September 2017 - Alkane Resources Ltd
Level 12, 37 Bligh Street +61 2 8233 6168

Hafnium: you’ve never seen it, but your future depends on it

Most people in developed nations have no idea how much the technology they use everyday depends on Hafnium, nor how access to this minor but critical element will shape future world economics and politics.

Shiny, silver and resisting corrosion, it’s named after the place where it was discovered in 1923: Hafnia (that’s Copenhagen, in Latin). Mendeleev predicted Hafnium’s existence when he developed the periodic table in 1869, but didn’t live to see any, because pure Hafnium (symbol Hf) doesn’t occur in nature; it’s always bound with Zirconium (Zr) compounds – usually in a Hf:Zr ratio of 1:50 – and it’s hard to extract. Until recently, Hafnium was just a low value by-product of the nuclear industry, separated from the Zirconium alloys used to clad fuel rods.

You’ve probably never seen Hafnium either, but it’s a sure bet you’re close to some right now: it’s inside the device with which you’ve accessed this article. The special properties of Hafnium oxide have recently permitted further miniaturisation of microprocessors, enhancing processing speed while eradicating overheating problems.

Hafnium is critical to advanced and developing technologies, due to its remarkable chemical and physical properties.

Chemically inert (i.e. resistant to corrosion), the metal and oxide forms of Hafnium also withstand extreme temperatures. Consequently, Hafnium is used in plasma cutting tips for welding, and is essential to the advancement of the aerospace industry, because it improves heat and creep resistance of its alloys in current and future Next Gen aircraft and rocket engines.

Hafnium carbide, with a melting point of about 3,900C, is one of the highest temperature resistant and hardest known materials known to man. Potentially suitable in a nuclear thermal rocket (NTR) for faster spacecraft propulsion.

Hafnium oxide films could be used for passive cooling, or to make air-conditioning and refrigeration systems requiring little or no electricity. And the potential of Hafnium oxide nanoparticles to destroy cancer cells through radiation therapy is being explored.

So clearly, a high tech future will require more and more Hafnium. The global market for Hafnium is currently small (about 70 tonnes annually), and demand is predicted to double by 2025. Tight supply has already driven prices higher.

Where will we get all the Hafnium we’ll need?

The Chinese currently produce 75% of the world’s zirconium supply, which is the source of Hafnium. China’s stranglehold on the supply chain of a material essential to advanced technology for transport, information and communications, medicine and defence, weakens the economic and political security of other nations. I have explored this issue in detail in a previous post.

Ideally customers need a Hafnium supply chain that is:

  • sustainable and traceable
  • independent of the nuclear fuel industry
  • not monopolised by China, nor any single nation or bloc
  • independent of the Zirconium supply chain
  • has the potential for ‘urban mining’ (i.e. recycling materials from technology at the end of its useful life)
  • designed for complementary sourcing of other essential materials.

Alkane Resources’ Dubbo Project in western NSW, Australia, will tick all these boxes. It will produce 50 tonnes of Hafnium per annum at start up, rising to 200 tpa at full capacity. The project is construction-ready, having received all necessary government approvals, and has an estimated mine life of 70+ years. Enough supply to build a safer, cleaner, high tech future, while benefitting from a burgeoning market for essential Hafnium.

Dubbo Project Resource and Reserve Statements FY17

  • Mineral Resources and Ore Reserves for the Toongi deposit within the Dubbo Project have been independently re-estimated to account for revised estimated operating costs, product revenues and regulatory approved site layouts:
  • Total Mineral Resources
    • 75.18Mt @ 1.89% ZrO2, 0.04% HfO2, 0.44% Nb2O5, 0.03% Ta2O5, 0.88% TREO*
  • Total Ore Reserves
    • 18.90Mt @ 1.85% ZrO2, 0.04% HfO2, 0.44% Nb2O5, 0.03% Ta2O5, 0.87% TREO* * = total rare earth oxides plus yttrium oxide
  • The Toongi deposit is a very large open pittable resource of zirconium (Zr), hafnium (Hf), niobium (Nb), tantalum (Ta), yttrium (Y) and the rare earth elements lanthanum (La), cerium (Ce), praseodymium (Pr), neodymium (Nd), samarium (Sm), europium (Eu), gadolinium (Gd), terbium (Tb), dysprosium (Dy), holmium (Ho), erbium (Er), thulium (Tm), ytterbium (Yb), lutetium (Lu).
  • Over several years, Alkane Resources subsidiary, Australian Strategic Materials Ltd (ASM) has developed a flow sheet to recover all of these metals, except tantalum.
  • The flow sheet has been proved through a demonstration pilot plant at ANSTO since 2008 enabling optimisation of capital and operating costs, and supply of samples for product certification to end users.
  • A definitive feasibility study was completed in 2013; front end engineering design (FEED) in 2015; and a revised modularised and staged construction concept is in progress to provide a bankable level study.
  • Many of these metals are required for modern advanced technologies with supply chains subject to critical issues.
  • The Proved Ore Reserve will support an initial 20 year mine life.


