REEs on a growth path

2019-03-20T11:19:22+00:00 March 19th, 2019|Business|

The interest in rare earth elements (REEs) continues to spread due to increasing dependency on it from the technology sector. Due to the complex nature of these deposits, investors need to take care when considering projects, writes Nicolaas C Steenkamp.

In recent years, there has been a steady interest in REEs, combined with a stabilisation in price since around 2011. This led to the active development of exploration and early stage projects on REE projects worldwide. China still dominates the REE primary market, but more African REE projects are being developed. The total Chinese production is thought to be approximately 105 000 tonnes per year.

African REE projects

Currently, the only producing REE mine in Africa belongs to Rainbow Rare Earths in the Karonge/Gakara vein system, west of Burundi. The deposit is mined free dig without any site beneficiation. The only other African REE project that has any potential for near future operation is the Steenkampskraal deposit in South Africa. Steenkampskraal is a historical thorium mine owned by Steenkampskraal Monazite Mine, a subsidiary of Rare Earth Extraction, now a wholly owned subsidiary of Great Western Minerals Group. This too is a vein-hosted REE deposit. At the time of writing, the project was busy with the bankable feasibility study (BFS).

The remaining REE deposits are in various stages of exploration and development. In Malawi, the Kangankunde carbonatite complex is owned and operated by Lynas Corporation following an extended legal process. Lancaster Exploration’s Songwe carbonatite, also in Malawi, a wholly owned subsidiary of Mkango Resources, holds the prospecting rights. The Nkombwa Hill carbonatite complex in Zambia has been noted as a significant deposit while Wigu Hill in Tanzania is held by Montero Mining and Exploration. The Ngualla Hill REE deposit, also in Tanzania, is being developed by Peak Resources.

Mrima Hill, one of a cluster of carbonatite and alkaline intrusions in Kenya, was covered by a special mining lease held by Cortec Mining Kenya, but the licence was recently revoked. Developer Namibia Rare Earths holds the exclusive prospecting license for the Lofdal REE project in Namibia.

The Zandkopsdrift Project in South Africa is managed by Frontier Rare Earths. The Glenover Complex is also in South Africa, and the exploration right is held by Glenover and is part of a joint venture with Galileo Resources. The Xiluvo REE Project is located in Mozambique and lies within a mining license held by Promac lda.

Geological setting

Naturally REE-enriched sources are alkaline volcanic and intrusive rocks. Carbonatites are the most REE-enriched group of igneous rocks, yet only one REE deposit is considered entirely magmatic: the Mountain Pass Deposit in the US. The most common occurrence of REE is associated with carbonatites. The highest REE concentrations are typically encountered in iron-rich dolomitic carbonatite varieties; that is, those with ferroan dolomite to ankerite as the main carbonate phase, sometimes accompanied by siderite.

REEs are effectively concentrated in residual deposits such as laterites produced by prolonged tropical weathering. In carbonatites, chemical weathering causes the breakdown of the main minerals. Dissolution of the carbonate phases and apatite releases the REEs, which are subsequently incorporated into new REE supergene phosphate and carbonate minerals such as monazite and/or bastnaesite. REE enrichments achieved in these residual deposits are typically 5–10 times those in the original source rock.

China’s near-monopolistic domination of the world rare earth market was due to the discovery of REE ion-adsorption clays. Deep weathering of granitic and acid volcanic rocks without associated denudation, has generated weathering profiles rich in clays. REE released during the breakdown of REE-bearing accessory phases in the protolith are adsorbed onto kaolinitic and halloysitic clay minerals and retained.

Historically mined REE deposits are generally associated with mineral sands deposits produced mainly from monazite. The REE mineral content of these heavy mineral sands is around 1%. REE-bearing accessory phases such as zircon, monazite, and xenotime, are common in crustal granitoids and are refractory during weathering; as such, they are a common constituent of heavy mineral sand placers.

The REEs are subdivided into ‘light’ (LREE) and ‘heavy’ (HREE). The LREEs are dominantly hosted in bastnaesite and monazite and lesser fluoro-carbonates. Lateritic deposits tend to be more HREE enriched. These HREEs are derived from secondary processes and are loosely bound via adsorption processes within clay minerals.

Applications of REEs

There are 17 REEs that vary in scarcity and in their applications. Rare earths are used to make strong permanent magnets which, in turn, are used in the electric motors that provide power for appliances, robots, and electric vehicles (EVs). REEs are also playing a role in the renewable energy development sector. The magnets used in wind turbines are also made of REEs. High-strength neodymium magnets are used in industries such as electrical motor manufacture, medical science, and renewable energy. It is used in commercial products, such as headphones, cellular phone speakers, and microphones.

REEs are associated with thorium, which is seen as a more effective and safer alternative to uranium. Thorium fuel can use either uranium or plutonium as the fissile driver material. It is also environmentally safer and extremely difficult to use to make a nuclear weapon. The thorium fuel cycle produces no plutonium and hardly any minor actinides. Thorium isotopes are also used in the treatment of cancer.

