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| ASM's rare earth mine site in Dubbo, New South Wales, Australia / Courtesy of ASM |
Strategic partnership with ASM creates stable, direct supply chain for rare earth metals
By Anna J. Park
Australian Strategic Materials (ASM) is a critical metal producer, with a strong strategic partnership with Korea. The relationship between ASM and Korea is based on a shared history of collaboration and innovation. It is a partnership that enables the metals ASM produces to be directly used in Korean industry to manufacture a wide range of advanced consumer and industrial products such as electric vehicles which are essential for the future of the worldwide energy transition currently underway.
The business relationship between ASM and Korea commenced with a joint venture technology development agreement with an innovative Korean metal processing company called Ziron Tech. ASM acquired Ziron Tech in November 2020. In April 2020, Ziron Tech received a government grant to build a pilot metal plant in Korea.
Following the success of the pilot plant, ASM now has a commercial plant under construction in Ochang with support from North Chungcheong Province. In July this year, the company further deepened that strategic relationship by signing a financing deal with a consortium of three Korean private equity firms to invest in ASM's polymetallic rare earth and critical mineral deposit called Dubbo Project. The success of the Dubbo Project will significantly de-risk Korea's rare earth supply chain in the coming years and ensure that the Asian country will continue to make products needed for both today and the future.
The Korea Times sat down with David Woodall, managing director of ASM, in Seoul. Woodall shared the company's vision and goals as well as the special business relationship the company has with Korea. It was interesting to hear Woodall speak about the history of the company starting with the Dubbo deposit, discovered in Australia decades ago, to a global supplier of critical metals essential for clean energy transition, electric vehicles and consumer electronics.
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| David Woodall at ASM's rare earth mine site in Dubbo, New South Wales, Australia / Courtesy of ASM |
In the 1950s, a massive deposit of various metal elements was found in Toongi, 25 kilometers south of Dubbo in central-western New South Wales, Australia. The deposit turned out to contain rare earth elements such as neodymium and praseodymium along with zirconium, niobium, and hafnium. Fast forward to 2021, and these critical metals have become essential for advanced green and clean technologies.
"What makes these metals critical today is that they are used in all our most powerful, futuristic tools. They help power our phones and computers; they are in wind turbines and electric cars. They have unusual electrical and magnetic properties that make our tools lighter, stronger and faster," Woodall explained.
The Dubbo Project is a $1billion plus flagship resource of ASM. Owning 3,700 hectares of land that includes the metals deposit, ASM aims to produce critical metals in an efficient and eco-friendly way that minimizes the environmental carbon footprint.
"Initially Alkane Resources, which is a predominantly gold company, owned both a gold mine and a critical metals deposit. Last year, the board decided to split the company into a gold company and a critical metals company, and ASM was separately listed on the Australian Stock Exchange. Our objective is clear, to become a leading global supplier of critical metals. This means developing the Dubbo Project, and using products from Dubbo, but also other products from third parties to produce critical metals in ASM metal plants. These critical metals are essential for electric vehicles, electronics, wind turbines, defense and aerospace, and a whole lot of other things," Woodall said.
Partnership with Korea
While ASM was searching for strategic partners around the world to facilitate its envisioned global metal production, the company happened to meet a Korean professor from Chungnam National University in 2018, who had an idea about clean metal processing technology. That meeting later developed into ASM's acquisition of a 95-percent stake in Ziron Tech in 2020 ― now Korea Strategic Materials Technology, boasting an innovative metallization process.
In that same year, ASM received a $4.5 million Korean government grant to build a plant in Ochang, located in North Chungcheong Province. The grant was part of the Korean government's strategic $4 billion plan to de-risk the country's global supply chain of rare earth metals by finding an alternate source of supply.
Despite the ever-growing demand for rare earth metals for the development of key industries of the future, the global supply is dominated by China. Given the importance of securing a stable supply chain of key metal materials like rare earth elements for the growth of future industries, it is more than necessary for a country to diversify the source of their rare earth imports to de-risk their supply chain.
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| Chairman of ASM Ian Gandel, first from the left, President Asia at ASM Frank Moon, second from the left, MD of ASM David Woodall, first from the right, pose for the photo at ASM's Ochang plant. / Courtesy of ASM |
"The Korean government was one of the first governments in the world to realize that if it didn't resolve the supply of critical metals into Korea, it would impact its manufacturing businesses," Woodall said, adding that the Korean government was clear in its goal to de-risk that supply chain so that it could become more self-sufficient. "It was a very strategic decision by the government."
