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Photo of Lina Portman Lina Portman3 weeks ago
0 8 minutes read

Proven model

Vertically integrated value chains have existed in the resources sector for decades, driving numerous mergers and acquisitions while being the key value proposition for mining and resources companies of all sizes.

Some resources, particularly those with high asset specificity, such as bauxite, are produced and processed almost entirely through vertical or near-vertical integration arrangements. The main reasons for these arrangements have remained relatively constant over the years.

On the one hand, vertical integration provides resilience in the face of market volatility, insulating against downstream and upstream impacts through greater control and lower production costs. This business model also allows a mining company to benefit from improved margins in adjacent sectors of the value chain, boost upstream marketing channels and generate additional demand for raw materials.

Sustainability strategies

The transition to cleaner forms of energy and electric vehicles will not happen overnight. This is a costly and complex undertaking in the long run. Additionally, it requires a massive amount of raw materials – and ensuring a company's entire supply chain is traceable and sustainable can be difficult.

A vertical integration strategy can enable a company to ensure a sustainable and responsible supply chain – from extraction and processing to sales and distribution, and potentially even product development.

As an investor, one must examine a mining company's entire supply chain to verify claims of vertical integration and sustainability, including extraction, processing and refining.

Vertically integrated mining companies to watch

Given that vertical integration strategies have long existed in the mining and resources sector, it is not surprising that many companies are adopting them, including some of the world's largest producers. Below are a few examples that we believe could make particularly attractive investment targets.

Aclara Resources (TSX: ARA, OTC Pink: ARAAF)

A development-stage company focused on heavy rare earth minerals hosted in ion-adsorbed clays, Aclara leverages its patented circular mineral harvesting system.process that produces no solid or liquid waste, requires no explosives, grinding or crushing, and recirculates up to 95 percent of wastewater. The company is committed to fully revegetating and revitalizing the extraction areas of its projects in Chile and Brazil.

Beyond its circular mineral harvesting process, Aclara plans to become a vertically integrated rare earth production company, from mine to metals and alloys, while prioritizing and consistently implementing sustainable practices throughout. along the value chain. In collaboration with the Saskatchewan Research Council and Hatch, the company is developing a rare earth separation facility in the United States using a solvent extraction process. Additionally, the recently announced joint venture between Aclara and CAP SA aims to provide a geopolitically independent rare earth alternative offering for the permanent magnet market. In a further demonstration of its commitment to sustainability, Aclara recently joined the United Nations Global Compact, the world's largest corporate sustainability initiative. With more than 24,000 participating organizations across 160 companies, the Global Compact sets out a framework of ten principles on labor, human rights, anti-corruption and environmental practices.

Northern Graphite (TSXV: NGC, OTCQB: NGPHF)

As the only graphite producer in North America, Northern (formerly Northern Graphite) recently changed its name to emphasize its new strategy to evolve into a vertically integrated mine-to-market to battery. Northern owns and operates the Lac des Iles graphite mine in Quebec, the Bissett Creek project in Ontario and a Namibian project that it is waiting to bring back into service. Once the Namibian project is operational, Northern will be one of the largest non-Chinese natural graphite producers in the world.

This puts the company in an excellent position to expand downstream, leveraging its pre-existing expertise to help establish a stable North American battery supply chain.

Arafura Resources (ASX: ARU, OTC Pink: ARAFF)

An Australian REE company focused on sustainability, Arafura retains full ownership of the Nolans project. Located 135 kilometers north of Alice Springs, the project is rich in both neodymium and praseodymium. Arafura has secured government funding to support the project, which it plans to develop into a vertically integrated operation with on-site processing facilities.

Once completed, the mine is expected to have a lifespan of 38 years with an annual neodymium-praseodymium concentrate production capacity of 4,400 tonnes.

Fortune Minerals (TSX: FT, OTCQB: FTMDF)

A diversified, development-stage mining company based in North America, Fortune Minerals owns the NICO cobalt-gold-bismuth-copper project in the Northwest Territories, Canada. The company is currently working to advance the vertically integrated project, producing concentrate in bulk via an on-site mine and concentration plant, then shipping the concentrate to a company-owned plant in southern Canada for refining. Fortune Minerals is also actively dedicated to sustainability, Indigenous relations and community outreach; the company currently has a working relationship with the Tlicho First Nation on the project.

Elcora Advanced Materials (TSXV:ERA)

Founded in 2011, Elcora is a vertically integrated battery materials company structured to address the entire battery value chain. The company is particularly distinguished by its proprietary refinement process to cost-effectively purify metals and minerals from batteries. Through this process, Elcora is able to produce high-quality graphene.

Elcora currently owns and operates the Sakura graphite mine in Sri Lanka and the Atlas Lion vanadium deposit in Morocco. The company also operates a processing facility near the Ragedara mine in Sri Lanka.

This INNSpired article is sponsored by Aclara Resources (TSX: ARA, OTC Pink: ARAAF). This INNSpired article provides information sourced from Investing News Network (INN) and approved by Aclara Resourcesto help investors learn more about the company. Aclara Resources is a customer of INN. Company campaign fees allow INN to create and update this INNspired article.

This INNspired article was written according to INN's editorial standards to educate investors.

INN does not provide investment advice and the information contained in this profile should not be considered a recommendation to buy or sell any security. INN does not endorse or recommend the activities, products, services or securities of the profiled companies.

The information contained herein is provided for informational purposes only and should not be construed as an offer or solicitation to sell or purchase any securities. Readers should conduct their own research for all publicly available information regarding the company. Before making any investment decision, readers are recommended to consult directly Aclara Resources and seek advice from a qualified investment advisor.

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Photo of Lina Portman Lina Portman3 weeks ago
0 8 minutes read
Photo of Lina Portman

Lina Portman

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