Next on stage is Paul Savich, Managing Director of WA1 . WA1 has been focused on advancing the development of the LUNI Niobium Project in Western Australia since its discovery shortly after listing in 2022. It says here that Paul is one of Australia's most foremost hamburger critics. He still finds time to change the global niobium market and is here today to give us an update on the LUNI project.
Thanks, Tim. Good morning and thank you, diggers and dealers, for this opportunity. I'm incredibly proud of what WA1 has achieved over the past three years, and today I'm looking forward to running you through our approach to bring online what is now one of Australia's most important and valuable critical mineral projects. First, I'd like to take a few minutes just to go through a little bit of detail on the niobium space to explain to investors why, on so many metrics, niobium is one of the best commodities for us to be working with and why there simply hasn't been a better time in history to discover and develop the world's second best niobium project. Okay, let's go. Currently, three existing niobium mines provide the world's niobium needs.
Two of those mines are in Brazil, and last year, one of the Brazilian mines provided the world 74% of its niobium supply. That mine is called Araxá, and it's owned by private company CBMM. It's not surprising that over the last couple of years since our discovery of LUNI, WA1 and Australia have now become a tremendously important global player, which can help address this highly concentrated supply situation. China, which is 37% of global niobium demand, has no domestic niobium supply and therefore relies on Brazil for almost all of its niobium. All the producers sell direct to customer, and that removes the price volatility, which is often seen or amplified by traders in a lot of other metal markets. This results in these three existing mines being some of the most reliably profitable mines on Earth. 88% of global niobium demand is in the form of ferroniobium.
It's a very high-value metal, selling for around $30,000 per ton. Ferroniobium is used as a microalloy in the steelmaking process, supplied directly into the steelmaking process. Alloying refers to the intentional addition of elements other than iron to modify or enhance steel's properties. The better-known alloys include vanadium, titanium, manganese, and nickel. Let me explain why niobium is one of the highest-ranked critical minerals, why it sells for $30,000 per ton, and why it is so highly sought after for a range of crucial applications. For over two centuries, whenever you've needed something strong and tough, it's been hard to beat steel. When steel production became cost-effective in the 1800s, it became a crucial component in infrastructure, transport, and manufacturing. Industry began to demand more from steel, and quality became a focus. This is when alloying elements started being widely used.
Different alloys will enhance steel's performance in different ways, and niobium is the ideal alloy if you need to form or bend steel, such as in structural steels and beams, pipelines, or in automotive chassis. This is because the addition of a small amount of niobium per ton of steel enhances the microstructure of the steel. It causes the iron to solidify in smaller, densely packed particles, and this is known as grain refinement. Niobium is the best element for this. It assists with formability while it maintains weldability, and it also enhances strength, which means that for the same application, you can use less steel. Iron steelmaking accounts for 11% of global CO2 emissions, and demand for steel will continue to increase. Microalloys like niobium provide industry an incredible opportunity to create and produce better products, meaning that construction and manufacturing can do much more with much less steel.
This dematerialization is a very important but often overlooked part of decarbonization. With 88% of niobium supply sold in the form of ferroniobium, that product is expected to underpin the initial development case for LUNI. I won't go into too much detail today on niobium oxide, which is niobium in a more pure form, selling for around $52,000 per ton. I will note that 12% of global niobium is used in oxide form and primarily for the production of superalloys, which are metals used in high-temperature, high-stress military, defense, and aerospace applications, and also in high-performance medical, energy, and electronic equipment. This is why niobium finds itself exempt from all Trump tariffs. While niobium demand is currently much smaller than ferroniobium, growth in this segment alone last year was 15%, or around 2,400 tons. To summarize the niobium market, growth is strong and getting stronger.
Consumption of ferroniobium over the last 20 years has increased by more than 300%. Even last year, in the face of lower steel production, ferroniobium consumption increased by 5,000 tons last year. The move away from blast furnaces to electric arc furnaces and potentially even grain steel will only further increase demand. In terms of supply, for the last 50 years, three mines have satisfied the growth in demand, with the burden of ensuring supply resting squarely on CBMM's shoulders. As you can see in this slide, CBMM has scale and grade, which, as I'll show you in a couple of slides, explains why LUNI is so valuable. I won't go into as much detail about CBMM as last year, but I'll share some recent insight. CBMM's mine is in the state of Minas Gerais, and the state of MG receives 25% of CBMM's profits under a profit-share royalty arrangement.
The state of MG is currently looking to reduce its debt to the federal government by transferring this ownership. The transaction is live in their regular developments. In summary, this is a very advanced proposal to federalize a significant portion of the ownership of the majority of the world's niobium supply. The valuation of the transfer is yet to be determined, but there have been reports that the state is seeking up to the equivalent of $10.5 billion for its share in CBMM. On a whole-of-company basis, this translates to $42 billion, which values CBMM's operations at more than Fortescue in its entirety. To put that into perspective, last year, Fortescue produced a record 194 million tons of iron ore, and CBMM produced 100,000 tons of ferroniobium equivalent. The prize in front of WA1 is significant.
The first time this slide was included in our corporate presentation was March 2023, when we had only three drill holes into LUNI. We were fortunate that the magnitude of LUNI immediately gave us the access to capital and the confidence to commit to development. That immediate commitment to development, commitment to long-lead activities across the full range of the project's components, has meant that we've been able to use the maximum time available from discovery through to potential production to de-risk design and permit each component. This, coupled with early engagement with potential offtake partners across the world, is allowing us to continue to refine the most suitable project delivery and associated funding model. Drilling at LUNI has progressed very efficiently. In 2024, we announced our maiden inferred resource estimate, and then after a further 20,000 m of resource definition drilling, we recently reported an updated MRE.