ASM's unique "mine to metal" strategy allows "direct" supply through its vertically-integrated production process of critical metals. ASM will be the first company outside China that undertakes all steps to produce critical metals end-to-end: from the mine, through multiple processing and refining stages, metallization, alloy and metal powder production.
"At ASM, not only will we produce metal oxide, we produce metal, so we can totally de-risk Korea's supply chain. Most oxides go to China to be turned into metal, but we don't have to do that. We can actually produce metal for Korea in Korea," the managing director stressed.
He further explained that rare earth metals produced from the Dubbo Project have the potential to supply about 50 percent of the Korean market's current demand. At present, most of the demand is met by supplies coming from China. The unique advantage to Korea of ASM is that it facilitates a full end-to-end supply chain on a bilateral basis.
After proving the viability of the metal production from the pilot plant, ASM is currently building its first commercial metal plant in Ochang, with a timeline of full production of strategic metals and rare earth alloy products by mid-2022. A total of 5,200 tons of the metals are expected to be produced each year, including neodymium ferro-boron (NdFeB) strip alloy, dysprosium, zirconium alloy and titanium powder.
The Ochang metals plant is also expected to enjoy logistical advantages with its close proximity to major manufacturers in Korea. In addition, offtake negotiations are currently in progress with potential customers, such as titanium product and permanent magnet producers, which would bolster ASM's unique "mine to metal" integrated production business, while benefiting the Korean offtake partners. An offtake agreement is made between a producer and a buyer involving product purchases or sales before the construction of a factory.
"Everything is being delivered well, ASM should start making profits by the end of next year from the metal plant in Korea," Woodall said.
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| Participants pose for a photo after signing a financing deal between ASM and a consortium of Korean investors at the Australian Embassy in Seoul on July 19. From left, Australian Ambassador to Korea Catherine Raper; CEO and Founder at ACE Capital Partners David Ko; CEO of Cerritos Holdings PS Ra; CEO and Founder of Kamur Partners Jerry Kwak; Chairman of ASM Ian Gandel; Australia's Minister of Trade, Tourism, and Investment Dan Tehan; and ASM MD David Woodall. / Courtesy of ASM |
In a move to deepen the strategic relationship between ASM and Korea, a consortium of Korean investors ― ACE Equity Partners, Kamur Partners and Cerritos Holdings ― signed a $250 million deal to acquire a 20 percent equity stake in ASM's rare earth minerals and critical metals project. The Korean investors also intend to invest in downstream activities as well, including permanent magnet manufacturing.
Along with the private equity investors, Woodall explained that a significant strategic investor (SI) ― anticipated to be a Korean conglomerate ― is expected to join the deal before the end of this year to achieve maximum benefits for both countries.
"The objective of what we're trying to do in Korea is to ensure that Korea has the resources it needs to support its manufacturing businesses, for as long as possible. That's what we're looking to do. With the Korean metal plant, that's certainly a part of that solution. Using innovation that was developed in Korea to de-risk the Korean supply has been our important goal," Woodall reiterated.
The ASM managing director added that a natural bond exists between manufacturing-focused Korea and resource-rich Australia reinforced by the meeting between the trade ministers of Korea and Australia during a recent visit to Seoul by Minister Dan Tehan. This mutual collaborative relationship between the two countries is the strengthening of the trade relationship in securing a long-term stable supply chain for Korean manufacturing.
ESG criteria become key for ASM's global expansion
What is also noteworthy is that ASM's Dubbo Project is not only focused on providing an alternative and secure source of critical metals, but it also puts a great emphasis on producing products in a sustainable manner, targeting net zero carbon emissions. Thus, ESG principles are an essential pillar of the company's ethos.
"And importantly for us, it's about delivering that supply but with the ESG ― the environmental, social and governance ― principles at the highest standard. That's really the key. It makes no sense to produce a metal that becomes green for wind and electric vehicles if you destroy the environment along the chain. All of our process chain at ASM is very much focused onto minimizing any environmental impact," Woodall highlighted.
While firmly rooted in the ESG principles, the company holds a clear goal to expand into globally strategic locations by 2025.
"By 2025, our vision is that the Dubbo mine project will be operating together with four profitable metal plants globally in Korea, Europe, North America and Australia," Woodall said, adding that the company is in talks with counterparties in those regions.
