the energy storage market is lagging
behind the development of the EV market, and so may provide upside demand, principally for utility
scale storage. Vanadium redox flow batteries are suited to utility scale energy storage because they
have a longer life than a lithium battery and more efficient charge cycles. But they are physically
heavier than lithium batteries, making them unsuitable for EVs. Domestic scale energy storage is
likely to benefit from bi‑directional charging from EV’s to dwellings. Bi‑directional charging from EVs
allows householders to use their car batteries to store electrical energy that may have been gathered
by wind or solar and use it domestically. Since an EV may be a sunk cost for many households, this
may provide battery storage by default. Such functionality appears to be becoming standard for EV
manufacturers, posing upside risk to cobalt demand — depending on evolving battery chemistry.

8 | Outlook for Selected Critical Minerals: Australia 2021

Key critical minerals

Outlook for Selected Critical Minerals: Australia 2021 | 9

 2. Rare Earth Elements
World supply dynamics
2020 production
(thousand tonnes Australia
Country rare earth oxides) Share of world 4th largest 3.4% of
producer of the worlds
China 140 57%
rare earths rare earth
US 38 15% resources

Myanmar 30 12%

Australia 23 9%

Rest of world 18 7%

29% 20% 14% 8% 29%

Magnets Catalysts Polishing Batteries Others

Rare earth elements are used for a variety of applications

2.1 Key properties and uses

Rare earth elements are a group of metals with unique physical and chemical properties.
Certain rare earths are primarily used in the production of ‘permanent’ magnets since they are
‘ferromagnetic’ and can be magnetized like iron. Rare earth magnets are the strongest permanent
magnets available. The most popular rare earth magnet (composed of neodymium, iron, boron)
was developed independently by General Motors and Sumitomo. Generally, these permanent
magnets contain numerous rare earth elements including neodymium. Permanent rare earth
magnets are used extensively in low-emissions technologies like wind turbines and electric vehicles.

However, because the rare earths are chemically similar, their physical separation can be difficult,
time-consuming, costly and environmentally challenging.

10 | Outlook for Selected Critical Minerals: Australia 2021

Some of the most important rare earths used in permanent magnet production are:
● Neodymium (Nd) [light rare earth]
● Praseodymium (Pr) [light rare earth]
● Dysprosium (Dy) [heavy rare earth]
Terbium can also be used in permanent magnet production but its use is not extensive.
A more complete list of the rare earths and their uses is presented in Table 2.1.

Table 2.1: Rare earth elements and uses

Rare earth Uses

Light rare earths

Lanthanum Rechargeable batteries, automotive catalysts, television and computer screens

Cerium Automotive catalysts, glass, polishing powders

Praseodymium Permanent magnets for EVs and wind turbines, computers, consumer electronic screens

Neodymium Permanent magnets for EVs and wind turbines, computers, consumer electronic screens

Promethium Thickness gauges and atomic batteries for spacecraft and guided missiles

Samarium Magnets for small motors, cancer treatment and nuclear reactors

Europium Red and blue colours in LCD screens, anti-forgery marks on banknotes

Heavy rare earths

Gadolinium LCD screens, in steel to improve resistance to high temperatures

Terbium LCD screens and magnets for electric cars and turbines

Dysprosium Permanent magnets for electric vehicles and wind turbines,

Holmium Nuclear control rods, sonar systems, data storage and laser materials

Erbium Nuclear control rods, lasers

Thulium Lasers, as a radiation source in x-ray machines and anti-forgery marks on banknotes

Ytterbium Portable X-ray machines, lasers, earthquake monitors, strengthening stainless steel

Lutetium Positron Emission Tomography (PET) scanners for 3D images of cellular activity

Other rare earths

Yttrium Consumer electronics, energy efficient lighting, satellites and superconductors

Notes: Scandium is not included as a rare earth element in this list. Promethium does not occur naturally.
Source: Austrade (2019), Geoscience Australia (2013)

2.2 Substitution
Rare earth substitutes are available in some applications, but they tend to be less effective.
Users of rare earths have responded to supply issues and price spikes by reducing use in
non‑essential applications. However, the three important ‘magnet’ rare earth elements listed
above are not easily substituted in the production of permanent magnets. Gadolinium –
another rare earth – is sometimes substituted for terbium.

Market supply of the three REE’s from recycling was minor in 2020. Although recycling supply
is set to grow by 2030, it is not projected to be a significant part of supply — and thereby provide
a substitute for raw material inputs.

Outlook for Selected Critical Minerals: Australia 2021 | 11

 2.3 Supply chain analysis
The rare earths supply chain is complex, with processes depending on the end products desired
as well as the type of metals (e.g. magnet metals) or the style of chemicals (oxide or chloride etc.)
(Figure 2.1). China produces about 85% of the world’s refined rare earths products, while Australia’s
Lynas Rare Earths Limited (‘Lynas’; formerly known as Lynas Corporation) is the largest non‑Chinese
supplier of refined rare earth products.

Figure 2.1: Rare earths supply chain

Permanent
Mining rare Crack and magnet Magnet in
earths leach in
Metal oxides Production of production components
preparation
separation metals & final
for extracting
US$2bn product
metal oxides US$14bn

China China China

China
Australia China Vietnam China Japan
Malaysia
USA Malaysia Thailand Japan US
Australia
Myanmar Philippines Europe

Source: Roskill (2021); Department of Industry, Science, Energy and Resources (2021); IMARC Group (2021)

Whilst China produces rare earth products for its domestic consumption, it also exports to the world
— primarily to Japan, Europe and the US. Capacity for further refining is being developed in the US,
Australia and Russia. Roskill’s projected annual growth rate in end use demand for rare earths for the
world is 4.0% per annum over the next 10 years, with the increasing supply being largely met outside
of China as other countries work to regain their earlier expertise that declined due to the environmental
issues associated with refining rare earths. In particular, Lynas, in conjunction with the US Department
of Defence, is examining refining rare earths in Texas, concentrating on heavy rare earths production.

2.4 World production

China accounts for 57% of the world’s mined rare earths output and 85%
of refined output

In the rare earths market, China produces approximately 57% of global mined production and
around 85% of refined production, with supply largely controlled by six state‑owned enterprises.
China consumes most of the rare earths that it produces in domestic downstream value-adding.
China’s capacity utilisation is understood to be only 70% — giving room for increased production
from China. In the past, capacity utilisation has been as low as 45%2. Although China has extensive
rare earths production, it is increasingly reliant on imports from Myanmar, Madagascar, Australia and
the US. Having nearby of borders with Myanmar and other countries has led to illegal production being
unofficially imported to China, evading environmental and social regulations as well as mining quotas.

