July 28, 2022 – It appears that projects to meet forecast demand for battery metals see the threat of looming supply crunches as a trigger for electric-vehicle makers to step in with investments in mining.
Fluorspar is one such integral mineral which supports the development of commercial-ready li-ion electric batteries, required for the country's transition to clean energy. Fluorspar is used in the lithium ion electrolyte as LiPF6, and used in the cathode, anode, and separator bindings, e.g. PVDF. It is also a vital component in the manufacture of the graphite used in Li-ion batteries, in the form of Hydrofluoric Acid. Currently no electric battery can be made domestically without the importation of fluorspar in these forms to assist in their manufacturing process; Ares will be the only domestic producer to supply the battery market.
In 2018, the U.S. government placed fluorspar (also known as fluorite) and other minerals on the strategic minerals list critical for the nation. As a result, a number of resource and mining companies are stepping up efforts to produce these metals. Many could benefit from broader investment including The Linde Group (OTC: LNEGY), Ucore Rare Metals Inc. (OTC: UURAF), and General Moly, Inc. (NYSE: GMO).
One company – junior miner Ares Strategic Mining Inv. – has acquired a fully-permitted mine to kickstart domestic production of fluorspar. Ares Strategic Mining’s (CNSX: ARS) (OTC: ARSMF) new property, the Lost Sheep Fluorspar Project, is made up of 5,982 acres over 353 Claims in the Spor Mountain area, Juab County, Utah. That’s about 214 kilometers south-west of Salt Lake City. The site has received all permits to proceed with mining and now has a NI 43-101 Technical Report that identifies extensive high-grade fluorspar on the site.
Almost shockingly, the mine is the sole fully permitted source for fluorspar in the United States. It is also a high value prospect since the Lost Sheep mine holds the highest naturally occurring fluorspar-grade in the US that shows no contamination from sulfides or arsenic commonly found with occurrences of the mineral. Currently the U.S. is importing all its sources from abroad, and the biggest fluorspar producers are countries like China and Russia. With supply chains damaged, and international cooperation low, there is a fluorspar sourcing crunch waiting to happen.
What’s Driving Auto Makers?
The need for fluorspar is especially keen in 2022. The coronavirus pandemic and plunging global auto sales have made it unusually difficult for mines to raise money. The cashflow problem threatens the supply chain of materials for batteries. This comes when auto companies have announced plans to spend more than $140 billion on electric vehicles in the next few years. Those vehicles significantly increase the need for minerals.
“Having to invest upstream is not what a car company wants to do, we understand that, but the rules have changed,” said Sam Riggall CEO of developer Clean TeQ Holdings. “We’re building a supply chain that’s never existed before, for a range of metals that have never been needed before by this industry.”
Auto companies have outlined plans to spend more than $140 billion on electric vehicle production, an industry shift that’ll need producers of specialist materials and metals for batteries to dramatically lift output. Nickel demand is forecast to surge about 16-fold through 2030 from 2018, while there will also be a significant rise in demand for graphite, lithium, copper and aluminum, and others according to BloombergNEF.
Junior Companies Could Ease the Problem
One of the new, innovative companies eager to find solutions is junior miner Ares Strategic Mining Inc. Ares finalized its acquisition of the Lost Sheep Mine project in February 2020. The new project gives Ares several tactical advantages over other companies.
A recent N1 43-101 report confirms the presence of Acidspar, the higher-priced fluorspar, in the Lost Sheep Mine. Acidspar is significantly purer than the fluorspar coming now from areas such as Mexico and Vietnam. Acidspar commands a higher price than lower-grade alternatives.
Ares has already learned how to upgrade its lower-grade fluorspar ore to create a higher-graded product. The process upgraded ore that is less than 40% pure to a final product that is 97% pure. This procedure allows Ares to get a better price from even its lower-quality raw products.
The company’s ability to produce high-quality Acidspar makes it possible to generate greater bulk mining operations.
The mine requires very low start-in capital. That means a higher return on investment as production is boosted.
Ares Strategic Mining has also benefited from several funding rounds that have put enough in its corporate coffers to get the mine into production within 12 months.
What All This Means to the Auto Industry
Automakers are already getting more involved in order to protect vulnerable parts of their supply chain, said Scott Tozier, CFO of Albemarle, the top lithium producer in the world. In talks, vehicle producers want better understanding on “how do I make sure I get the product I need, when I need it,” he said. “Will they go all the way to invest, we’ll have to wait and see -- it’s too early to call.”
Investments by the auto industry would also create security.
Smaller developers of battery metals projects “are swimming in a very shallow pool of retail capital and are starving for start-up capital,” said Sophie Lu, BNEF’s head of mining and metals.
Companies that can show the ability to produce domestic minerals for use on battery production are likely to gain momentum from this shift in global concern for supply chain security including:
The Linde Group operates as a gases and engineering company worldwide. It operates in two divisions, Gases and Engineering. The Gases division offers a range of compressed and liquefied gases, and chemicals for use in steel and glass production, chemical and food processing, environmental protection, welding, and electronics industries, as well as in the energy sector.
Ucore Rare Metals Inc. is focused on rare and critical metals resources, extraction and beneficiation technologies with potential for production, growth, and scalability. The company has a 100% ownership stake in the Bokan-Dotson Ridge Rare Earth Project. Ucore's wholly owned subsidiary, Innovation Metals Corp. announced it has executed a binding agreement with Kingston Process Metallurgy Inc. to serve as IMC's long-term laboratory partner for the commercialization of the RapidSX™ technology being developed for the cost-effective, bulk/commercial separation and purification of rare-earth elements.
General Moly, Inc. together with its subsidiary, Eureka Moly, LLC, engages in the exploration, development, and mining of mineral properties in the United States. The company recently provided a forecast of a supply deficit for Moly anticipated beginning in 2021 and extending through 2024 and said in its annual meeting that the company anticipates sustained higher prices for Moly as the global economy recovers.
For a more details on the developments taking place for Fluorspar and other strategic minerals, see the article at aresmining.com.
Companies typically rely on comprehensive feasibility reports on mineral reserve estimates to reduce the risks and uncertainties associated with a production decision. Historically, situations where the issuer decides to put a mineral project into production without first establishing mineral reserves supported by a technical report and completing a feasibility study have a higher risk of economic or technical failure, though some industrial mineral ventures are relatively simple operations with low levels of investment and risk, where the operating entity has determined that a formal prefeasibility or feasibility study in conformance with NI 43-101 and 43-101 CP is not required for a production decision. Based on historical engineering work, geological reports, historical production data and current engineering work completed or in the process by Ares, the Company intends to move forward with the development of its Utah asset.
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