Strategic Materials seeking investors for Dubbo rare earths project

Dubbo project location. (Image courtesy of Alkane Resources.)

Rare earths producer Australian Strategic Materials (ASM) is seeking investors for its Dubbo project in New South Wales state, the company’s chief executive Rowena Smith said on Wednesday.

“So we are looking for offtake partners who will then take an equity portion in the project,” Smith told Reuters at the Australia-Korea Business Council (AKBC) conference in Sydney.

“We are in conversation with a number of parties at the moment about that potential,” she said. Investment from South Korea, where ASM already has some operations would be the “first and strongest option”, she said.

Australia is pushing for investment from geopolitical alliesfor its critical minerals sector amid a global drive by automotive, aerospace and other industries to diversify supply chains. The also push comes as investment from China falls off.

ASM says on its website that the Dubbo site contains light and heavy rare earths, zirconium, niobium and hafnium.

ASM signed a contract with South Korea-based Hyundai Engineering this year for work on the Dubbo project, 400 km (250 miles) northwest of Sydney. It also has an existing investment in South Korea with its Korean Metals Plant.

“We would be looking for an equity contribution of about 20%-40% of the Dubbo project,” she said.

The capital forecast for the Dubbo project is about A$1.67 billion ($1.12 billion), and the company is forecasting free cash flow of over A$400 million a year once it is in production.

Any investor in Dubbo “may also choose to choose to take an equity position in the Korean Metals Plant as well,” she said.

Smith said ASM wants to have a deal in place by mid-2023.

The company is also talking to companies in the United States, Japan and Europe, she said.

($1 = 1.4948 Australian dollars)

(By Praveen Menon and Melanie Burton; Editing by Tom Hogue)


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