Global mine supply is projected to grow by 1.5% per annum over 10 years to 2030, with growth coming
primarily from Australia (Figure 2.2). Refined production is projected to grow by 4.6% per annum to
2030, with growth largely driven by Australia and the US (Figure 2.3). The use of stockpiles makes

2 Global Times - China 202102

12 | Outlook for Selected Critical Minerals: Australia 2021

a comparison of the balance of mined and refined supply more challenging, and is more meaningful
for individual element demand and supply. In particular, lanthanum and cerium are in oversupply, while
magnet metals are in undersupply — with stockpiles being drawn down. Australia’s mined production
of rare earths is forecast to grow by 9.1% per annum over the outlook period (2020‑2030), largely as
a result of investment by Lynas at their Mount Weld operation, including a possible ‘Crack and Leach’
facility at Kalgoorlie. Investment in Australia’s refinery capacity is also largely attributed to Lynas,
although it may take place in a number of geographic locations with the possibility of a refinery based
around the processing of Iluka’s Eneabba tailings.

Figure 2.2: Projected rare earths mine production by country

100% 300

Rare earth oxides (thousand tonnes)

80% 240
Share of world

60% 180

40% 120

20% 60

0% 0
2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030

China Australia USA

Russia Rest of world Total supply (t)

Source: Roskill (2021); Department of Industry, Science, Energy and Resources (2021)

Figure 2.3: Projected rare earths refined production by country

100% 300
Rare earth oxides (thousand tonnes)

80% 240
Share of world

60% 180

40% 120

20% 60

0% 0
2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030

China USA Australia

Myanmar Rest of world Total supply (t)

Source: Roskill (2021); Department of Industry, Science, Energy and Resources (2021)

Outlook for Selected Critical Minerals: Australia 2021 | 13

 2.5 World consumption
Growth due to magnet elements

Over the five years to 2020, the consumption of rare earths has grown by an estimated 3.9% per year.
Annual growth accelerated to 5% in 2020, despite the impacts of the COVID-19 pandemic.

Trade in rare earths can be difficult to elucidate: the statistical codes used for raw materials (in the form
of concentrates as well as more refined materials) are often not separate, making it difficult to estimate
country trade without back calculations on values. Inconsistent reporting of rare earth elements (for
example, as light and heavy rare earths, or by listing individual rare earth elements) across industry
further complicates the assessment of trade and production.

In 2020, the largest importers of rare earth compounds (excluding lower value cerium products) were:

● US (20%)
● China (18%)
● Philippines (12%)
● Vietnam (10% )
● Japan (9.7%)
● Germany (9.6%)
China consumes most of the world’s rare earths in downstream applications (Figure 2.4).
China’s main consumption is in magnets, followed by polishing and catalysts (with equal shares)
and batteries. Japan also consumes rare earths via magnet production, as well as in other applications.
Due to the strategic nature of magnet metals supply, stockpiling plays an important part in planning
for consumption in the longer term. Many countries are taking a longer term view of the supply chain.
Japan in particular, and more recently Germany, have acted to secure the supply of key metals
through long term relationships with key producers external to China, as well as securing offtake
with promising upcoming producers.

Consumption is projected to grow at 4.0% per annum over 10 years to 2030, with magnet production to
grow by 6.2% per annum, driven by the strong take-up of low carbon emissions technologies (Figure 2.5).

Figure 2.4: Estimated rare earths consumption by use and region, 2020

80%

60%
Share of world total

40%

20%

0%
China Japan & USA Europe Rest of world
Other Asia

Magnets Catalysts Polishing Batteries Other Uses

Source: Roskill (2021); Department of Industry, Science, Energy and Resources (2021)

14 | Outlook for Selected Critical Minerals: Australia 2021

Figure 2.5: Projected rare earths consumption by end use
Rare earth oxides (thousand tonnes) 250

200

150

100

50

0
2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030
Magnets Catalysts Polishing Batteries Other uses
Source: Roskill (2021); Department of Industry, Science, Energy and Resources (2021)

2.6 Market outlook

Market history shows significant volatility
The rare earths market has had a volatile history, with shortages, oversupply, volatile prices, export
restrictions, quotas and ‘element specific’ behaviour based on whether the element is concerned used
in permanent magnet production or in other areas. In the 1990’s, with low prices and environmental
concerns around the process of separating rare earths, a lot of production relocated away from
Australia, India, South Africa and the US towards China. This relocation resulted in a ramp up of
Chinese production, including the separation of rare earths and the fabrication of rare earth products,
including permanent magnets. In 2009, China introduced export quotas for environmental and resource
preservation reasons. Quotas were lifted in early 2015, but subdued prices limited new entrants —
unless supported by binding offtake agreements. Emerging low‑emissions technologies are dependent
on permanent magnets and hence rare earths (especially the magnet metals), and this has led some
governments and companies to reclassify these minerals as ‘critical’, taking measures to support the
market in the long term. More recently, in the first half of 2020 prices plumbed 2010 levels due to the
COVID-19 pandemic, followed by a strong recovery in the second half of 2020. These volatile price
moves have pushed potential producers to obtain secure offtake agreements, in order to develop
projects. Added to this is the emergence of renewables technologies which do not require rare earth
permanent magnets; placing additional uncertainty on the outlook for rare earth elements. The IEA
estimates neodymium demand by 2030 according to stated policies similar to projections elsewhere
but notes a significant upside risk for ‘sustainable development’ and zero emissions3.

Magnet elements in demand

The outlook for rare earth elements varies considerably, depending primarily on the end-use
application. For low-emissions technologies requiring permanent magnets, the ‘magnet elements’
of neodymium, praseodymium, dysprosium, have a positive outlook for demand. Neodymium and
praseodymium, in particular, are expected to experience market shortfalls towards the end of the
decade, with some relief in 2023‑24, as additional supply comes online. Demand‑pull factors, including

3 IEA (2021) The role of critical minerals in clean energy transitions

https://www.iea.org/reports/the-role-of-critical-minerals-in-clean-energy-transitions

Outlook for Selected Critical Minerals: Australia 2021 | 15

 permanent magnet production in China and Japan, are expected to strongly influence the market
balance for particular elements.

