Thank you for standing by, and welcome to the Australian Strategic Materials Ltd. company update. I would now like to hand the conference over to Rowena Smith, Managing Director and CEO. Please go ahead.
Thanks very much, Darcy, and welcome to everyone joining us on the call this morning. Today I'll be taking you through the investor presentation that we released to the ASX last week following the release of our March quarterly report. Since the beginning of the calendar year, we've witnessed considerable global activity in the rare earth and critical minerals sector, and some of this activity has created uncertainty and volatility, but at the same time we also see significant opportunity. ASM is very well positioned to leverage those opportunities, and that is what I'd like to focus on today. ASM, we're building a global rare earths and critical minerals business to provide the high-tech metals that are needed for the emerging advanced technologies.
What I want to take us through today is, first of all, just a bit of an overview of what's happening in the international market dynamics that I think really supports ASM's mined metal strategy. I then want to give an update on the metals plant in Korea that we've already established, which we really see as a blueprint for growth, and how that is now playing out in our thinking around a case for a U.S. metals plant as a strategic expansion of that metalization capability. We'll give you an update on where we're at with our Dubbo project, our key project here in Australia, which is a global project that we see as being very much in the national interest.
I will finish up by just giving a bit of a view on what we see as the outlook as we go forward to deliver this secure, sustainable supply chain for rare earths and critical minerals. ASM, we have a mine to metal strategy. We have two key areas that we're focused on when we're looking for development of our assets. The first is a mine in Dubbo in New South Wales, which is advanced, but when it's in operation we will mine, separate, and refine a suite of critical minerals products all the way through to high purity oxides in that location. We will then take those through to one of our global metals plants, the first of which we've already established in Korea, but we now have well advanced our planning for replicating that facility in the U.S.
What we are focused on there is metalizing the rare earths, the light rare earths, the heavy rare earths, and also producing those specialist alloys that are the major constituent for the high-performance magnets that are an essential component in so many of the advanced manufacturing technologies with defense applications and with direct applications into the emerging clean technologies. I just want to focus firstly on what's happening in the global market because what we see for rare earths specifically is a very strong demand story. In recent years, we have been seeing growth in demand for these materials, but we've seen to date production really being able to keep pace with that increasing demand, so it's remained relatively in balance.
What the forecasts are showing as we're going forward is that that demand is going to continue to step up at a significant rate, and the production is not going to be able to maintain that growth. We see pretty much from this year, we're starting to see a global deficit for that production to meet that increasing demand. I think importantly when you look at the slides on the right you can also see that demand is coming from multiple sources, which I think is also a really important story to understand. Yes, there's predicted growth in electric vehicles, but that is only a quarter of what we're anticipating we will see demand to be in 2040 for these materials.
We're also seeing significant growth in robotics, in a number of other applications for defense, as well as across the suite of those uses in the technologies that are listed there. In addition to there being a very strong demand story, there's also clearly a very interesting supply story for these materials. The supply chain currently really is dominated by one jurisdiction, and that is China. While 60% of the raw materials are being mined by China, what you can see is that as it then goes forward in order to be separated and refined into oxides, then metalized and alloyed, and then manufactured into magnets, you see that that supply chain really gets squeezed with over 90% of the production capability residing in China through all of that mid-processing part of that supply chain.
While a significant amount of the magnets that are manufactured are then used in domestic manufacturing within China, only a small portion of it is exported. Nonetheless, the size of the export market from China in 2024 was just under $3 billion and obviously anticipated to grow substantially over the next 10 years. I think the recent news of China restricting the export of those magnets and those key alloys is very significant. That is an immediate impact on that nearly $3 billion market, and the market is definitely grappling at the moment as to where the immediate alternate sources are. I think that this process of confronting the reality of the disruption in that supply chain is really motivating people to think about what do I need to do now to establish diversity in this supply chain.
China, in response to the U.S. tariffs, announced that they were going to restrict the rare earths that are listed there, that's a suite of seven heavy rare earths, as well as that specialist alloy, the NdFeB alloy that is that major constituent for magnets. What you can see there on the table on the right is all seven of those rare earths are found in the Dubbo resource. All of those products we will be producing from Dubbo. Importantly, today, with the facility that we have in Korea, that alloy is a product that we produce there currently, as well as we're working on the metalization capability for the terbium and the dysprosium metals. Very directly relevant to our projects, these restrictions. This isn't a surprise that China would potentially restrict the export of these materials.