Overall, infill drilling increased the total resource at LUNI by 10% to 220 million tons at 1% Nb2O5. This was a testament to the accuracy and the integrity of our first resource estimate, and it is also a reinforcement of the quality and continuity of LUNI's mineralization. In line with our project delivery model and development ambitions that I just mentioned earlier, since discovery, drilling at LUNI has had one key objective: to find the best of this incredibly large and high-grade deposit, which can support the highest value, lowest risk development case. Following initial reconnaissance, we narrowed our focus to two key high-grade zones, which are shown in this image in color. These are the new indicated portions of LUNI's resource: 31 million tons at an incredible 2.3%. I'm confident that this indicated resource provides the foundation for us to progress all facets of LUNI's development.
The scale is hard to appreciate in this image. That eastern zone alone is 1.5 km x 500 m, very close to surface, and has an average thickness of 25 m. These rocks are not staying in the ground, and our mine design studies are well underway to work out which ones should come out first. This year, we've had three drill rigs operating at site, with only one of them focused on resource definition and the other two on completing pre-development activities. This image shows the drilling completed for sterilization, geotechnical, hydrogeological, and environmental purposes, and will enable us to finalize site design and disturbance envelopes for various work streams. It's again important to note the scale of this image, that sterilization there is 10 km east-west, defining clear boundaries to the mineralization and providing significant opportunity for our layouts.
Hydrogeological drilling remains ongoing, including the establishment of production bores to inform water studies and balances. Considerable funding and effort has been committed to the drilling on this map, and this is in line with our approach to progress each project component as efficiently as possible and thereby deliver the best value to our shareholders. Moving to processing, the existing mines use a similar process flow sheet, which comprises three main steps, which you can see on this slide. Importantly, these three mines all produce ferroniobium, which is ready for direct use in the steelmaking process. This is one of the most strategic attributes of owning a niobium operation because it means that the mine gate products can be directly sold to a diverse global customer base. The main challenge in these conventional flow sheets is the same as many other commodities.
It's the flotation step, so this is where we focus most of our effort. Mineralogical characterization across LUNI has identified the same key niobium-bearing minerals that exist at the other deposits, so we've focused on refining a similar flow sheet. To date, we've reported flotation test work from within the eastern zone of the deposit, which I mentioned earlier. This is the part of the deposit that we currently believe could underpin our optimal initial development scenario, and we've since been undertaking a lot of flotation variability test work to inform process flow sheet design decisions and mass balances. This test work is also providing a continuous feedback loop into mine design studies. We've also reported the results from the second and third steps in that flow sheet.
To summarize that proof of concept test work, we took mineralization from LUNI through the entire flow sheet and produced ferroniobium, thereby representing the relative simplicity of a ferroniobium flow sheet. We've also just released results from test work that used concentrate from LUNI to produce high-purity niobium oxide samples. With currently no significant supply of niobium oxide outside of CBMM, this test work further highlights the incredibly strategic nature of LUNI. Now, based on test work results to date, we have sample specifications for various stages of the flow sheet, including niobium concentrates, ferroniobium, and niobium oxide, enabling increasingly detailed engagement with potential offtake partners who are able to consider our entire potential product mix.
We've continued to upgrade our facilities at site, and now, following the drilling I was talking about that we completed earlier this year, we're finalizing layout designs, looking for a suitable camp to purchase, which will support our increasing and diversified site-based activities. We have an excellent record on health and safety, heritage, and environment, and our highly experienced team is absolutely determined to continue this. Over the past three years, we've placed significant importance on work streams to support high-quality environmental data capture, to support documentation for our ultimate government impact assessment process. Our surveys have been completed in partnership with local ranger groups, and that's also providing important information to enhance their ability to deliver conservation outcomes and heritage protection.
Separate to this, I'm pleased to say we've increased our community-based initiatives, which has included white card training and specialist skill sessions and training, and also short-term on-country internships for a number of traditional owners with our earthworks contractor. Our shareholders can be incredibly proud of the work that their company is doing in the local communities. Over the past year, we've bolstered our board and executive team for the next part of the WA1 journey. We've had the pleasure of welcoming Kathleen Bozanic and Lee Bowers to our board, and we now have full in-house capability to advance our permitting and development ambitions. We have AUD 70 million cash, and we have maintained our treasury discipline, and our shareholder base continues to grow, largely supported by high-quality North American institutional investors. I'm very appreciative that we're starting to see some Australian institutional support as well.
As I've demonstrated today, we are advancing all project components as efficiently as possible, with a firm focus on our objective of defining the highest value, lowest risk development case for LUNI. With a resource of this scale, the challenge is to optimize our studies to ensure the best part of the deposit is utilized first. Coupled with our demonstrated product potential product mix, we expect to be able to access our ideal offtake and funding models. In parallel, we're advancing our permitting work streams, which will most likely have a large influence on the ultimate development timeline for our 100% owned LUNI Niobium Project . We are well funded, we're highly motivated, and we're extremely grateful to be working on this project because there simply has not been a better time in history to discover and develop the world's second best niobium deposit. Thank you very much.
Thank you very much, Paul.