What St. George Mining has planned for its Brazilian niobium-rare earths project

Australia-listed exploration firm St. George Mining announced key advances of its Araxá niobium-rare earths project in Brazil’s Minas Gerais state.

St. George acquired the Araxá project last year from Itafos Araxá Mineração e Fertilizantes, a subsidiary of Itafos. 

"We count on three mining tenements within the project, with one already in the licensing phase, while for the other two, we will continue with the drilling to create the report in order to make the mining request and arrange licensing for these two other rights," Thiago Amaral, St. George's director in Brazil, responsible for ESG and technical development, told BNamericas.

With the advance of the project, the company is likely to enter a segment dominated by Brazilian niobium miner and integrated producer CBMM, which also has operations in Minas Gerais and produces around 80% of the world’s niobium.

John Prineas, founding shareholder and executive chairman of St. George Mining, talks with BNamericas about the details of the Araxá project.

BNamericas: What’s the status of the Araxá project?

Prineas: We signed an MOU with Minas Gerais, and the goal of this MOU is to position this as a strategic project for the state, helping us to advance the analysis of the project more quickly.

But it doesn't mean that we're conducting fewer studies or that the studies will be of lower quality. It just means that the state is putting in its best efforts, as we're making our best efforts to ensure the best studies and to expedite the approval of all the projects within a good timeline.

BNamericas: At this point, what are the needs in terms of acquiring machinery and hiring a workforce?

Prineas: We're hiring third-party specialist companies for drilling the two tenements that are in the exploration phase. Regarding the other tenement, we have our people and third parties working on the studies, such as heritage studies, environmental studies and process studies.

At this time, we are hiring specialized personnel and companies. From our side, we have positions in our administrative team, including some geologists, not only in Brazil but also in Australia, who are helping with this first stage.

BNamericas: What's the timetable for the different phases of the project, construction and production?

Prineas: The important thing we're doing right now is metallurgical test work on the mineralization. We know CBMM produces niobium products for sale through a fairly standard flotation process.

We've signed a co-venture agreement with the rare earths institute of Senai [a nonprofit offering industrial training and innovation support] to explore a more innovative, technologically advanced way to process our mineralization.

This project will take about 10 months to reach a conclusion and we might find a different process to treat the mineralization compared to CBMM, potentially at a lower cost, and in a more ESG-friendly way to optimize recovery.

After that, we can place large orders for machinery, start hiring more staff and really understand the production levels for both niobium and rare earths.

That will likely take 10 to 12 months before we can make a real decision on what the production scenario will be.

BNamericas: What is the investment estimate and financing strategy?

Prineas: That will depend on the outcome of the test work to determine the kind of plant we want. The estimate is somewhere between US$150mn and US$300mn to set up the production process.

We just have to wait and see exactly what the results are, but that’s the funding range we will require.

We've been speaking to end users and trading houses who are very keen to support us in financing the construction phase. Some parties are happy to provide all the construction under an EPC contract for free in exchange for production offtake. Other parties, who are traders in niobium, are willing to lend us the money, with repayment through the offtake.

BNamericas: What motivated the company to enter the niobium sector?

Prineas: We do exploration for nickel and lithium in Western Australia. They're wonderful commodities, but they're very volatile. Prices can fluctuate quite dramatically, as they have recently.

Lithium prices crashed. Nickel prices crashed. It’s not a very attractive space to be as a producer or as an explorer because you don’t get support from investors.

We like niobium because of its very stable price environment. The price of niobium has been pretty constant and rising for the past 20 years. There is no risk of oversupply because there are only three primary producers of niobium.

CBMM, of course, controls about 80% of the production. So it’s a very attractive market for investors because it offers a stable outlook. For a mining company like ours, it’s a very good space to be in.

BNamericas: What are the main markets for your production in Brazil?

Prineas: The two obvious big-picture markets are China and the US. China is the easier one because they want everything.

The US is also a big consumer of niobium. They’re a bit quieter, but we understand that they're stockpiling niobium due to its strategic importance, not just for construction but also for defense materials. So we will also be speaking to the US as a destination for niobium products.

BNamericas: What can the mining sector expect from the Donald Trump administration?

Prineas: I think the general concept is that he wants to promote economic activity in the US, including more mining activity, and reduce cheap imports into the country.

He wants to create jobs, but he has also said that he welcomes foreign companies coming to the US to set up production facilities and operations as long as they create jobs.

So, I’m not too worried about the Trump administration. I think it would be very positive for mining in America, for mining that supplies America, and he’s focused on creating economic growth. So, I think it would be very positive for the world, and very positive for Brazil and Australia.