Northern Minerals buoyed by heavy rare earths outlook in ‘green’ COVID recovery

Northern Minerals Ltd (ASX:NTU) (FRA:NUN) is encouraged by strong price gains since the beginning of 2020 in the primary payable heavy rare earth elements from its Browns Range Project in WA as well as the future market outlook. According to the company, the commercial viability of production from Browns Range is heavily influenced by the ultimate prices achieved for dysprosium and terbium, being the dominant payable elements in the xenotime mineral resource. Dysprosium up 22% In 2020, the dysprosium price is up 22% from the start of the year, according to data from Asian Metal. The daily mid-range price for dysprosium has risen from US$244 per kilogram on January 4, 2020, to touch a high of US$297 per kilogram on December 4. 2020 dysprosium price graph using Asian Metal daily price data. Terbium up 93% Following the trend, terbium prices are also at the highest levels since 2012, representing a massive 93% increase across 2020. Terbium was trading at a daily mid-range price of $958 per kilogram on December 4, 2020, up from US$497 per kilogram on January 2, 2020. 2020 terbium price graph using Asian Metal daily price data. Trade tensions Northern Minerals CEO Mark Tory said: “The accelerated price increases are likely linked to increasing trade tensions between the US and China, which remains the dominant producer globally of heavy rare earth. Global trade tensions exacerbated by disruptions resulting from the COVID-19 pandemic are contributing to upward pressure on most rare earth element (REE) prices. Around 80 per cent of US rare earth needs are imported directly from China, with portions of the remainder indirectly sourced from China through other countries. The US administration has recognised the urgency of securing an REE supply chain outside of China with a Presidential Executive Order in September. This called for future policy options to reduce the vulnerability of the US to the disruption of critical mineral supply chains through cooperation and coordination with partners and international allies. Permanent magnet sector Northern Minerals believes demand for heavy REEs, in particular dysprosium and terbium, continues to be fundamentally underpinned by strong growth in the high-performance DyNdFeB permanent magnet sector. These permanent magnets are used in new energy applications including renewable generation and the electrification of transport. A ‘green’ recovery Tory said: “In addition to global trade volatility, the disruption caused by COVID-19 will potentially act as a catalyst around the world for countries to focus on investment in more sustainable infrastructure projects, including renewable energy capacity, as part of their economic recovery initiatives. “We are also seeing an acceleration of government policy settings around the world to further incentivise the purchase of electric and hybrid drivetrain vehicles, while at the same time disincentivise the purchase of new diesel and petrol-engine vehicles.” Recently the Government of Western Australia’s has announced that it was steering towards a cleaner future with the release of State’s first-ever Electric Vehicle Strategy. The State’s $21 million Electric Vehicle Fund includes a commitment to build one of the world's longest electric vehicle charging infrastructure networks from Perth to Kununurra in the north, Esperance in the south and Kalgoorlie in the east. Shares on the move Through the development of its flagship Browns Range Project, Northern Minerals aims to build the operation into a significant world producer of dysprosium outside of China. The development and improving markets are cheered by investors as the company’s market cap has increased to $159.5 million while share prices have risen from 1.7 cents on June 30 to 4.4 cents on October 8 and today are at 3.8 cents. Northern Minerals is one of a few producers of dysprosium outside of China and it started the production of heavy rare earth carbonate in late 2018 as part of a three-year pilot assessment of economic and technical feasibility of a larger scale development at Browns Range. In March 2020, the operation was placed into care and maintenance as a result of COVID-19 and partially restarted in August 2020.