The outlook for other rare earth elements is more subdued, with much more muted growth
prospects. Because a mixture of rare earth elements often occur in each mineral deposit, and they
are usually extracted together, oversupply of some rare earths may be exacerbated in areas of low
demand. Thus the economics of extraction is increasingly reliant on the ‘magnet elements’. The
Neodymium‑praseodymium market is projected to grow by 35% over the outlook period to 2030.

Prices

Neodymium and praseodymium as mixed oxides were trading at around US$40 per kilogram in the
first half of 2020, but firmed to over US$55 per kilogram in December 2020. Dysprosium prices were
volatile in 2020, falling from around US$260 to US$230 per kilogram by the end of the year. Terbium
performed the strongest, increasing from around US$500 per kilogram at the start of 2020 to over
US$1000 per kilogram towards the close of 2020. Terbium’s price premium makes it less attractive
as a magnet metal.

As most producers market a mixed oxide, there is a premium for the separated products.
Consequently, producers are looking at ways to extract the most valuable rare earths within
their total mine extraction. Meanwhile, explorers are also targeting the more valuable elements.

The average annual growth for the price of magnet metals over the next 10 years to 2030 (in real
terms) is projected to be 8‑9% (Figure 2.6). The global rare earths market was valued at around
US$2 billion in 2020, and is forecast to grow to around US$12billion by 2030, up an average 16%
a year (Figure 2.6).

Figure 2.6: Rare earths market size outlook

12
Size of market (revenue US$bn)

10

0
2014 2016 2018 2020 2022 2024 2026 2028 2030

Magnet metals Other

Source: Roskill (2021); Department of Industry, Science, Energy and Resources (2021)

16 | Outlook for Selected Critical Minerals: Australia 2021

2.7 Australia
Production and potential production

Australia is ranked sixth in the world in terms of rare earth resources, but fourth in terms of production
— largely as a result of output from the tier one Mt Weld deposit. However, the element mix of
other deposits makes them attractive for development (Table 2.2). Over the forecast period (to
2030) Australia’s mined rare earth element production is forecast to grow by 9.1% annually, driven
by increased production planned from Lynas. Additionally, over 2021‑30, Australia’s refined rare
production is forecast to grow by 69% annually, with increasing production of refined products via the
proposed Kalgoorlie Crack and Leach plant, as well as Malaysian and possible US separation facilities.

Lynas are the largest supplier of refined rare earths (mixed oxide products) outside of China.
Processing is currently undertaken in Malaysia, although first stage ‘crack and leach’ may take place
in Western Australia by mid‑2023. They are looking at additional extraction of dysprosium and terbium,
with testing in a pilot plant in Texas. Additionally, Lynas is undertaking production of rare earth metals
via toll treatment in Vietnam. Iluka are also assessing an integrated refinery for their Eneabba tailings
operation. Phase 1 is in production, Phase 2 for 90% monazite concentrate is in construction and
Phase 3 (a fully integrated refinery) is undergoing a feasibility study.

Table 2.2: Australia’s rare earth resources and production

Australia’s resources Australia’s production

Geological Economic Share World 2020 Share World

potential Demonstrated world ranking production of world ranking
Resource resources resources production production
High 4,100kt 3% 6 23.7kt 7% 4

Source: Source: USGS January (2021); Roskill (2021); Company reports

ASX listed producers also include Northern Minerals (currently producing mixed carbonates from a pilot
plant). Potential producers are included in Table 2.3.

Outlook for Selected Critical Minerals: Australia 2021 | 17

 Table 2.3: Rare earths development projects in Australia

Production
Company Project State Elements Status Offtake Comments
/ capacity

Capital cost (Crack/leach)

12-16kt/year
Nd/Pr of mixed rare $500m
Planning to earth oxides
Lynas Mt Weld WA Producing Multiple Revenue: $400m
value-add including
with Dy/Tb. 5ktpa of mixed Current employees: 850
Nd/Pr oxides.
Dy/Tb extraction in US

Stage 1: Producing
concentrate
50kt/year
monazite/ Stage 2: 90% Monazite
Nd/Pr zircon concentrate – plant under
Iluka Eneabba WA Producing Multiple
Dy/Tb concentrate construction
containing rare
Stage 3: Fully integrated
earths
refinery – feasibility
ongoing
Publicly
Iluka Wimmera VIC N/A Feasibility studies ongoing
announced
Stage 1: Pilot plant -
280t/year Dy, production
Germany /
Northern Browns Producing 3.1kt/year rare
WA Dy/Tb Thyssen-Krupp Stage 2 & 3: Project
Minerals Range / Feasibility earth oxides
Materials development & scale up
for Stage 3
DFS started
Germany / 15kt/year Capital Cost: $449m
Schaeffler and Mixed Conc
Revenue: $380m
Hastings Thyssen Krupp inc 3.4kt/year
Yangibana WA Nd/Pr Feasibility Nd/Pr oxides Finalising construction
Tech Further offtakes
debt June Quarter 2021
with EU Site
financing preparation Possible production in 2023
Capital cost: $1026m

Arafura Nolans NT Nd/Pr Feasibility In negot’ns Nd/Pr 4kt/year Revenue: $540m

Re-examining capital
16kt/year
Publicly
zirconia, 2.2kt/
Variety of announced Dubbo mine
Australian Scoping study year rare earth
Dubbo possible - magnets
Strategic NSW for metals plant oxides (inc Capital cost: $1297m
zirconia value-add to / Feasibility
Minerals +magnets 0.9kt/year Nd/
metal – Dubbo Revenue: $580m
0.2kt/year Pr,
mine
0.1kt/year Dy)

Notes: Revenue estimate in A$ per annum; estimated employees based on company reports
Source: USGS (January 2021); Roskill (2021); Company reports

18 | Outlook for Selected Critical Minerals: Australia 2021

 3. Cobalt
World production Russia
4%
Rest of world
18%
Cuba
3%
DRC
67%

Philippines
4%
Australia
4%
Australia has around 19% of world
cobalt resources and is the
2nd largest producer in the world

Uses

59%
of cobalt Laptops Mobile phones Electric cars
is used in 5-15 grams 5-10 grams 10-20 kilograms
batteries cobalt cobalt cobalt

3.1 Key properties and uses

Cobalt is a ferromagnetic metal that is valued for its stability, hardness, anti-corrosion and
high-temperature resistance characteristics.

