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 greater 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."
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1) Patrice Fusillo compiled this article for Streetwise Reports LLC and provides services to Streetwise Reports as an employee. She owns, or members of her immediate household or family own, shares of the following companies mentioned in this article: None. She is, or members of her immediate household or family are, paid by the following companies mentioned in this article: None.
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Disclosures from Follow Up On Alkane Resources, Giles Kerr, Seeking Alpha, Dec. 25, 2016
I am/we are long ANLKY.
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Disclosures from Edison Investment Research, Dec. 19, 2016
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