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AUSTRALIAN STRATEGIC MATERIALS LTD (ASM) - Building a Non-China Critical Minerals Supply Chain: ASM's Mine-to-Metal Strategy
The vulnerability of global rare earth supply chains has just moved from theoretical to tangible with China's new export restrictions. This couldn't make Australian Strategic Materials' strategy more relevant – or more urgent.
When Rowena Smith, CEO and Managing Director of ASM, explains their mine-to-metal capability, what stands out is how few companies globally can do what they do. As the only ASX-listed company with established metallisation capability outside China, ASM offers something increasingly precious: supply chain security for critical minerals essential to clean energy, defence, and emerging technologies.
The company's Korean metals plant is already shipping products to customers, with validation processes completed for multiple magnet producers across several jurisdictions. What's particularly exciting is their breakthrough in heavy rare earth metallisation – they're on the verge of commercial dysprosium production, with terbium to follow. Smith notes that only two other companies outside China have similar capabilities, positioning ASM at the forefront of this critical technology.
ASM's two-pronged strategy combines the shovel-ready Dubbo project in NSW with global metals plants. Their expansion plans include replicating their Korean facility in the US, with strong interest from the Department of Defense seeking domestic manufacturing capability through allied nations. The company is also exploring a phased approach to the Dubbo project, potentially targeting the rare earths portion first to reduce initial capital requirements below $1 billion.
Andrew Musgrave Host
Welcome back to ASX Briefs, where we bring you the leaders behind Australia's most innovative and globally ambitious listed companies and today we're speaking with Rowena Smith, the CEO and Managing Director of Australian Strategic Materials Limited, a company that is executing a bold mine-to-metal strategy that positions it as a leader in building an alternative, non-China rare earths and critical mineral supply chain. Rowena, thanks for joining me today and welcome to the ASX Briefs podcast.
Rowena Smith Guest
Thanks very much, Andrew.
Andrew Musgrave Host
Now Rowena. For investors that may be unfamiliar with the company, can you just provide a brief overview of the company?
Rowena Smith Guest
Indeed, ASM, or Australian Strategic Materials, is an emerging producer of critical minerals and rare earth metals, and we've got two key development areas that we're focused on. Firstly, our Dubbo project in New South Wales, which will be our rare earth and critical minerals mine and processing plant, and then the second area is the global metals plants, of which we've built the first one already in Korea. That's already in production and we're currently advancing our expansion plans to replicate that in the US, and that combined, vertically integrated supply chain is delivering products through to customers that are needing these metals for a whole series of emerging technologies in the clean energy area, in defence, in aerospace and in some of these new technologies like robotics.
Andrew Musgrave Host
Now Rowena. ASM has a unique position as one of the only companies delivering a mine-to-metals capability outside of China, so can you walk us through the strategic rationale and how this positions you globally?
Rowena Smith Guest
Well, you're right, Andrew. We are one of very few companies globally, outside of China, that have got the ability to metallise those rare earth metals in particular, and indeed we're the only ASX listed company that has that established metallisation capability. So, the combination of both our Dubbo project and metals plant in Korea and then that expansion in the US, puts us in a very unique position in a market that's increasingly focused on that supply chain security. And you know we have worked hard to align ourselves to those global policy shifts that we've been seeing in recent times with Australia and its allies, so that we've got both the assets and the technical capability to be able to support that growing demand for non-China critical minerals.
Andrew Musgrave Host
And with trade tensions escalating in China, introducing a new rare earth export restriction. So how does ASM provide a credible alternative for global OEMs and governments?
Rowena Smith Guest
Well, the OEMs and governments are looking for certainty as well as for supply, and I think that's where, in recent years, there has been much more understanding of the vulnerability of the existing supply chains. The offering for ASM is that we're offering a de-risked, vertically integrated supply chain of those materials. We've already got our metallisation capability proven in Korea. Dubbo project is shovel ready, so we're really well positioned to be able to provide an immediate response to the urgent need for emergency diversity of supply of these materials.
Andrew Musgrave Host
Now you mentioned the Korean metals plant is already delivering metals and alloys to customers. So, what is the customer feedback been like so far?
Rowena Smith Guest
Well, it's been really positive, and even more so just since China announced the additional restrictions on the heavy rare earths in recent weeks.
We've been inundated with interest, so we've been shipping metals and alloys from the Korean metals plants since it was commissioned in 2022.
And what we've been doing since 2022 there in Korea is that we have been working with these emerging magnet producers globally in Korea, but also in the US and in Europe in particular to be able to work through the product validation processes on the range of alloys, because you know, these magnet alloys that we produce there are customer specific and you know there's quite a range of them and the validation process is quite protracted.