For over 2,500 years, cobalt was used as a pigment, due to its luminous blue colour. Today,
the main use of cobalt is in the precursors and cathodes of rechargeable batteries (56% of total
consumption), followed by nickel‑based alloys (13%) which are used extensively in the aerospace
industry, tool manufacturing (8%), with smaller amounts used in pigments, soaps and as catalysts.
The end use of cobalt is primarily in portable electronics (36.3% of global consumption), such as
smartphones and laptops, however, automotive applications are also large (23%) and growing.

Outlook for Selected Critical Minerals: Australia 2021 | 19

 3.2 Substitution
Due to the high price and supply issues associated with cobalt, battery makers have strived to
reduce the cobalt content in batteries, instead using nickel-rich cathode chemistries. In late 2020,
Tesla Inc. announced that it would move to a cobalt-free battery, although no time frame was given.
To date, cobalt substitutes have not been widely adopted, due to inferior performance.

It is expected that there will be a considerable increase in the amount of cobalt supplied through
recycling over the forecast period. Recycling is already relatively well-utilised, as cobalt can be
recovered from a range of secondary sources. Increasingly, growth in cobalt recycling is being
driven by battery recycling, as the practice achieves a greater commercial scale with the increased
availability of end-of-life batteries. It is forecast that cobalt supply from recycled sources could reach
34 kilotonnes per annum by 2030, with over 80% of that volume coming from battery recycling.

3.3 Supply chain analysis

Cobalt mine production is highly concentrated in a single country, the Democratic Republic of Congo
(DRC), which accounts for 67% of the global mining production. There have been on-going concerns
linked to the DRC regarding political stability, labour issues, corruption and transparency, which
accentuate the supply chain risk of a highly concentrated market. It is also worth noting that mine
ownership in the DRC is highly concentrated between Chinese and Swiss firms.

Cobalt refining is also highly concentrated in a single country, being China. This is especially true for
cobalt chemicals, which are expected to experience a surge in demand, while metals tend to have a
more diversified refining base, including in Australia. The most significant global trade relationship for
cobalt is between the DRC and China.

Another factor to be considered in the cobalt supply chain is that it is typically mined as a by-product.
Whilst cobalt itself is not scarce or rare, it typically occurs at relatively low-grade along with other
metals, most commonly nickel and copper. As a result, future supply depends on demand for,
and prices of, nickel (27% of cobalt is a by-product) and copper (60% of cobalt is a by-product).
Increased battery demand is likely to lead to higher prices for both nickel and copper.

Figure 3.1: Cobalt supply chain

Refined cobalt metal End Uses (29%):

China: 34% Nickel alloys: 13%
Finland: 13% Tool materials: 8%
Mined cobalt Canada: 12% Magnets: 4%
DRC: 67%
Australia: 4%
Russia: 4% Refined cobalt
End Uses (71%):
chemical
Batteries: 55%
China: 85%
Catalysts: 8%
Finland: 9%
Pigments: 6%
Belgium: 2%

Source: Roskill (2021); Department of Industry, Science, Energy and Resources (2021)

20 | Outlook for Selected Critical Minerals: Australia 2021

3.4 World production
World production of mined and refined cobalt is heavily concentrated

Global production of cobalt is highly concentrated, with the DRC accounting for approximately 67% of
global production of mined cobalt (96,000 tonnes in 2020). Australia is the second largest cobalt miner,
accounting for around 4% of global production (5,700 tonnes in 2020). A number of other countries,
including Canada, Russia, the Philippines and Zambia, also contribute a smaller (<5%) share of
global production. Global production has decreased recently, due to lower prices; Glencore placed
the Mutanda mine — the world’s largest cobalt mine — onto care and maintenance in 2019 and it is
not expected to re-open until 2022. Mutanda tends to be more sensitive to cobalt prices than copper
prices, the other major commodity it produces. Typically, the DRC is quite price sensitive due to the
prominence of artisanal mining.

China is the largest producer of refined cobalt products, accounting for 66% of global output, followed
by Finland (10%). Both countries rely on imported feedstock from the DRC for their refining operations.
Australia accounts for around 3% of refined production and is ranked 6th globally. There has been a
shift in the type of refined cobalt being produced. Cobalt metal was previously the dominant refined
product, however, in 2020, it is estimated that 65% of refined cobalt is in chemical form. The production
of cobalt chemicals is heavily dominated by China, while the production of cobalt metal is more
diversified.

Figure 3.2: Projected cobalt mine production by country

300

250
Cobalt (thousand tonnes)

200

150

100

50

0
2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030
DRC Indonesia Australia China Rest of world
Source: Roskill (2021); Department of Industry, Science, Energy and Resources (2021)

Outlook for Selected Critical Minerals: Australia 2021 | 21

 Figure 3.3: Projected refined cobalt production by country

300

250
Cobalt (thousand tonnes)

200

150

100

50

0
2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030

Australia China Finland Canada Japan Norway Rest of world

Source: Roskill (2021); Department of Industry, Science, Energy and Resources (2021)

3.5 World consumption

Increase in cobalt consumption driven by automotive sector

Global consumption of cobalt has increased significantly in recent years, with growth in consumption
across all major uses. The market has grown at an average rate of 4.5% per year since 2013, and total
consumption is estimated to have reached 141,000 tonnes in 2020. Most of the growth in consumption
has come from cobalt chemicals, due to their use in lithium-ion batteries. Global consumption was
somewhat impacted by the COVID‑19 pandemic, with a lower year‑on‑year growth rate of 3.8%
in 2020. The reduction was largely driven by the decreased demand for nickel-based alloys in the
aerospace industry in 2020, which fell 12%.

Demand is expected to grow to 280,000 tonnes, more than doubling current consumption, by 2030,
at an average growth rate of more than 6% per year. This growth would largely be driven by increased
battery demand in the automotive sector. The increased demand for EVs is expected to see cobalt use
in automotive batteries rise at a rate of 16% per year through to 2030; advances in battery composition
are projected to lead to lower cobalt requirements per unit.

In 2020, the largest importers of cobalt ores and concentrates were:

● China (81% of world total)

● Morocco (14%)
● Finland (2.4%)
The consumption of refined cobalt can be broken down into consumption of cobalt metals and
consumption of cobalt chemicals, with the former used in products such as nickel-based alloys
and tools, and the latter used in battery production. China is the largest consumer of refined cobalt
globally, consuming significant amounts of both the chemical and the metal.

