European automakers are in discussions with an Australian mining company about sourcing elements the help power electric vehicles from outside China, which dominates the global supply of rare earth metals.
The mining company, Arafura Resources, is developing the $728 million Nolans project in Australia's Northern Territory that is expected to cover as much as 10 percent of global demand for the type of rare earths used in permanent magnets for electric motors.
Crucially, Arafura plans to process ores close to its site, ensuring direct oversight of the treatment of toxic waste products at the project it bought in 2001.
"We have engagement with European manufacturers to directly supply them with material," Arafura Chief Financial Officer Peter Sherrington said in an interview, adding that he expects to sign agreements before the end of the year as talks advance to volumes and price.
New rules on sustainability and traceability "have opened carmakers' minds up to the need of this," Sherrington said.
Rare earths are emerging as another source of concern in the transformation to electric cars. They will require vast amounts of battery raw materials like lithium, nickel and cobalt, which is leading automakers including BMW, Volkswagen Group and Tesla to go directly to miners.
China is expected to put much of its production to use domestically in the future. The country controls two-thirds of mining and 85 percent of refining of rare earths, according to BloombergNEF.