Ares Strategic Mining's new property, the Lost Sheep Fluorspar Project, is made up of of 1,447 acres over 67 Claims in the Spor Mountain area, Juab County, Utah.
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. 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 Linde plc (NYSE: LIN), Air Products and Chemicals Inc. (NYSE: APD) and General Moly, Inc. (NYSE: GMO).
One company – junior miner Ares Strategic Mining Ltd. (TSX-V: ARS) (OTCQB: ARSMF) – has acquired a fully-permitted mine to kickstart domestic production of fluorspar. Ares Strategic Mining's new property, the Lost Sheep Fluorspar Project, is made up of of 1,447 acres over 67 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 sulphides or arsenic commonly found with occurrences of the mineral.
What's Driving Auto Makers?
The need for fluorspar is especially keen in 2020. 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 Ltd. Ares finalized its acquisition of the Lost Sheep Mine project in February 2020. The new project gives Ares several tactical advantages over other companies.
1. 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.
2. 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.
3. The company's ability to produce high-quality Acidspar makes it possible to generate greater bulk mining operations.
4. 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 withing 12 months.
What All This Means to the Auto Industry
Automakers already are 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 also would 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:
Linde plc operates as an industrial gas company in North and South America, Europe, the Middle East, Africa, and the Asia Pacific. The company offers oxygen, nitrogen, argon, rare gases, carbon monoxide, carbon dioxide, helium, hydrogen, electronic gases, specialty gases, and acetylene. It also designs and constructs turnkey process plants, such as olefin, natural gas, air separation, and hydrogen and synthesis gas plants. The company serves healthcare, petroleum refining, manufacturing, food, beverage carbonation, fiber-optics, steel making, aerospace, chemicals, and water treatment industries. Linde plc was founded in 1879 and is based in Guildford, the United Kingdom.
Air Products and Chemicals, Inc. provides atmospheric gases, process and specialty gases, equipment, and services worldwide. The company produces atmospheric gases, including oxygen, nitrogen, argon, and rare gases; process gases, such as hydrogen, helium, carbon dioxide, carbon monoxide, syngas, and specialty gases; and equipment for the production or processing of gases comprising air separation units and non-cryogenic generators for customers in various industries, including refining, chemical, gasification, metals, electronics, manufacturing, food and beverage, magnetic resonance imaging, energy production and refining, and metals. It also designs and manufactures equipment for air separation, hydrocarbon recovery and purification, natural gas liquefaction, and liquid helium and liquid hydrogen transport and storage. Air Products and Chemicals, Inc. was founded in 1940 and is headquartered in Allentown, Pennsylvania.
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.