22 | Outlook for Selected Critical Minerals: Australia 2021

Figure 3.4: Projected cobalt consumption by end use

300
Cobalt (thousand tonnes)
250

200

150

100

50

0
2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030
Batteries Nickel-base alloys Tool materials
Pigments Catalysts Magnets
Soaps & dryers Others
Source: Roskill (2021); Department of Industry, Science, Energy and Resources (2021)

3.6 Market outlook

Prices likely to recover as consumption picks up

The global cobalt market suffered three consecutive years of over‑supply, following a surge in prices
in 2016-18. The high prices in mid-2018 triggered a massive supply response in the DRC, leading the
market to be in surplus and causing prices to fall significantly throughout the period 2019‑20, to levels
under US$30,000 per tonne. In early 2021, prices started to recover, rising to over US$45,000 per
tonne. Prices are expected to average about US$43,000 per tonne in the period through to 2030.

There is expected to be significant growth in consumption, especially for cobalt chemicals, driven by
growth in the battery sector and increased EV manufacturing. Mined cobalt production is expected
to more than double by 2030 to meet the increase in demand, however this will require significant
additional mine capacity to come online over that period.

Figure 3.5: Cobalt spot price history

120,000

100,000

80,000
US$ per tonne

60,000

40,000

20,000

0
May-16 May-17 May-18 May-19 May-20 May-21

Source: S&P Global (2021) Department of Industry, Science, Energy and Resources (2021)
Note: Metal Bulletin price, cobalt metal, standard grade

Outlook for Selected Critical Minerals: Australia 2021 | 23

 3.7 Australia
Australia has strong cobalt prospects and a significant pipeline of new cobalt projects

Australia has the 2nd largest resources of cobalt in the world, estimated at around 19% of the world
total, however currently only contributes 4% of global mined supply. There is significant future potential
for Australia’s cobalt, with the rising demand for EV batteries, particularly with manufacturers seeking
reliable and responsible alternatives sources of supply. Australia’s mined cobalt is typically a by-product
of nickel laterite resources, while refined cobalt is currently exclusively in the form of cobalt metal.
Australia currently produces no refined cobalt chemicals, after production ceased in 2015 with the
closure of the Palmer Nickel and Cobalt Refinery (Queensland Nickel).

There are currently four cobalt producing companies operational in Australia: Glencore plc, BHP,
First Quantum Minerals Ltd and IGO Ltd, with Glencore being the dominant producer in the Australian
market and the only company producing refined material. In March 2021, Glencore announced a
temporary reduction in production at its Murrin Murrin facility due to a malfunction. It is unclear the
duration and scale of the reduction. There are a number of other projects in the pipeline, at both
early and advanced stages of development (see table 3.2). In early 2021, Panoramic Resources
Ltd announced the restart of the Savannah Nickel Operation, which is expected to have an annual
production target of 676 tonnes of cobalt, with first shipments from December 2021. In recent
developments, POSCO and First Quantum are planning to produce a 'battery precursor' of mixed
nickel-cobalt hydoxide. Production is expected by 2024.

Table 3.1: Australia’s cobalt resources and production

Australia’s resources 2019 Australia’s 2020 production
Geological Economic Share World Production Share of World
potential Demonstrated world ranking world ranking
Resources economic resources production production
resources
High 1399kt 19% 2nd 5.7kt 4% 2nd

Source: Geoscience Australia (2020); Roskill (2021)

24 | Outlook for Selected Critical Minerals: Australia 2021

Table 3.2: Cobalt development projects in Australia

Company Project State Status Capacity Comments

Walford Publically 22 kt over Scoping study completed, PFS
Aeon Metals Ltd QLD
Creek announced 11 years expected in 2022.

5.5 ktpa
Estimated construction employment:
Ardea Publically cobalt
Goongarrie WA 1000
Resources Ltd announced sulfate
1.2kt Operating employment: 300

Estimated construction employment:

0.2 Mt 500
of cobalt Operating employment: 300
Australian
Sconi QLD Feasible sulfate over
Mines Ltd CAPEX US$974 million
30 year
mine life Looking to produce battery precursor
materials on-site

Australian Publically Revenue: A$677 Million

Flemington NSW -
Mines Ltd announced Operating employment: 66

Barra 1.9kt over Peak workforce estimate: 300

Mt. Thirsty WA Feasible
Resources Ltd 12 years CAPEX A$371 million

Estimated construction employment:

1700
Sunrise 4.4kt cobalt
Energy Sunrise NSW Feasible over Operating employment: 380
Metals Ltd 11 years Capital cost: A$2.368 billion

Offtake agreement signed.

Cobalt Blue Pilot plant with first production in early

Broken Hill NSW Feasible 3.6kt/year
Holdings Ltd 2021.

GME
NiWest WA Feasible 1.4kt/year CAPEX estimate: $900m
Resources Ltd

Refinery project
Pure 3.0kt/year
TECH MOU with LG Chem and Samsung.
Minerals QLD Feasible of cobalt
Project
Ltd sulphate Announced a doubling in proposed
capacity in March 2021.

Source: Department of Industry, Science, Energy and Resources (2021); Company reports; Roskill (2020)

Outlook for Selected Critical Minerals: Australia 2021 | 25

 4. Graphite
Australia’s resources World consumption
Natural graphite Synthetic graphite

60% 40%
of world consumption of world consumption
Australia has 3% of
world resources, ranked
7th in the world
66% of
natural graphite
consumed in Asia

Uses

Refractories Foundries Other Lubricants Batteries

43% 21% 20% 12% 4%

4.1 Key properties and uses

Graphite is a black mineral composed of carbon. It occurs naturally in three forms: as crystal flakes
in metamorphic rocks, as vein graphite in veins or fractures and as amorphous graphite in some coal
deposits. Most natural graphite is produced as crystal flakes.

Due to key properties such as electrical conductivity, lubrication and thermal stability, graphite is used
in a number of industrial applications. Graphite is an excellent conductor of both electricity and heat,
and has the highest natural strength and stiffness of any material under extremely high temperatures.
Graphite is predominantly used in steelmaking and refractory applications, such as electrodes
(28% of total graphite use in 2020), refractories (16%) and recarbusing (10%). Graphite has a
significant role in low‑emissions technologies. Currently, battery applications account for the fourth
largest use of graphite (4% in 2020). Graphite is the largest mineral component in nickel and lithium
batteries. Graphite is used in a purified form (spherical graphite) in battery anodes, as a cost‑effective
and durable way to improve battery conductivity and charging. High purity graphite is also used in wind
and solar technologies.

26 | Outlook for Selected Critical Minerals: Australia 2021

4.2 Substitution
Synthetic graphite is a common substitute for graphite in iron and steel production. In batteries,
synthetic graphite powder is a substitute, and silicon anode is under research as another substitute
in battery applications.