This is something that has been anticipated and indeed is the primary driver for ASM's strategy to develop this alternative end-to-end supply chain. I think the challenge to date has been, whilst it's been known, it hasn't been felt, and so there's been a hesitancy globally to act. What we're really quite excited about at the moment is that what we are witnessing is that now that this is an immediate impact, it's really motivating people to move to action. That is in Australia, but we're seeing it in the States, and we're seeing it in Asia, in Korea, in Japan, we're seeing it in Europe, and interestingly we're also seeing a lot of activity in the Middle East. They're coming to talk to us because we are very uniquely positioned to be part of that solution.
The strategy that we have for mined metal is quite unique. ASM is the only ASX-listed company that has established capability in that metals, alloys, and powders part of that supply chain, and the only one who is able to provide immediately into that gap that has been created with this disruption on those alloys from China. I think that leads us nicely into giving an update on where we're at with the Korean metals facility. We're very proud of this facility in Korea. It's located in the foreign investment zone in Ochang, south of Seoul. What we have established here is a facility with an installed capacity of 1,300 tonnes per annum of that NdFeB alloy. The installed equipment is a one strip caster, which has three furnaces feeding it currently.
We have invested about $60 million to date, both through CapEx and working capital as we've been going through these early establishment years. Our current product suite that we're delivering to customers are a combination of neodymium and praseodymium metals, which are the light rare earth metals, as well as that alloy. What you can see is that we've got plans for expansion. First of all, we've got a phase II ramp up to take that installed capacity from 1,300 tonnes per annum through to its design capacity of 3,600 tonnes per annum. It is not a significant additional investment in CapEx, only an additional $8 million to take us through to that full design capacity. The lead time is for some of the long lead equipment, particularly the strip caster, which is what that 18-month timeline is.
The commissioning will be relatively straightforward for us because it is a replication of units that we already have and have already established capability in. We will commit to that ramp up in alignment to the customer demand ramp up for that facility. The other area of expansion that we're very focused on at the moment is increasing the product suite. We've advised the market previously. We're working on taking our own proprietary technology that we have developed for the metalization of terbium and dysprosium, those heavy rare earth metals. We are taking that through to commercial scale this year, and we are anticipating that we will, in the second half, be ready to be delivering our first commercial products for the dysprosium and terbium metal to the market, which is very timely given the level of interest that there is globally in this capability, which is extremely unique.
I'm only aware of two other producers at the moment globally outside of China who have the capability to be able to make those metals in their pure form. The Korean metals plant financials, we have provided an update here so that the market can see what this facility looks like when it is at that design capacity for the 3,600 tonnes per annum. This is based on all of the experience we have now over the last particularly 12 months in the product validation and the commercial discussions that we're having with the established and emerging Western magnet producers. We've got much more confidence around the pricing assumptions that are flowing into this model, and we're still feeling very confident around both the revenue and the EBITDA for this facility.
As I said earlier, the timeline for this is we're continuing to talk with those magnet producers this year, with then moving through that phase II expansion next year for then being at the 3,600 tonnes per annum, potentially from 2027, assuming that the customer demand supports those commitments. We do see this facility in Korea as a blueprint for growth. We have worked hard over the period since we delivered our first commercial production here in 2022 to produce the neodymium praseodymium metal and alloy for a growing domestic and international customer base. We've been going through quite an involved process of validating our products with a very broad suite of customers in Korea, in the U.S., in Europe, and more recently in Canada. We have been delivering our metal products to Korean magnet producers like NS World and KCM for some time.
We did announce our first alloy customers would be Noveon Magnetics and USA Rare Earths, which are two emerging magnet producers based in the U.S. Those relationships continue to be strong as they are progressing their commissioning, and we will continue to work with them to support their supply needs as they begin to ramp up. We have also been working more recently with KMMI, another emerging Korean magnet producer for alloy, and Magnequench, which is a part of the NEO group that have, from late last year, taken an order of the NdPr metal from us. We have just completed the first 19-tonne order for them, and we are well progressed in discussions with them for follow-up orders. They are particularly interested not just in our light rare earth metal, but very interested in our heavy rare earth metal capability.
Even more recently, we have sent a sample, or are in the process of preparing a sample, for GKN, which is, again, another very significant user of these magnets for their manufacturing goods. That is a snapshot of some of the customers that we are working with that are in the public domain. There are a number of others that we are working with that are not yet able to be spoken about publicly.
