Niobium unknowns add to West Aruntan intrigue

An undeniable stretch of success with the drill has turned WA1 Resources from a minnow to billion-dollar company, but even pre-resource a question has emerged whether so much niobium would be part of a monopoly – or be enough to break one.

With more than 80 per cent of the world’s niobium coming from a lone project producing at much higher grades than fellows in Brazilian or a Canadian asset which could only be called a competitor at a stretch, CBMM dominates the landscape.

CBMM’s Araxá project alone has been calculated to be able meet global demand from somewhere between two to five centuries at current demand.

And the grades are a doozy, hosted in carbonatite, consisting of a core of primary ore grading at 1.5% and with residual material ranging between 2.5-3%, compared to its major Brazilian competitor which produces about 15% of global consumption at a much lesser 0.43%.

And while by 2019-reckoning Brazil held 98 per cent of known global reserves, then CBMM technology head Marcos Stuart told Revista Pesquisa Fapesp the ore was indeed abundant in Brazil but not uncommon elsewhere, and there were currently around 85 known but unexploited deposits lying around the planet.

Stuart said his company, with little known about the element and its applications, had essentially created a market for niobium, noting that the biggest competitor to niobium was steel made without it.

But West Arunta and WA1, relatively fresh off its 2022 listing, have fast been proving up a challenger on the other end of the earth at WA1’s West Arunta project in Western Australia’s Gibson Desert.

The niobium discovery has earned the right to be claimed as the most significant Australian critical minerals discovery in years, but a scarcity of global producers makes its march to production all the more fascinating.

Monopoly-buster?

A recent Taxloss post on Substack made analogy to Quintis Resources and Syrah Resources, two ASX-listed companies who, with Indian Sandalwood and Graphite, found that adding a large portion to global markets had made it one for the buyers.

“This is not the iron ore, copper, nickel or even manganese market, it’s a tiny $4.5bn/yr and that’s at monopoly prices,” Taxloss wrote.

“If WA1’s resource is as good as everyone says it is – and if it is then management are to be congratulated on it as are the people who have ridden this up – then ironically the niobium market is screwed as are all the players in it.

“In any case – the assumption that spot pricing can be maintained when over 20% is added to global supply at the very minimum bears further scrutiny.”

Pushback towards the post mentioned that a profitable equilibrium between WA1 and CBMM could be found, rather than two companies lowering a price towards a shared poorhouse, and that diversified supply remains a significant factor for end users.

Determining distance

WA1 naysayers have also made note of its presence in a sparsely populated and essentially infrastructure-free part of the state, but that’s a fact the company has never tried to hide.

“We’re in a new part of Western Australia. It hasn’t got any infrastructure,” WA1 Managing Director Paul Savich told Fairfax’s the Australian Financial Review.

“Common user infrastructure is what we need out where we are and hopefully the bar for the first project out in the West Arunta, is really, really high and Luni can shoulder that burden.”

Australia has had its sights on disrupting the Brazilian monopoly since at least 2019, but without the drilling successes to make a claim until WA1 came around.

A Dubbo project in New South Wales currently under Australian Strategic Materials control was once touted as the Australian answer, but with inferred resources currently grading at 0.44% it is at a fairly lower mark than CBMM and the grades being reported out of West Arunta.

And then there is the fact that CBMM doesn’t sell niobium ore, but rather products like ferroniobium, and it remains unclear what WA1 might actually be selling.

Recent metallurgy out of West Arunta was taken by the market as enough to reward the WA1 ticker with a hefty price bump, and while it remains early days, the grades, distant location, market-disrupting potential, and even the bickering, all make for intrigue across that new Aruntan frontier.

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