While synthetic graphite production is well developed (accounting for 60% of world graphite production)
and can produce high quality product, it is more expensive to produce than natural graphite.

Secondary graphite (recycled) is a graphite substitute in industrial applications, which utilises graphite’s
thermal properties. However recycling technology is limited, and graphite is currently not recycled on
a significant scale.

4.3 Supply chain analysis

Figure 4.1: Graphite supply chain

Purification to Used in final

produce Value-add steps products
Mining natural
concentrate, (shaping and - refractories
graphite (flake,
sphetical graphite, purification) to
laterite and vein - batteries
fines and produce battery
deposits) - foundires
expandable anode material
graphite - lubricants

China 80%, Brazil China, including 100% of China, South Korea,

7%, Mozambique 3% sepherical graphite 100% Japan

Source: Roskill (2020); USGS (2021).

Graphite production is concentrated in China at all stages of the supply chain. While China consumes
most of its domestic production, in 2019 around 31% of China’s natural graphite production was
exported. Processing and refinery facilities outside of China are limited; currently China produces
all of the world’s battery grade (spherical) graphite. This is a highly involved process, with associated
environmental costs in terms of toxic inputs (hydrofluoric acid) and local pollution.

4.4 World production

China’s production dominates world markets and has evolved over time

Graphite resources are spread out geographically, and natural graphite is produced in almost
20 countries. Despite this, graphite production is heavily concentrated, with China accounting for
around 80% of world production. China is the largest producer of natural graphite in flake (60% of
world production) and amorphous forms (20%), and is also the largest producer of synthetic graphite.
Other major producers include Brazil (7% share of world production over last five years), Mozambique
(5%) and Madagascar (2%).

World graphite output fell by 27% in 2020, as producers reacted to a fall in demand due to the
COVID-19 pandemic. China produced 787,000 tonnes of natural graphite in 2020, accounting
for a higher share of world production (81%) as production from Mozambique declined.

Outlook for Selected Critical Minerals: Australia 2021 | 27

 China’s graphite production has transformed in recent years, as amorphous graphite production
has lowered, while production of flake graphite has increased. These changes reflect interruptions
to amorphous production (due to enforcing environmental controls) and changing end use demand,
with the rise in flake production closely linked to battery and EV manufacturing. China’s graphite
production fell in the first half of 2020, due to COVID‑19 impacts on consumption and industrial activity,
resulting in annual fall of 15% in 2020.

World production has also been affected by volatility in output from Mozambique. After being the
world’s second‑largest producer in 2018, Mozambique’s production fell significantly in 2019 with the
temporary closure of Syrah Resources’ Balama flake graphite operation (which accounts for almost all
of Mozambique’s output). Syrah Resources is an ASX company, and is developing vertically integrated
processing facilities in the US. After closing in late 2019 — in response to low prices — production
from Balama recommenced in March 2021.

Going forward, production is projected to increase by around 4% annually in the period to 2030,
to 2.4 million tonnes. The most significant production growth is expected in China, followed by Africa.

Figure 4.2: Projected natural graphite production by country

2500
Natural graphite (thousand tonnes)

2000

1500

1000

500

0
2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030
China Africa South America Other Asia Europe North America
Source: Roskill (2020)

4.5 World consumption

World
consumption

Refractories Batteries Other

Asia 33% 16% 18%

Europe 4% 1% 6%

North America 2% 1% 4%

South America 2% 1% 5%

Other 1% 2% 2%

28 | Outlook for Selected Critical Minerals: Australia 2021

Graphite consumption located in Asia in proximity to processing facilities

Around half of world’s graphite output is consumed in Asia, primarily in China, followed by Japan
and South Korea. In terms of end-use applications, use in refractory applications account for the
largest end-use sector (44%), followed by batteries and foundries. Lithium ion battery manufacturing
is concentrated in China, followed South Korea and Japan, with the US and Europe accounting
for a small, but growing share. Most graphite consumed is flake graphite (80% of world graphite
consumption).

After falling in 2020, due to COVID-19 related market impacts, graphite consumption is expected to
recover. Going forward, consumption is expected increase in line with growing battery manufacturing
(Figure 4.3). Total graphite consumption is projected to exceed 2 million tonnes in 2030, as the
share of graphite used in battery manufacturing almost doubles, up from 217,000 tonnes in 2020.
Other economic indicators are positive for graphite used in industrial applications, such as steel
manufacturing, though are expected to increase at a more moderate rate.

Figure 4.3: Projected graphite consumption by use

2500
Graphite (thouosand tonnes)

2000

1500

1000

500

0
2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030

Batteries Refractories Foundries Lubricants Other

Source: Roskill (2020)

4.6 Market outlook

Graphite in battery use to lead consumption, potentially pushing market into deficit

Positive forecasts for battery manufacturing and electric vehicle sales are expected to flow through to
higher graphite consumption going forward, however, the exact timing is difficult to predict. End‑use
demand drivers in China and the rest of the world remain dependent on government policy and
subsidies. Even with strong positive consumption growth, the supply side will take some time to adjust.

To optimise battery manufacturing costs, demand for natural graphite is expected to outpace
demand for synthetic graphite. Natural graphite can be processed into high purity product suitable
for battery use, while remaining cost competitive with synthetic graphite. While the graphite market is
currently adequately supplied, significant increases in consumption may lead to market tightness for
high‑quality, battery grade graphite (Figure 4.4). The adjustment of production and consumption needs
is expected to see the graphite market being well supplied over the short-term, which may weigh on

Outlook for Selected Critical Minerals: Australia 2021 | 29

 prices and subdue production expansions. As battery manufacturing momentum and scale increases,
consumption growth could lead to an undersupplied market around the middle of the decade,
before new production comes on line.

Increasing awareness of environmental considerations may also impact the graphite market going
forward. Production costs (including labour, environmental and energy costs) could influence prices.

Figure 4.4: Projected graphite market balance

Oversupplied
Balanced
Shortage

2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030
Market balance
Source: Roskill (2020); Department of Industry, Science, Energy and Resources (2021)

4.7 Australia
The only direction for Australia’s graphite production is up

Australia has moderate geological potential for graphite and, to date, exploration activity has delineated
the world’s seventh largest economic resources, mostly in flake form (Table 4.1). South Australia hosts
65% of Australia’s economically demonstrated graphite resources, followed by Queensland (17%) and
Western Australia (18%).

