A SUPPLY deficit in rare earths was likely to exist for at least a decade even as the US rushes to secure deals for the minerals.
“I believe that there’s not going to be enough supply coming into the market in the next 15 years,” said George Bennett, CEO of Rainbow Rare Earths. “Even if new rare earth sources are found in Greenland or in Ukraine, these projects are 20 years away from production.”
Rainbow Rare Earths, a UK-listed firm, intends to produce rare earths neodymium and praseodymium from its proposed $326m Phalaborwa project in South Africa’s Northern Cape province. It is developing state-of-the-art processing technology in order to access tailings of phosphogypsum, stockpiled from previous phosphate mining.
First production was still on track for 2028 despite delays in the completion of a definitive feasibility study. Commenting in a presentation on Wednesday, Bennett said the DFS would result in capital and operating savings.
“I’m not going to make excuses for the delay. I believe we will deliver for our shareholders a de-risked project as well as a far better project in terms of project economics, NPV, capex, and so forth. So yes, we do have a delay, but in the overall scheme of things, this is a very fast-tracked project that’s coming to the market in terms of production.”
“We are basically like a Ferrari on a racetrack in terms of from cradle to grave of the Rainbow project at Phalaborwa.”
Shares in the company were about 17% higher on Thursday valuing it at £117.6m.
US president Donald Trump this week signed a series of deals on his visit to Asia to secure rare earths which have broad uses in the electric mobility, robotics, and defence industries. The deals were with Japan, Malaysia, Thailand, Vietnam and Cambodia in an effort to grab some market share from China, which dominates downstream supply of the minerals.
Concern exists in Europe as well. Bloomberg News reported on Wednesday that the G7 nations are set to announce a critical minerals production alliance that would include supply agreements in a bid to counter China’s dominance in the sector.
The group of wealthy countries — the US, Canada, UK, Germany, France, Italy and Japan — plan to unveil the pact at the conclusion of a meeting of their energy ministers in Toronto on Friday, said he newswire citing a senior government official.
The US government’s International Development Finance has pledged $50m in equity for the Phalaborwa project for a stake in TechMet, an 11.7% shareholder in Rainbow. TechMet is run by Brian Menell whose family helped build the Anglovaal group.
“The percentage of equity they get will be based on forward forecast rare earth pricing, which is very positive, as we all know, and it will be based on the final NPV value of the project,” said Bennett.
Speaking during Australian Prime Minister Anthony Albanese’s visit to the White House, Trump said that “in about a year from now we’ll have so much critical minerals and rare earths that you won’t know what to do with them”, according to a report by the BBC.
Trump added that “they’ll be worth $2”, suggesting prices for rare earths would plummet as supply soared. At the moment, however, prices have increased to about $80/kg, a one third lift which was the result of a supply deal between NP Materials and the US which has undertaken to buy the minerals at a floor price of $110/kg.