What we're seeing in those discussions is, particularly in the last few weeks, with the volatility that we're seeing in the market, we're seeing a lot more engagement from them, which is in response to the fact that they have had significant engagement from their OEMs and their customers in recent weeks about establishing an alternative to the existing supply chain in order to manage this supply chain risk that is very present and felt at the moment. What we also are seeing is a lot of interest in whether or not we can replicate this capability in their jurisdictions. That, I think, leads nicely into some of the thinking that we've been doing around the U.S. strategic expansion.
I think I just literally got back on the weekend from another week in D.C., and these conversations that we are having in the U.S. with government departments and with customers and with investors is very live. What you can see there on that slide is the photo that was taken in October 2023 at the Critical Minerals Roundtable that I participated in as part of the Prime Minister's state visit back in 2023. There has been significant activity both in government to government since that time, but also we've been extremely active in our discussions in the U.S. since that time to build to a point where we have now got quite advanced thinking about our U.S. strategic expansion.
One of the things when we were considering where we would potentially replicate the Korean metals facility, because we have considered this across a number of jurisdictions, but when we were looking at that, the U.S. came out very strongly early as being a very favorable jurisdiction for the non-cost sort of components of that decision tree. You can see that there quite simply in that ranking. South Korea was a very strong jurisdiction. U.S. is stronger again. The area that we have really been trying to establish confidence in is whether or not, from a cost perspective, this was the right jurisdiction for us to be investing in. That is what has been so exciting about some of this development over the last 12 months. It has got even stronger momentum now with the Trump administration coming in. We are seeing a lot of activity.
Whilst I referenced before, there's a lot of volatility at the moment, a lot of uncertainty globally as the Trump administration's new policies are coming through, and there's not a lot of clarity yet about where they will all be landing. There are two themes that are very strong, that are very consistent, that we're quite excited about. One is there is a very strong theme about establishing a manufacturing capability, that made in America mandate from the Trump administration. They are very committed to ensuring that U.S. manufacturing is going to grow through the coming decade and creating policy that's going to enable that. The other very strong theme is that they are determined that there will be alternative supply chains, independent supply chains, particularly for critical minerals and rare earths, to be able to support that manufacturing industry.
We're seeing that in numerous pieces of policy. Certainly, when I was there again last week, just an enormous amount of excitement and activity in the various different government departments, as many of them are still waiting for their senior roles to be appointed. They're still working through getting clarity on their budget and their mandate, but all of them preparing to be extremely active. There was a very strong theme about the need to deliver results and that they want to be seen to be doing deals and being active in creating this supply chain. We've been talking for some period of time, first of all, with the Export-Import Bank of the United States, but also with the United States Department of Defense. When I was in D.C. in February, we confirmed and submitted our paper seeking CapEx funding for a U.S. plant.
That is currently being considered by the United States Department of Defense. One of the reasons why we're particularly interested in the U.S., other than the amount of support there is in the ecosystem and in the funding, is because the states themselves are extremely active in competing for creating these supportive business environments with state-based grants and incentives. In addition to the 45X tax credit that will support this metals facility if it's in the states, we've been talking since, well, over the last 12 months, we attended the Select USA conference, which is a conference run by the Department of Commerce there in the states that really introduces businesses like ours to the states and helps as a concierge service to be able to see what the various states have to offer.
We're now at a point where we've selected the top six states for location for this plant. We have received the responses on our RFI request of those six states. We're just finalizing selection of the top two states at the moment. We will, later this quarter, be or perhaps July, perhaps it's early next quarter, doing a visit to those top two states to then, through the second half, finalize the location for our preferred site for this U.S. plant. We can see the competitiveness of these submissions that we've received.
We're feeling very confident about the ability to be able to replicate the capability that we have in Korea and have it be a very cost-competitive source of metals to be able to support this emerging downstream manufacturing, inclusive of our existing magnet customers, Noveon Magnetics and USA Rare Earths, but also broadening it out to others. What we have also been doing is talking about sources of feed. The oxides, obviously, are critical for being able to support these metals plants, be it in Korea or in the U.S. We really want to make sure that we have got non-China-sourced oxide to be able to go all the way through this supply chain. We have well-advanced discussions with American, with U.S, with European, and with Canadian sources of oxides as third-party materials for our metals facilities.