Reporting

Most Western hemisphere and African deposits are defined in terms of resources and reserves, based on mineral reporting codes, determined either by the country in which the deposited is located, or the stock exchange where the company is listed. These are usually benchmarked against deposits in the US. This is due to the fact that the Mountain Pass carbonatite bastnaesite dominated the world supply up to the late 1990s. The mine was temporarily closed due to environmental and safety concerns and was only periodically operated until 2015. The report should be compiled by a competent person.

Where is the real value?

The actual REE ratios should be carefully considered when looking at the value of a REE deposit. A developer may indicate a high ratio of the generally more valuable HREO to LREO compared with LREO-enriched deposits. These apparently high ratios may, however, be largely due to yttrium. Yttrium may dominate a particular mix of HREO, although its value generally ranks below that of Pr, Nd, Eu, Tb, Dy, Tm, Yb, and Lu. Further consideration is that the mining, as well as separating REO from a higher grade LREO deposit, may be a more cost-effective resource of HREO than a low-grade HREO-enriched deposit.

Given that current and projected consumptions of rare earths are between 120 000 and 200 000 tons, it is clear that only a few operations will be viable without flooding the world’s market and impacting price levels. Other factors that have been putting a damper on the development of African REE projects are a lack of funding, the remoteness of the deposit, and lack of infrastructure to move the ore from mine to port. Finally, a significant number of the projects have been hampered by intervention by the governments of the host country and protracted legal actions and sited environmental issues.

Processing

Due to the extremely complex nature of REE deposits, each deposit will have unique processing challenges, mostly related to the mineralogy. Monazite encompasses Ce, La, Nd, Sm, and Gd-dominant varieties. Churchite (hydrated yttrium phosphate) encompasses Nd, Dy, and Er-rich varieties. The size and density of REE phases will provide guidance relevant to physical beneficiation and the understanding of the behaviour of possible radio-nuclides.

The processing of REE is solvent extraction, again guided by the dominant mineral composition. This ranges from atmospheric leaching with mildly acidic conditions, to extremely aggressive conditions. Cognisance should also be taken of any potential by-products that can be produced, such as zircon, and how the processing will affect the quality of by-products.

The processing component of REE is also the most cost-intensive part of the operation. The cost of processing REE is generally opaque and subject to strict confidentiality clauses. The different settings and mineralogy will also have an impact, but it can be estimated that the processing cost can be as much as the combined cost of mining, transport, and concentration.

Mkango Resources is exploring the REE deposit in Malawi. Photo by Mkango

Rainbow Rare Earths

The only REE producing mine in Africa at the time of writing is operated by Rainbow Rare Earths, a UK-based company. Martin Eales, CEO of Rainbow Rare Earths, says that the fast development of the mine, from the mining licence being granted in 2015 to delivering the first off-take material in the fourth quarter of 2017, is due to the fact that the deposit, on surface, is capable of free dig, with high grade, allowing them to mine a smaller volume of material. “The mine does not perform any beneficiation of the ore and sell a simple product that is not separated,” he says. This, according to Eales, resulted in a low capex requirement to develop the operation. Eales points out that the capex cost for other operations could be up to USD200-million more to develop. He goes on to mention that Burundi introduced new mining legislation in 2013, simplifying it to operate in the country. Eales also states that the Burundian government holds a 10% interest in the mine.

The new generation of EV and ‘green’ energies are dependent on REEs as a critical set of elements; yet have not seen the same amount of hype as lithium, graphite or nickel, for example. Bankers still appears to see REE as an opaque market and is not as readily funded to the same extent as gold or coal projects are. Eales agrees with the sentiment and adds that this is due to debt lenders relying on some hedging, which is not available to REE projects at the moment, coupled with price uncertainty in the sector; yet, the demand for REE products is as strong as hoped.

The issue of conflict minerals has become synonymous with countries like the DRC and its neighbours. To date, REE has not attracted the same attention as gold, tin, tungsten, and tantalum (GTTT). Eales indicates that although REEs are not deemed a conflict mineral, Rainbow Rare Earths is listed on the London Stock Exchange, which applies scrutiny to all companies listed and meets the high standards set by the off-take partner Thyssenkrupp.

Turning briefly to the recycling market, some analysts have indicated that there might be sufficient electronics available in five years to make an impact on the primary producing ore minerals market segment. Eales’s sentiment is that REEs do not have a significantly big market share at the moment and that the associated cost would need to be justified. He also indicates that any developments on this front are price dependent to make REE magnet recycling viable.

Looking at China, over the past couple of years, the Chinese market has consolidated the numerous smaller operations. Eales notes that initially, the country reduced quotas (2010), but has since increased the quotas this year. He goes on to explain that this is due to stable growth and projected strong market that is demand driven, with no long changes visible. China has also introduced stricter environmental legislation and in June 2018, acted against a company that operated in contravention of the current legislation, indicating that China is serious, adds Eales. He concludes by saying that there is an expectation that China will become a net importer of REE minerals within the next 5–10 years.

For independent geological and geotechnical consulting, market studies, reviews, desktop studies, due diligence, feasibility studies, business plans, and related services, send an email to ncs.contract@gmail.com or visit the website at www.bowlineps.co.za