There are no producing graphite projects in Australia, however there are a number of development
projects underway. The Uley mine in South Australia produced for a year in 2015, before closing
due to low prices. In addition to flake graphite mining projects which will produce graphite concentrate,
a number of processing facilities, that would produce spherical graphite for battery use, are under
consideration.
Table 4.1: Australia’s graphite resources and production

Australia’s resources 2019 Australia’s production

Geological Economic Share World 2020 Share World

potential Demonstrated world economic ranking production of world ranking
Resource resources resources production production

Moderate 7.97 Mt 3% 7 - - -

Source: Geoscience Australia (2020)

30 | Outlook for Selected Critical Minerals: Australia 2021

Table 4.2: Graphite development projects in Australia
Company Project State Status Capacity Comment

Mine projects

Estimated capital expenditure

Lincoln Kookaburra
SA Pre-feasibility 35 kt/year $40-50 million. 10 year mine life
Minerals Gully
with satellite extension options.

Definitive feasibility study

completed Jan 2020, capex
Minerals $61 million. Planned FID
Munglinup WA Feasibility 52 kt/year
Commodities 2023, commissioning 2024.
Concentrate export to Norway
for anode processing.

Exploration for graphite, nickel

Hexagon Publically
McIntosh WA 88 kt/year and platinum group metals
Energy Materials announced
potential.

Quantum Estimated capex US$20 million.

Uley 2 SA Feasibility 55 kt/year
Graphite Negotiating offtake agreements.

World’s largest graphite deposit

outside of Africa. CAPEX
of US$79m capex and total
80 kt/year project cashflow of US$2.9
Renascor (stage 1) 144 billion. Project life 40 years
Siviour SA Feasibility
Resources kt/year (stage with internationally competitive
2) operating costs. Targeting FID
2022, with potential production
end 2023. MOUs signed for
100% of offtake.

Downstream/processing facilities

Producing spherical graphite.

5.0 kt/year Construction scheduled for
(stage 1) 20.0 mid-2021.
EcoGraf1 Kwinana WA FEED
kt/year
(stage 2) Project value: US$35m Annual
EBITDA.

Mineral
Resources,
WA Producing spherical graphite.
Hexagon
Energy Materials

Renascor Producing spherical graphite.

Siviour SA Prefeasibility 28 kt/year
Resources Financing underway.

Source: Department of Industry, Science, Energy and Resources (2021); Company reports; Roskill (2020)

Outlook for Selected Critical Minerals: Australia 2021 | 31

 5. Vanadium
Top producers Russia
18,900 tonnes
Rest of world
8,100 tonnes China
66,400 tonnes
South Africa
7000 tonnes

USA Brazil
4,400 tonnes 6,700 tonnes

Top consumers

Country Tonnes
China 62,000 Australia has two advanced
projects evaluating mining as
Europe 12,000 well as downstream processing.
North America 10,000

Australia’s Vanadium resources are the 3rd largest

in the world, accounting for 18 per cent of world
economic demonstrated resources but Australia’s
current production levels are negligible.

5.1 Key properties and uses

Vanadium is used mostly in steel alloys. Vanadium adds strength to steel and makes it suitable for
applications in tool making, girders and other similar areas. However, it has an emerging role in vanadium
redox ‘flow’ batteries (VRFBs).

Vanadium Redox Flow Batteries

Vanadium redox flow batteries are part of a suite of batteries that are suited to stationary energy storage
applications. They are non‑flammable compared with lithium batteries and have a longer service life of
around 20 years — compared with 10 years for lithium batteries — and can discharge 100% of their stored
energy. However, they are much heavier per unit volume making them more suitable for stationary storage
applications4.Two Australian companies are currently assessing VRFB production in Australia. Whilst
the lithium batteries can be reused at the end of life hence the technologies might appear to compete,
they can be complementary. Lithium batteries discharge over typically 4-5 hours, whereas the discharge
profile for VRFB’s is 5‑10 hours. This complementarity may accelerate the uptake of VRFB’s.

4 https://energypost.eu/can‑vanadium‑flow‑batteries‑beat‑li‑ion‑for‑utility‑scale‑storage/#:~:text=V%2Dflow%20batteries
%20are%20fully,V%20as%20Li%20each%20year.

32 | Outlook for Selected Critical Minerals: Australia 2021

5.2 Substitution
In steel applications, vanadium can be substituted with titanium or, more commonly, niobium;
substitution is usually based on moves in prices. Vanadium flow batteries are not unique;
zinc flow batteries also exist and therefore potentially compete for market share.

5.3 Supply chain analysis

Seventy percent of vanadium supply results from smelting iron rich ores containing vanadium to
produce pig iron and a vanadium rich slag. Most vanadium (92%) is used as ferrovanadium for steel
hardening. The supply of vanadium slag is dominated by China and Russia. Mined vanadium supplies
only 18% of the market. Mined vanadium is currently supplied by Brazil and South Africa. The value of
the vanadium market is difficult to estimate, since vanadium slag does not have a harmonised customs
code. The vanadium battery market is an emerging market whose size is difficult to estimate at this
early stage.

Figure 5.1: Vanadium supply chain – battery end product

Sourcing Ferro vanadium

vanadium: for steel (92%) Battery
Steel slag (70%) Vanadium
Refine to Vanadium production
battery
Mining (18%) vandium oxides chemicals supplied for
chemicals
Vanadium energy storage
Spent catalysts
(12%) battereis

China, Russia
- mining, slag Australia
China China Developing
South Africa, Brazil
Russia Russia production
Brazil - mining Canada
South Africa South Africa in Australia
US - Spent France
catalysts
US

Source: Roskill (2021); Department of Industry, Science, Energy and Resources (2021)

5.4 World production

Three major sources

There are three major sources for vanadium production:

● Co-production from ferrovanadium ore, which produces vanadium slag after vanadium rich
iron ore is smelted (>70% of world total)

● Direct mine production (18%)

● Recovery from used vanadium products (often fuel catalysts) (12%)
Production of vanadium from these sources varies by region, with China’s production primarily
(>85%) via co-production. Russia’s production is also co-production. South Africa’s production is
direct production, centred on the Bushveld Complex. Brazil started direct production from its mines
in 2014, and has been steadily increasing output, whilst production in the US is mainly from the
recycling of catalysts.

