RARE earths, it turns out, are a broad family of elements – 17 in all – any of which sound like the forbidden substance in a science fiction novel. Promethium, for instance. But it’s in actual science where the likes of scandium and samarium have their modern life relevance from making lighter sports equipment to manufacturing nuclear rods and the paint that makes car dashboards luminous at night.
This apparent arcanery has practical economic relevance for Rainbow Rare Earths, a UK-listed company that will produce rare earths plant at its $260m-300m Phalaborwa project in the Northern Cape from 2028.
Primarily established to produce neodymium and praseodymium – the flagship rare earth metals used in permanent magnets – the Phalaborwa project is being adjusted to process a broader range of these minerals including, erbium – a mineral used in fibre optics that Rainbow CEO George Bennett said he’d not heard of before.
There’s also yttrium, another of the rare earth family that has introduced an interesting serendipity to the firm’s business case.
Yttrium has surprised the market. Its price has soared 3,000% this year on the back of a China export ban. For the Phalaborwa project, that kind of price appreciation is transformational. Predicated initially on NdPr, the ‘surprise’ occurence of a highly appreciating metal like yttrium in its basket adds about $20m to Phalaborwa’s ebitda, assuming the lower range of the European prices.
In this aspect, rare earths are similar to platinum group metals where the negative economics of a surplus in, say, palladium is offset by a deficit in platinum. The diversity of Phalaborwa’s minerology is important given the pervasive nature of rare earth metals industrially.
“The average component of NdPr in a rare earth basket is circa 20% to 24%. We have 29.1% of the basket in NdPr,” said Bennett. “But we’ve also got terbium, samarium and gadolinium and dysprosium,” he added.
These ‘heavy rare earths’ have particular applications in electric vehicle production and will be fiercely contested in the future. That’s because China’s primary source of them is limited to clay deposits in Myanmar. “I believe China will stop supplying its ‘heavies’ to the West because they need them for their own consumption, and they want to be the dominant force for EVs globally,” said Bennett.
Rainbow Rare Earths opted to build two separate process lines at Phalaborwa in order to add heavy rare earths production to NdPr through solvent extraction processing – a technology the firm didn’t at first contemplate. That switch in approach delayed publication of a definitive feasibility study. Investors hate that kind of news. Bennett says the delay is regrettable but worth it given the firm’s access to new revenue.
Revenue from NdPr is estimated at about $80m, says Bennett. “But after extracting the heavy rare earth group our revenue for that basket at 70% payability is now $160m.”
A version of this article first appeared in the Financial Mail.