We will continue with those, and we will source materials from those prior to bringing on our own materials. What we really do want is to be able to see the Dubbo feed coming in as a supplementary source to support growth as we go forward. Just on the American metals plant, this is just a bit of a summary of what we are looking at when we are assessing whether or not we will commit to this American metals plant. We're obviously in discussion with the DoD for funding support. There are also other domestic options that are emerging in the new policy for support from the U.S. government as well for this facility. We're targeting financials that are broadly aligned with the KNP target financials that I spoke about earlier.
We're thinking that we'll initially start this at a 2,000-tonne per annum capacity with the design to readily expand that to 4,000-tonne per annum, and then obviously it can continue to expand beyond that as demand dictates. When you look at the timing here, I said before we're looking to select the U.S. state for this facility this year. We will select that in the second half. Really, the timeline for then being able to finalise funding and move into construction is largely the permitting process. The Department of Defense funding requires you to go through what's called the NEPA process in the states. Our research and advice that we've received is that for a facility of our kind, we would anticipate that would take 12 months.
We're really wanting to be in a position where we've identified the site, we can kick off that permitting process by the end of this year, which then keeps us on track for being able to then complete that permitting process through 2026 and then commence construction in 2027. There's obviously a lot of discussion at the moment in the states about potentially accelerating their permitting processes. We will continue to watch to see what these timelines can look like, but these are our current assumptions. Our Dubbo project, as a primary source of feed for growth of these metals facilities, is the other area I want to provide an update on.
We do see the Dubbo project as a very unique orebody because in addition to the light rare earth, the neodymium and praseodymium, it has a very high proportion of these heavy rare earths, the terbium, the dysprosium, as well as that suite of others that we spoke about earlier. Importantly, it also has zirconium, niobium, and hafnium. They also are listed on the critical minerals list for Australia and the U.S., and indeed in many other of the Western jurisdictions. It is a long-life mine. We have a 20-year life of mine based on the reserves with a substantial resource underpinning that that gives us the potential for further growth. It is in a tier-one jurisdiction. It is construction-ready with all of the major approvals in place.
We have done substantial work over the last 17 years to prove up our flow sheet, and we have the IP to be able to progress with this project. We have got very strong ESG credentials. The Sustainalytics independent rating rates us in the top 10% of diversified metals and mining businesses for our comprehensive ESG program. We really are at the point with our project of really taking those strong financials and securing our funding and securing our offtake. That's where our focus is currently. The last 12 months, we've been very pleased with the momentum that we have been able to have in our funding on the debt side of the stack. We have had over $1.5 billion of conditional ECA support in combination from the Export-Import Bank in the U. S., as well as the Canadian Development Export Bank, as well as Export Finance Australia.
Indeed, the Export Development Canada just issued us with a letter of extension for that letter of interest. The Export-Import Bank has not dated their letter, but they continue to be a very strong supporter of our project. One of the reasons why I was in Washington D.C. last week is that I was invited to speak on a panel at their annual conference as they were really facilitating discussions internationally about how this alternate supply chain is going to be established. We are focused at the moment in our discussions with the Export-Import Bank on finalizing the other letter of interest that we got, which is for funding for the final bit of engineering to be able to finalize the Dubbo project prior to taking feed. Those conversations are continuing to progress well. The discussions around the debt, we're feeling very confident about.
The area that we're really focused on at the moment is on securing the equity. One of the areas that we're very active in is in discussing this with sovereign funds. We've got current discussions underway in Australia, in Korea, in Europe, and more recently, very strong interest coming in from the Middle East. Those again, I think the volatility that's happening at the moment in the market is resulting in all of those jurisdictions, and I would argue I would include Japan in this as well, really thinking very actively about what their alliances are going to be going forward with these supply chains. I think all of them are more active than they were perhaps six to twelve months ago. We've also been talking with the United States Department of Defence for funding support on the equity side for Dubbo.
The DPA Title III in the U.S. allows the Department of Defense to invest in Dubbo as a domestic source. When you hear them talking about the U.S., about the importance of domestic supply chains, Dubbo meets their definition of that. We put two submissions in for grant support late last year from the U.S. Department of Defense, and both of those submissions are currently in consideration. One of the discussions that is happening at the moment in D.C. is with the various different executive orders that have come through recently, there is increased funding to be able to fund those style of projects. They are looking at increasing the capability of the team that is managing that in order to be able to move through those more rapidly. We are feeling very encouraged by what we are seeing there in D.C. around those Department of Defense opportunities.