Outlook for Selected Critical Minerals: Australia 2021 | 33

 Figure 5.2: Projected vanadium production by country

150
Vanadium (thousand tonnes)

100

50

0
2020 2021 2022 2023 2024 2025 2026 2027 2028 2029

China Russia South Africa Brazil US

Other Asia Europe Oceania New Supply

Source: Roskill (2020); Department of Industry, Science, Energy and Resources (2021)

It is worth noting that China holds around 42% of the world’s reserves, but produces around 62%
of vanadium. By contrast, Australia holds 18% of the world’s reserves but currently does not produce
vanadium (Figure 5.3).

Figure 5.3: Vanadium reserves

10,000

7,500
Thousand tonnes

5,000

2,500

0
Australia Brazil China Russia South Africa

Source: USGS (2021); Department of Industry, Science, Energy and Resources (2021)

34 | Outlook for Selected Critical Minerals: Australia 2021

5.5 World consumption
Mature market affected by emerging technologies

The vanadium market is largely driven by steel consumption (accounting for 90% of vanadium
use), which is projected to grow by an average 2.9% a year between 2020 and 2029 (Figure
5.4). However, emerging low‑emissions technologies are playing an increasing role. Vanadium
consumption for batteries is forecast to grow at an average 20.7% a year over 2020 to 2029
(Figure 5.5). The chemicals sector is also due to grow, though by a lesser 3.8% per annum.
However, vanadium’s use in hardened steel will continue to dominate the market.

Consumption across regions is forecast to rise in-line with consumption by use, with the various
regions maintaining approximately the same consumption shares over the outlook period (Figure 5.6).

Figure 5.4: Projected vanadium consumption by end use – including steel

150
Vanadium (thoudsand tonnes)

100

50

0
2020 2021 2022 2023 2024 2025 2026 2027 2028 2029

Steel Non-ferrous Chemical Batteries

Source: Roskill (2020); Department of Industry, Science, Energy and Resources (2021)

Figure 5.5: Projected vanadium consumption by end use – excluding steel

15
Vanadium (thousand tonnes)

10

0
2020 2021 2022 2023 2024 2025 2026 2027 2028 2029

Non-ferrous Chemical Batteries

Source: Roskill (2020); Department of Industry, Science, Energy and Resources (2021)

Outlook for Selected Critical Minerals: Australia 2021 | 35

 Figure 5.6: Projected vanadium consumption by country

150
Vanadium ( thousand tonnes)

100

50

0
2020 2021 2022 2023 2024 2025 2026 2027 2028 2029

China Japan India South Korea

Rest of Asia Europe NAFTA ROW

Source: Roskill (2020); Department of Industry, Science, Energy and Resources (2021)

5.6 Market outlook

Prices expected to firm before return to baseline

Market shortfalls may occur over the next couple of years, as Chinese steel production grows.
The forecasts assume Chinese slag producers are operating at full capacity. The market shortfalls
should result in a tighter market and rising price outlook in the short to medium term. However,
as new production enters the market, prices are expected to return to a baseline (Figure 5.7).

Prices for vanadium pentoxide were around US$8 per pound in March 2021, up from US$5 per pound
in December 2020. Prices for ferrovanadium were around US$35 per kilogram in early 2021, having
appreciated similarly. The size of the market is approximately US$2.4 billion for both ferrovanadium
and vanadium pentoxide. This does not include revenue from vanadium slag or recycling.

Figure 5.7: Vanadium prices outlook

1.5
Vanadium price indexes

1.0

0.5

0.0
2020 2021 2022 2023 2024 2025 2026 2027 2028 2029

Ferrovanadium Vanadium pentoxide Ferrovanadium (real)

Source: Roskill (2020); Department of Industry, Science, Energy and Resources (2021)

36 | Outlook for Selected Critical Minerals: Australia 2021

5.7 Australia
Advanced projects ready for production

Australia does not currently produce vanadium, although it has 18% of the world’s reserves (Table 5.1).
However, it does have a number of advanced projects, which are pitched towards the energy storage
market via vanadium redox flow batteries. Production of vanadium in Australia may also include battery
production for the local market. Australia currently produces a similar product: zinc flow batteries via
ASX Listed Redflow Limited.
Table 5.1: Australia’s vanadium resources and production
Australia’s resources Australia’s production

Geological Economic Share world World 2020 Share of World

potential Demonstrated resources ranking production world ranking
Resource* resources production production

High 4,000kt 18% 3 0kt 0% N/A

Notes: *JORC 1,100 kt; USGS is an estimate and differs from http://www.ga.gov.au/digital-publication/aimr2020/world-rankings
Source: USGS (2021); Department of Industry, Science, Energy and Resources (2021).

Potential projects set to come online to fill a supply shortfall over the next few years are significant.
Australia and other countries are well placed to increase supply (Figure 5.8). However, overarching
the narrow window for upcoming projects is the increasing momentum for the implementation of
low emissions technologies. This may yield a greater opportunity than initially envisioned.

Figure 5.8: Vanadium development projects

100
Vanadium (thousand tonnes)

75

50

25

0
2021 2022 2023 2024 2025 2026 2027 2028 2029

Expected (World) Announced (World) Australia

Source: Roskill (2020); Department of Industry, Science, Energy and Resources (2021)

ASX-listed Technology Metals is investigating downstream processing in Australia, with the aim
to produce VRFB’s and, in particular, vanadium electrolyte from its proposed Gabanintha Mine
(Table 5.2). Meanwhile, ASX listed, Australian Vanadium is also assessing downstream processing
to produce VRFBs for the Australian energy storage market from its proposed Australian Vanadium
Mine. It currently sells VRFBs from a variety of manufacturers.

Outlook for Selected Critical Minerals: Australia 2021 | 37

 Table 5.2: Vanadium development projects in Australia
Company Project State Status Capacity Comments
Prefeasibility

Capital cost: $550m

11kt/year
The Vanadium oxide Revenue: $350m
Australian Australian Publicly VSUN - Subsidiary Employees: 240
WA
Vanadium Vanadium announced focused on
MOUs for offtake with Austria,
project Australian energy
China, US & Singapore
storage market
Examining green hydrogen for
power.

Definitive feasibility

12.8kt/year Capital cost: $518m

Technology
Vanadium Oxide Revenue: $440m
Metals Gabanintha WA Feasibility
Australia Ltd 6-10kt/year under Employees: 242
binding offtake
Agreement for offtake dependent
on making FID by mid-2021

Notes: Revenue estimate in A$ per annum; estimated employees based on company reports
Source: ASX company announcements; Department of Industry, Science, Energy and Resources (2021)

38 | Outlook for Selected Critical Minerals: Australia 2021

Outlook for Selected Critical Minerals: Australia 2021 | 39