INTERVIEW: US agency funding for Australian rare earth project to help diversify supply chains

Australia's RZ Resources Ltd. secured financing approval on Sept. 25 from the Export-Import Bank of the United States (EXIM Bank) for the Copi heavy mineral sands project in New South Wales through the engineering multiplier program. It was the first time the agency approved funding for an Australian project since the West Australian Roy Hill iron ore development in 2013.

Japan's JX Advanced Metals Corp. also agreed to invest A$20 million in the project. Japan, North America, Australia and Europe are set to support the Copi project, particularly after China tightened its rare earth export control regime earlier in October, according to Campbell Jones, CEO of RZ Resources. Copi's resources include the rare earth-bearing minerals monazite and xenotime.

Platts, part of S&P Global Energy, spoke with Jones about RZ Resources' dealings with the US agencies in light of the broader landscape for rare earths and mineral sands. The following is an edited interview.

Platts: What is the broader significance of your agreement with the US EXIM Bank?

Jones: Our Copi greenfield project will be a significant producer, and our mineral separation plant in Brisbane fast-tracks our ability to supply critical minerals into the marketplace by processing third-party feedstocks. We will need to raise about A$1.3 billion in total, and for the debt portion, the best way to get that funding stack in place is with support from the export credit agencies in the US, Australia and Japan.

With our strategic partner JX Advanced Metals and its associations with other Japanese companies, we are hoping to make an announcement this year for another Japanese company to join the portfolio. That will help us secure Japanese EXIM funding, and then, together with support from other export credit agencies, including those from Australia and Japan, we could get in the order of A$200 million to A$300 million from each of those agencies to get our debt structure in place.

We started with the US EXIM Bank because we are targeting our customer base to bypass Chinese processing completely. One of our cornerstones for that is titanium metal going into aerospace. JX Advanced Metals is the majority owner of Toho Titanium Company Ltd., one of the few Japanese titanium metal manufacturers approved for US aerospace, so they can supply companies like The Boeing Co., Pratt & Whitney, Rolls-Royce Holdings PLC and Lockheed Martin Corp. with missiles and defense equipment, etc.

Today, the US aerospace manufacturers are dependent on imported products for this application.

About 18 months ago, we received a letter of interest from the US EXIM Bank for $347.5 million. What we just signed in September is to be part of its EMP, so we are now an approved borrower, subject to formal documentation being agreed upon.

This year, EXIM has also included a supplier initiative for critical minerals, where you qualify for funding if you supply American companies. For example, if 20% of our revenue was going to American companies, then they would fund up to 20% of the project -- and that is cumulative. So if we had $101 million of US content in our [capital expenditure], then US EXIM could potentially lend up to $200 million. Then, if we produced another $100 million of US-based revenue, they would lend us another $100 million on top of that, potentially increasing the total funds offered as debt.

Platts: How have China's latest rare earth controls affected your market?

Jones: That is a big story in its own right. As just one example, the electric vehicle industry is a huge multiplier of employment because it is made in assembly plants. So everything that you see on the car has to come from yet another supplier, whether it is the glass for the window, the tires on the car or the batteries and the electric motors. There is a lot of technology in those cars now. A C-class Mercedes has over 200 electric motors for many things, including seat adjustment, mirrors and wipers, all of which drive employment.

China is very conscious of that, and BYD Company Ltd. is now the world's largest electric vehicle manufacturer by a mile, and China is very protective of its emerging strong position. After [the coronavirus pandemic] forced supply chain pressures, the West is now highly dependent on certain materials from certain countries, which has driven the US to offer a floor price to Mountain Pass to ensure they will make certain light rare earths in the future. That trend has driven companies and countries to reevaluate their strategic alliances and how they are going to go forward, which China is now struggling with. Hence, the rare earth controls.

I was at the Australian Embassy in Washington in September, where various US departments, including US EXIM, presented their situation to Australian companies. There is no doubt that America is very conscious of the situation it now finds itself in, particularly now with China's tightened supply chain controls for rare earths. It did not really matter whether the Republicans or the Democrats won the election, as far as the US' China approach is concerned.

President Donald Trump is, if anything, an enabler. He is making this transition happen faster. This [trade conflict] and tariffs are really putting pressure on finding solutions quickly on how America can be truly independent, particularly for defense technology raw materials. The US wants to be able to make its fighter planes, missiles and satellites without Chinese componentry, which, as of today, they cannot.

Platts: What is the timeline on funding and those projects?

Jones: We already have memorandum of understanding agreements with significant blue-chip customers and partners in the US, which will form part of that formula. We will have American content in our capex because we are sourcing certain equipment from the US, as they are the preferred supplier for specific equipment, so this will form the basis for our US funding proposal.

We have also been speaking to credit agencies in Europe, from whom we are highly likely to buy some equipment, and they would also provide debt funding. So between probably those US, Japanese, Australian and European agencies, we would like to cover the majority of our debt requirement. Then, between our Japanese cornerstone investor and going to market, we should cover the equity side of what we need.

By the start of 2027, we can have the Brisbane [mineral separation and processing] plant running depending on approvals and funding. The Brisbane plant, which was the old consolidated rutile plant run by SCR-Sibelco NV and Consolidated Rutile Ltd., treating feedstock from North Stradbroke Island, is in care and maintenance. We need to upgrade it to make a very high-grade titanium metal for the aerospace industry.

To upgrade that plant, we have also done trials on various feedstocks from third parties currently being treated in China. From that work, we recognize that we can actually do that and be cash flow positive.