So, you know, some of those processes have taken us 18 months to get through that process with the customer. But we've now completed that validation process with multiple magnet producers through those various different jurisdictions, and so we're now at the point where we are working in the commercial discussions on entering into their supply chain over the next 12 to 18 months as their capacity ramps up. But then we've also been working on broadening our product range because initially we've been doing the light rare earth metals and these alloys, but we've also been developing our own proprietary technology for the metallization of the heavy rare earths, and that's an area that we're excited about, but that's the area that we're seeing significant interest in at the moment.
Andrew Musgrave Host
Okay, and touching on that, you are piloting commercial production of heavy rare earth metals. So how close are you to full-scale production and what's the level of interest from your strategic partners?
Rowena Smith Guest
Well, as I say, a huge amount of interest, particularly with the. You know, even though it's been known that this is a vulnerability with the lack of diversity in the supply chain for some time, I think with the recent announcement about the restrictions, that's just really brought it from known to felt. So, yes, a lot of interest in this. That, combined with the fact that I only know of two others globally, outside of China, who actually have the capability to be able to metallise the heavy rare earth. So, it is very unique. So, we've been developing our own proprietary technology. As you say, we're piloting that at commercial scale this year. We've started with dysprosium. We're very close to having our first commercial product of dysprosium confirmed, which is really exciting for us and could not be more timely. But then once we've done that, then we'll work on replicating that for the terbium through the second half.
Andrew Musgrave Host
Okay, and you recently submitted a white paper to the US Department of Defence seeking support for an American metals plant, so can you share more about what's driving this initiative and the response so far?
Rowena Smith Guest
Well, the rationale is clear the US really need a secure domestic access to these magnet metals, and you know the policy has been developing for the last few years.
The Biden administration gave this a priority and that's where our discussions with the Department of Defence first commenced, but now with the Trump administration you know it's been a very consistent theme in what, you know it's been a fairly noisy start. The Trump administration, but you know two very clear themes are there, regardless of that noise. One is they want domestic manufacturing capability and secondly, they have an urgent need to establish these supply chains for critical minerals, and specifically rare earths, to be coming directly through allied nations into their domestic manufacturing industry.
So, because we've got that proven capability already in Korea, the Department of Defence has been quite actively discussing this with us now over the last 12 months, encouraging us to put in a white paper to ask for funding support to replicate that Korean facility in the US. Our first alloy customers for the Korean plant were both two emerging US magnet producers, and so we've also been in discussion with them, as well as others that aren't in public domain yet, for being able, as we expand our capability to not just expand in Korea but to actually add that additional onshore capacity. So, a lot of interest and a lot of support for it and you know we've had very strong engagement from the Department of Defence and we're looking forward to those discussions progressing again in the coming months.
Andrew Musgrave Host
And the Dubbo project is construction ready and has conditional funding support. So, what are the remaining milestones before you break ground?
Rowena Smith Guest
Yes, the Dubbo project is technically ready. It's fully permitted and we're in conversation with offtakers and funders. We've got very strong momentum already in the debt side of the stack for Dubbo with discussions with various ECA, so over $1.5 billion worth of ECA support for that project. Now we're in discussions with off-takers and working on the equity side of that stack and that's in part some of the discussions with the Department of Defence in the US, but also with sovereign funds here in Australia as well as in Korea to look at what contribution they can make to the equity side of the stack.
But I think the other thing we've really challenged ourselves on is do we need to do the Dubbo project in one step, Because it is a significant capital outlay for that first step if you do it in that manner, and so we've been looking at, could we do it in two phases and do the rare earth part of the flow sheet first, which we would be targeting for the first phase capital to be well under a billion dollars and for us to be able to establish the rare earths all the way through to oxides to provide that end-to-end supply chain for the rare earths more rapidly and to be able to establish that in the bottom third of the cost curve. So that's a piece of work that the federal government gave us $5 million of funding late last year to progress and we're looking forward to updating the market early quarter three with the outcomes of that study.
Andrew Musgrave Host
Okay, now just to wrap things up with off-take agreements progressing across the US, Korea and Europe. Where do you see ASM in the next 12 to 24 months?
Rowena Smith Guest
Well, it's a very exciting time for us. I think you know some of the dynamic that we're seeing at a macro level has really focused everybody on moving to action. So, you know we've been working on preparing for this moment for a long time. The next 12 to 18 months we get to be in delivery. So, you know we're looking at expansion of our Korean metal’s facility over that time as these magnet producers start to ramp up. We're looking at progressing our expansion into the US for that second metals plant, which is exciting for us. And then, thirdly, you know, as we complete the study on the rare earth option, you know we would be looking to have construction on that commencing by 27.
Andrew Musgrave Host
Okay, well, Rowena, it's been great to chat today, so thanks very much for your time, and we look forward to further updates from Australian Strategic Materials in the upcoming months.
Rowena Smith Guest
Thanks very much, Andrew.
Andrew Musgrave Host
That concludes this episode of ASX Briefs. Don't forget to subscribe and we look forward to catching you on our next episode.