Highlights
- Rainbow Rare Earths is developing a highly efficient rare earth recovery project from phosphogypsum stacks in Phalaborwa, South Africa.
- The project has a 25-million-tonne resource.
- The project aims to produce approximately 1,850 tonnes of magnet rare earths per year.
- This production represents about 2% of forecast global demand by 2027.
- Despite current market challenges including price fluctuations and Chinese supply dominance, the company sees the project as one of the most resilient rare earth initiatives globally.
How Important is South Africa’s rare earth recovery project now underway in the Limpopo province (opens in a new tab)? According to a recent Martin Creamer entry in Mining Weekly (opens in a new tab) the Rainbow Rare Earths (opens in a new tab) project represents one of the most“resilient rare earth projects” given the market demandfactors, and the predominance of China. The Guernsey-registered mining corporation reports substantial presence of “highly economic grade of rare earths in the gypsum stacks at Phalaborwa, where the 25-million-tonne resource provides for 16 years of recovery of four of the world’s most sought after rare earth elements (REEs).” With prices dropping, industry insiders suggest stabilization now. But so many variables at play, including the incoming Trump administration, a wildcard.
Rainbow Rare Earths, a London-listed mining venture claims to be in a powerful position with its mining operations in South Africa.
So, what is this project and how important is it really?
The company claims that approximately 150,000 tons of select rare earths are to be produced in a process sought as highly efficient when compared to any other project in the West, and perhaps even more efficiently than the East.
What’s an example of this efficiency?
According to company CEO George Bennett (opens in a new tab) during a presentation at Mintek90 (opens in a new tab) that as recently as a couple months ago with prices of neodymium and praseodymium (two key permanent magnet REEs) priced at $47/kg to $48/kg, Rainbow Rare Earths would have been profitable if it was in production. The message, positive for investors.
Writing for Mining Weekly, Martin Creamer who attended the event reports now prices for these two elements hit $60/kg, noting that in 2022 price points of $180/kg. According to forecasts prices are on the upswing.
And because of this productivity and efficiency potential Bennett, who was a financial trader early on in his career, selling a firm he co-founded called Simpson McKie Inc to HSBC Banking Corporation, went on the record “We believe this is one of the most resilient rare earths projects in the world.”
No money at these prices?
Bennett’s point to the trade press centers on the presumption that at current REE prices few are efficient enough to make money. “The fact that we could achieve such a low opex makes this project (opens in a new tab) very resilient. At the moment, no rare earth projects (opens in a new tab) in the world are making money at current rare earth pricing” according to Bennett.
More on the Operation
Done in close collaboration with Mintek (opens in a new tab) since 2022, the South Africa operation presently would be considered a large-scale pilot, operating at 20 kg per hour of feed, according to the company six to ten times the size of a normal pilot plant.
According to Martin Creamer of Mining Weekly:
“A reclaim trial run on the phosphate gypsum was run in February this year very successfully and the plant will be rerun in January/February to prove up final stage separation.
Involved is the first commercial recovery of REEs from phosphogypsum, which makes Rainbow Rare Earths something of a pioneer. The availability of phosphogypsum is the result of the mining (opens in a new tab) of a hard-rock phosphate deposit, which has been carried out by Foskor for the last 60 years. The mined material is concentrated through a flotation (opens in a new tab) process into a phosphate slurry (opens in a new tab), which over the period has been the feed for a nearby phosphoric acid plant, where two key ingredients were added, namely sulphuric acid and heat to create phosphoric acid. The rare earths in the phosphate slurry (opens in a new tab) were further upgraded in the phosphoric acid sludge in the phosphoric acid plant and then that phosphoric acid production created a gypsum waste (opens in a new tab) residue that was transported in a concentrated form to the gypsum stacks.”
What’s the importance of the South African Phalaborwa project for the company?
The Phalaborwa project will produce ca. 1,850t of magnet rare earths per annum, which is equivalent to ca. 2% of the forecast demand in 2027 when the project is expected to commence operations. Of course, there are many assumptions underlying this statement which could turn out to be off.
What does the company forecast for pricing?
Rare Earth Exchanges reviewed the company’s latest annual report (opens in a new tab) for more insight into how the group thinks.
REE prices during Q1 2022 and since then have dramatically dropped. For example, the company reports a decline in the price of Nd/Pr of ca. 45% was seen in FY 2023.
This weak pricing ensued FY 2024 with Nd/Pr falling a further 23% to end the Year at US$51/kg. The company does report a stabilization of REE prices Since 30 June 2024. For example, by September 30, 2024, Nd/Pr was priced at US$62/kg.
What’s causing the pricing weakness?
The company believes that these weakened prices are the result of significantly increased Chinese supply quotas exceeding growth in demand. This is an important point. Remember China has everything to gain by maintaining their 70% control on the processing of REE.
But REE demand has also been hindered by what the company cites as a “soft global economic backdrop.” This weakness, especially in China, meant slowdowns in construction (impacting elevator and HVAC consumption) and consumer electronics.
Importantly while still growing, a slower than expected roll-out of electric vehicles and offshore wind turbines also impacted market forces. Rare Earth Exchanges has suggested with the incoming Trump administration America will depart the Paris Agreement and cut any electric vehicle mandates. This will likely have ripples effects in this industry.
What are some key assumptions?
A major assumption of Rainbow Rare Earths, and much of the industry is that REE supply is forecast to continue to grow, it is not expected to be able to keep pace with the fast-growing demand for rare earth permanent magnets (REPM), which would need supply of the Magnet REE to grow by nearly 9% per annum to satisfy the demand for the green energy transition.
If the demand for REPM slows at all, which Rare Earth Exchanges suggests, given a potential initial shock of changes to American policy via the incoming Trump and associated ideology (e.g. global warming not real), this could impact adversely Argus latest forecasts anticipating supply deficits for magnet REE growing to 8,200t by 2034.
Other assumptions here are that non-Chinese supply of REE grows from 4% of total REO in 2023 to 17% in 2029 and 24% by 2034. This excludes anticipated growth from established non-Chinese suppliers.
Any delays to new supply additions or slower quota growth in China could fuel supply deficits, as could increasing demand for REPM from emerging technologies as covered by Rare Earth Exchanges.
Daniel
You Might Also Like…