How to secure our critical rare earths supply: lessons from China

Not to advance is to drop back – Chinese proverb

Rare earths are a group of 17 elements, known as the ‘vitamins of industry’ because many applications require only minute – but critical – amounts. Permanent magnets are an exception, being composed of 31% rare earths. Permanent magnets are the main driver of the US$3-4billion global rare earths market, accounting for just 20-25% of volume, but 80-85% of value, due to their multiple applications in advanced technology for transport, information and communications, defence and medicine. Permanent magnets are critical for high performance electric vehicles, wind turbines, smartphones, computers, and magnetic resonance imaging, for example.

Dig the well before you are thirsty – Chinese proverb

In 1992, Deng Xiaoping said ‘There is oil in the Middle East. There is Rare Earth in China.’ China’s rare earths industry began with mining and extraction and extended to downstream manufacturing. China has now conquered more than 90% of the rare earths market.

Most people are unaware of the critical role of rare earths in technologies we use daily, and on which our future industries and wellbeing will depend. Consequently, they are unaware of the threat presented by China’s near monopoly in rare earths supply. Single country domination in the production of minerals essential for clean and efficient energy generation, advanced computing and communications, and high-tech defence applications, has the potential to disrupt economies and the security of all nations. While the US, Canada, Japan, Korea and Europe are taking action to secure their rare earths supply, Australia has no such strategy in place.

When you drink the water, remember the spring – Chinese proverb

Companies who buy materials and technology without concern for the origins of their components are enabling China’s dominance of supply. Purchase specifications usually focus on performance criteria and prices, ignoring the source of components. A traceable supply chain from mineral sources through to products requires elemental mapping of materials and devices, and is the first step to addressing the risk of supply monopoly.

There are three truths: my truth, your truth, and the truth – Chinese proverb

Industry platforms quote daily rare earths prices, and news items about market developments provide other price data. Estimating supply is more difficult, as actual rare earths production appears to be much higher than official Chinese government production quotas. Inspections by China’s Ministry of Environmental Protection have identified widespread non-compliance, illegal activities and corruption in rare earths production.

The best way to determine the true state of the rare earths market is to study demand for the rare earths in permanent magnets, which leads price increases. Prices for praseodymium/neodymium (Pr/Nd) oxide, the main magnet rare earths, have increased by over 70% since the beginning of this year.

When the winds of change blow, some build shelter while others build windmills – Chinese proverb

Based on data provided by Professor Dudley Kingsnorth from the Industrial Minerals Company of Australia, some of the big changes affecting the price of rare earths in recent years are as follows:

  • In 2011, China had more than 150 companies involved in mining, processing and marketing rare earths. Consolidation since 2014 has resulted in just six state-owned enterprises, and their subsidiary companies, controlling the rare earths market.
  • In 2011, China had more than 150 companies involved in mining, processing and marketing rare earths. Consolidation since 2014 has resulted in just six state-owned enterprises, and their subsidiary companies, controlling the rare earths market.
  • In 2015, China removed export taxes of 15-25% from rare earths.
  • The Made in China 2025 initiative is providing $US hundreds of billions in Chinese government support for ten high-tech industries to achieve 70-80% domestic supply by 2025. Electric vehicles, wind power and industrial robots are included industries, which require permanent magnets.
  • Demand for Pr/Nd oxide for permanent magnets has increased from 27,500t in 2011 to an estimated 46,500t in 2017 – a compound annual growth rate of 9%.
  • China’s ‘war on pollution’ (announced in 2014) is showing signs of being a permanent campaign. The cost of rectifying the environmental damage caused by mining and processing over the past 30 years is estimated at US$30-40 billion, driving up rare earths prices.
  • Since 2011, illegal Pr/Nd oxide production has increased by around 3.3 times to 24,500t, or 50% of total supply. (This is a conservative estimate, based on Chinese domestic consumption only.) The Chinese government’s attempts to stop illegal mining – partly to prevent further environmental damage – have driven prices up as customers compete to secure legal supplies.
  • Production shortfall for Pr/Nd oxide has increased from 35-40,000t to 100-120,000t.

Opportunities multiply as they are seized – Chinese proverb

In summary, China’s ‘war on pollution’ appears to be reducing its illegal rare earth supply while domestic demand is increasing with support from government policies. With demand for permanent magnets set to grow at 9% p.a. or more, where will extra supply come from to feed insatiable demand from China and the rest of the world? Chinese companies are not waiting for legal Chinese supply to increase to match demand, but are actively seeking foreign sources of rare earths to fill the gap.

Alkane Resources’ Dubbo Project is construction-ready, having received all necessary government approvals. With an estimated mine life of 70+ years, it will produce critical zirconia, niobium, and light and heavy rare earths.

It doesn’t require the wisdom of Confucius to know that Australians should seize this opportunity to secure our high-tech future and economic wellbeing.

The best time to plant a tree was twenty years ago. The second-best time is now – Chinese proverb