Hafnium may not be a household word, but demand for the element is
growing, and Alkane Resources is gearing up to take advantage.
Although hafnium is used in electronics, in alloys for aerospace
applications and in control rods for nuclear reactors, the market is quite
small. Hafnium is not rare, but it is not found alone in nature. It is almost
always found with zirconium and must be separated from it. Only about 70 tons
are produced each year, but demand is expected to increase.
Tom Vulcan noted in ETF.com that "while the demand
for hafnium from the electronics industry (for chips) appears to be
increasing slightly, there is strong demand growth for the metal both in air
plasma applications and superalloys. . .it is, however, from the nuclear
industry that the greatest growth in demand may arise." According to the
World Nuclear Association, 60 nuclear reactors are under construction
worldwide.
Among the companies poised to benefit from great hafnium demand is Alkane
Resources Ltd. (ALK:ASX; ANLKY:OTCQX). The Australia-based company is
developing the Dubbo Zirconia Project (DZP) in New South Wales. Ian Chalmers,
managing director of Alkane, told The Gold Report that about three
years ago, Alkane was "approached by an aerospace company to look at
hafnium separation from our zirconium stream so that supply was not linked
to, and therefore restricted by, the production of nuclear grade zirconium
metal in which hafnium is a byproduct. This had an added bonus of producing a
very high purity zirconium product, with advanced manufacture applications.
There was added complexity in the flow sheet but this was offset but a
substantial increase in revenues."
In its quarterly report, Alkane gave a detailed report on hafnium, noting
"hafnium supply remained in deficit during 2016 with demand continuing
to exceed supply, which is heavily tied to demand for hafnium free zirconium
metal for the nuclear industry. Chinese zirconium companies are starting to
produce hafnium free zirconium for their nuclear industry so it is expected
to also increase hafnium supply, but the quantities involved are only a few
tonnes, and will most likely be consumed within China."
The company added that "the main market for hafnium is for hafnium
metal used in super alloys for industrial gas turbines and jet engines, but
there are numerous research and development activities taking place which
could create significant additional demand if hafnium availability can be
increased from new sources such as the Dubbo Project."
Alkane's Chalmers told The Gold Report that the outlook on hafnium
is "very positive with growth in specialty alloys to drive in the short
term but longer-term growth in new applications such as thermoelectric and
ferroelectrics." He added that the company considers hafnium "a
bonus; it doesn't drive the economics but it has the ability to add 'cream to
the cake.'"
In December, Alkane announced that it had "dispatched high purity
samples of hafnia (hafnium oxide) to several key potential customers."
Giles Kerr noted in Seeking Alpha that the DZP will be
"the world's only significant producer of Hafnium and that will create
new demand because high-tech manufacturers cannot currently source reliable
product. Hafnium has many applications, for example, by giving alloyed
materials properties which enable more flexible, stronger and lighter
components for the aerospace industry." He explained that "being
such a minor metal Hafnium is not widely traded and the spot price is not
publicly available however, based upon this 2015 article, the price is reportedly near
$1000/kg�equivalent to $1 million per tonne. At this price the Hafnium stream
clearly has the potential to be a significant revenue source of up to $200
million per annum depending on market demand."
Analyst Tom Hayes of Edison Investment Research stated in December that
"we have always considered the DZP, with its mix of products including
zirconium chemicals, heavy and light rare earth concentrates, ferro-niobium
and the highly valuable hafnium output (plus TGO gold output), as a project
that through its diversification should weather the worst of end-market
environments."
He also noted that "industry feedback has been especially positive
for DZP hafnium output as it is not tied to the vagaries of the nuclear
industry. This is because growth in the extremely small (c 50tpa) hafnium
market is to be largely linked to high-tech material usage, such as alloys
used in the aerospace and industrial gas turbine industries."
Alkane was named to the 2017 OTCQX Best 50 on Feb. 7, a ranking of
the top 50 companies trading on the OTCQX market in 2016. Alkane's return in
2016 was 54.60%.
Chalmers stated that the company's success on the OTCQX "reflects the
development progress of the Dubbo Project in Australia. Our rare metals/rare
earths project will be critical for use in aerospace, defense, clean energy
technologies and high tech devices that we use every day across the world.
The Dubbo Project has all environmental approvals and is now construction
ready pending financing."