The Nolans NdPr project is 135km north of Alice Springs. All Images: Arafura Resources.
BY ELIZABETH FABRI
ARAFURA Resources is going above and beyond many juniors on the path to production, with a seven phase pilot project for its Nolans rare earths mine nearing completion, downstream processing plans confirmed for the Northern Territory, and a DFS and Final Investment Decision imminent.
Arafura Resources has made some innovative decisions on its $US680 million Nolans neodymium-praseodymium (NdPr) project over the last few years.
Instead of taking what would be considered a faster route straight to production – the explorer has had a dedicated team focussed on a detailed pilot program addressing key engineering and operational considerations prior to commissioning.
Arafura’s Nolans project is one of the world’s largest undeveloped deposits, with a JORC compliant resource of 56 million tonnes at 2.6 per cent total rare earth oxide (TREO) with 26.4 per cent NdPr enrichment that could provide 5-10 per cent of global demand of NdPr oxide (about 3600 tonnes of NdPr oxide production per annum) for use in permanent magnets.
Nolans was positioned in a tier 1 jurisdiction, 10km from Stuart Highway, and adjacent to the Amadeus natural gas pipeline.
And unlike many of its rare earth peers, which were in earlier stages of development, Arafura’s Nolans project was fast advancing with major project status granted, environment and Federal approvals locked in, and results from a Definitive Feasibility Study (DFS) expected before the end of the 2018 calendar year.
Arafura Resources Nolans project manager Stewart Watkins said the completion of the DFS will be a major milestone that will set the team up for project financing.
“It isn’t, however, the only work we have on-going in the company at the moment in relation to the project,” Mr Watkins told The Australian Mining Review.
“Currently we are working with the NT EPA to assess the impacts of the various changes to the project to that contemplated in the EIS.”
The main change Mr Watkins was referring to was the company’s recent decision to build the rare earth separation plant on site in the Northern Territory as opposed to an overseas option in South Korea, originally floated by the board.
The separation plant, which hosts the final stages of rare earth processing, takes a mixed rare earth intermediate (chloride) product and refines it into high-value NdPr oxide and other rare earth products.
The decision to build locally would mean more jobs for the Northern Territory, as well as assurance for the management team with all operations undertaken on home soil.
Arafura was also significantly advanced in preparing the Mining Management Plan (MMP), which draws together the environmental approval conditions, commitments made in the EIS as well as the designs developed in the DFS.
“This MMP will then be assessed by the Department of Primary Industry and Resources in the NT and once approved will provide Arafura with our approval to mine (obviously once we have a granted mining lease) which is a pre-requisite to commencing any site works,” Mr Watkins said.
“Finally, in order to be granted a mining lease, we need to reach agreement with the traditional owners recognising the impact of our operation on their Native Title rights.”
Mr Watkins said the company hoped to reach an agreement in the first half of 2019, and have the mining leases granted soon after.
“Once all these things are completed, and we have the financing advanced sufficiently, then we will be in position for the board to make a final investment decision and the project team can then commence Front End Engineering and Design (FEED) with our selected execution partners,” he said.
Piloting Program
In parallel to final approvals, the pilot plant program, undertaken at ALS Metallurgical Services (ALS) facilities in Perth, was also in its final stages.
In Arafura’s Annual Report the company’s chairman Ian Kowalick said the program – designed to reduce execution risk – went “above and beyond the work typically undertaken by a junior resource company developing a mining project”.
Mr Watkins agreed.
“Many typical mining projects executed by junior companies actually include no piloting at all, or simple bench scale piloting such as locked cycle testing or the like,” Mr Watkins said.
“In the case of a complex rare earths project such as Nolans we have definitely had to go above and beyond the normal level of metallurgical testing carried out by juniors.”
Mr Watkins said the piloting program – which comprised seven phases covering beneficiation, phosphate extraction, bulk pre-leach, acid bake, rare earth processing, and the soon to be completed rare earth separation phase– had been important in a couple of key ways.
“Firstly it provides confidence that process is not just viable but suitably robust to be workable in the real world,” he said.
“Many things that work in a batch on a bench scale with continuous operator attention become unworkable when running continuously at a larger scale.
“Secondly there are aspects, such as materials handling or materials of construction that just can’t be tested in a batch setting.
“And finally, in order to test some aspects, such as solid/liquid separation, a reasonable quantity of material is needed and that just isn’t possible unless the processing is done at a reasonable scale.”
Mr Watkins said the most important aspect of the piloting process by far was the acid bake pilot phase completed in early August, following a thorough period of commissioning of all unit operations.
“Because of the characteristics of the Nolans ore, Arafura is able to carry this out at a much lower temperature than traditional processing,” Mr Watkins said.
“Additionally we are carrying it out using paddle dyer technology as opposed to large rotary kilns.
“On that basis it was extremely valuable to carry this out continuously at scale and to allow us to prove up the equipment and also provide detailed scale up information for the vendors.
“We now have a lot of confidence in this aspect of the process which is really at the heart of the whole plant.”