One of the things while we've been working on all of these different funding angles is that we've really been challenging ourselves on, is there an alternate pathway for execution on Dubbo? Because until now, we've always been very committed to doing this in one step, doing the whole of the flow sheet with all of those various different products all coming through to market simultaneously.
About 12 months ago, we really started challenging ourselves on, is there an opportunity to break this up to do the execution in two phases, to build, commission the rare earth part of the circuit first, and establish the light and heavy rare earth oxide supplies that can then go through to our metals plants in the first phase and then come back once we've got them established and revenue coming from that, come back and invest in the second phase to be able to bring the zirconia, hafnia, and niobium online. This work is progressing well. We received a grant of $5 million from the federal government here in Australia late last year to be able to progress this work. We've identified four potential options.
They are looking at two different types of atmospheric leaching, a heap leach or a tank leach, and looking at that with two different acids, looking at it with hydrochloric acid and sulfuric acid. We have identified those options. We have done a series of drilling and sampling programs so that we are doing this work on fresh coal, but also a larger representation, of course, so that we can really get a good understanding of the variability of the response to leaching across the ore body. What we are progressing at the moment, we are well into at the moment, is that variability leaching test work, as well as we have been working with DRA Global on doing the CapEx and OpEx estimates for those various options. We are anticipating that we will see the first pull-up of all of this work in the mid-year.
We're really just working hard at the moment on particularly making sure that we have optimized the heavy rare earth recoveries as we're going through this leaching test work because that's obviously very important to the market and will make a big difference to the economics of this first phase. That is what we're focused on at the moment, and I anticipate that we'll be giving an update to the market in the middle of the year. What we're really looking for when we're considering whether or not we think this will be viable, obviously the recoveries are important, but ultimately what they lead into is, is the project going to be reduced capital and at a strong operating expenditure that will really support the economics of it in the first phase?
What we're striving for is to have a capital that is well below the $1 billion mark, and we are wanting to deliver an OpEx that's in the bottom third, if not lower, of the existing cost curve. That is what we're striving for. We anticipate that, as I said, we'll give an update to the market on that in the mid-year. Assuming that all things go well to schedule, we would expect that we would see the Dubbo project engineering being complete, that work that we were talking about doing with Bechtel, with the U.S. Exim funding. We would expect that to be complete in 2026 to allow us to be able to commence construction in 2027. Our outlook as we are going forward, we are seeing volatility at the moment.
I've said this a number of times, with that volatility, we are seeing significant opportunity. The amount of inbound inquiry that we are getting from off-takers, from investors in recent weeks is significant. We are seeing the desire to establish a strong alternative supply chain being stronger than we've ever seen it. It is very clear that ASM is recognised as being uniquely positioned to be part of that solution. We're seeing growth across all of these sectors, the automotive, defence, magnets, and semiconductors, and we're seeing it across all of those jurisdictions that I've been talking about. For us, it's a very exciting time as we are looking to establish ourselves at what we see as being a pivotal point in this industry.
What I'm looking forward to over the next quarter is I'm anticipating going back to North America again in mid-June to continue the discussions we're having with government as well as with some of the key customers that we're talking to about partnership and with investors. We will, as I said before, select our top two sites in the States for our American metals plant and conduct the site visits. We're going to be continuing the commercial discussions that are underway at the moment with the off-takers for the Korean metals plant. In particular, I am really looking forward to, in the coming months, being able to confirm our dysprosium commercial production. We set ourselves a target of doing it this calendar year, but I'm certainly hopeful that we will see that in the coming months that we will be able to confirm our first commercial sale.
They're the key things that we're really focused on. More broadly, ASM, we are a mine to metals business building out that alternative global supply chain at a point in history where there has never been stronger interest or motivation for establishing that capability. We're already in production of these high-tech metals and alloys, and we're ready to scale globally. We've got incredibly strong government support across multiple jurisdictions. Our Dubbo project is construction ready, and we have got great momentum in the debt funding. We're looking forward to what we can deliver in the coming months at this very unique point in time. That concludes our presentation today. If there are any questions that you would like to follow up with, please do send them to info@asm-au.com. I'd just like to thank everybody for joining us today.
I look forward to providing further updates on our activities in the months to come, and I hope you enjoy your day. Have a safe one.
That does conclude our conference for today. Thank you for participating. You may now disconnect.