On 28 November, Arafura announced the fifth phase of the piloting – the rare earth purification and precipitation – was completed successfully.
This phase, took the NdPr sulphate materials from Arafura’s acid bake pilot plant through purification and precipitation processes to produce rare earth hydroxide.
Arafura’s process engineers closely monitored several important operational performance parameters over the duration of the five-day pilot, including solid-liquid separation, reagent dosing, temperature profiles and residence time across each unit operation of the process.
The rare earth hydroxide produced will feed into phase six – rare earth dissolution and evaporation – with phase seven expected to be completed in early 2019.
The acid bake (Phase 4) pilot plant.
Overcoming Challenges
Like all of its rare earth peers, Arafura also faced the challenge of bringing costs down.
Mr Watkins said the rare earth elements (REE) industry was “very different to traditional mining projects in Australia”.
“You are dealing with a project that is not so much a mining project but a small mine with a large chemical processing plant attached,” he said.
“As such the capital costs are very much higher than a traditional project, however, on the flip side the operating margins are also much higher.”
Mr Watkins – who has a chemical engineering background spanning 25 plus years– said he had worked on a lot of different projects throughout his career, and Nolans was “by far the most complex and challenging” and the processing was “some of the most technical going around”.
“However, it has been very rewarding to come into the team and try and instil some of the pragmatic design guidelines that work on every project – knowing what needs to be gold plated and done just right and what can be done more cost effectively,” he said.
“This type of project, especially with our very long mine life (which is typical of the quality REE projects around), means that the investment decision is more about developing something that is more akin to a financial annuity, which will deliver shareholder returns year after year for 20 to 40 years.”
In studies to date, Nolans will have operating costs of about $US6.23/kg TREO or $US24.38/kg NdPr oxide, which will be the lowest amongst peers.
Mr Watkins said the costs were influenced by the ore being mined.
“The development in house of the phosphoric acid pre-leach (PAPL) process means that our processing really works with the ore.
“The added benefit of that is that we produce a merchant grade phosphoric acid by product, which offsets a significant part of our operating costs (the by-product credit essentially pays for the incoming and outgoing transport and logistics effectively relocating the mine to Darwin).
“There are also some other aspects of the flowsheet that also act to keep the costs lower where we utilise alternate chemistry rather than further consumption of reagents.”
Mr Watkins said the biggest part of the operating cost picture was the cost of reagents, and as Arafura finalised the costs for the DFS, any movement in projected reagent pricing would impact on these costs.
However, he said the team remained “pretty confident of having comparable or lower costs” to its peers.
The decision to build the rare earth separation plant locally would also be more expensive in areas.
“While there were some negatives on the cost side (higher reagent costs on site) the benefits of less overall labour and consolidation of expertise largely outweighed these factors,” he said.
“The key driver for considering Nolans for the separation plant was really the ability to take full control of our environmental impact.
“Provenance of raw materials is becoming a larger and larger factor in the REE industry (and other industrial supply chains) and as such by locating everything at Nolans it means we have 100 per cent control over all the wastes from the project and can assure that they are managed in an appropriate manner.”
Rising Demand
Once Nolans enters production, Arafura will be well positioned to tap into growing demand for NdPr out of China.
“The NdPr market is a matter of when, not if,” Mr Watkins said.
“There is massive demand side pressure with the electrification of transport, which is also the current drive that is fuelling the lithium market.
“At the same time, China’s environmental commitment to cleaning up ‘black market’ and polluting producers also adds a degree of supply side pressure.”
Analysts have forecast that China will move from being a net exporter of NdPr to being a net importer by 2021/22 to meet its own domestic demand.
“On that basis, the prospects for a company with a non-China linked NdPr project capable of producing roughly 5-10 per cent of current global production, ready to develop and come on-line in 2021/22 look pretty good,” he said.
In October, Arafura locked in its first offtake agreement with JingCi Material Science Co for the supply of NdPr oxide.
JingCi is a tier 1 Chinese manufacturer of neodymium iron boron (NdFeB) permanent magnets and produces about 6500 tonnes per annum.
The agreement entered would see Arafura supply up to 900 tonnes of NdPr per annum to JingCi – a quarter of Nolans forecasted annual output.
Mr Watkins said the company was “relatively happy with the way things are going in the offtake space”.
“I think completion of the DFS may be a catalyst for potential offtake partners to get a better feel for the project and that will certainly help with the discussion,” he said.
Outlook
Mr Watkins said post ramp up, Nolans had the life of mine (the EIS contemplated 55 years) to support an expansion in production.
“It certainly could become a much larger project in the REE space, but let’s get the first phase up and running before we get ahead of ourselves,” he said.
“The execution of the project is anticipated at this stage to consist of a six month FEED process followed by a roughly two year construction (just reviewing project implementation schedules at the moment).”
At peak Arafura anticipated about 500 people on site at one time.
“Commencement of construction obviously depends on financing but I would be hopeful that we would be getting into things before the end of 2019,” Mr Watkins said.
