By Bill Corcoran, in Cape Town
SOUTH Africa has deposits of rare earth elements (REEs) to rival that of Australia, and the country is poised to take advantage of this increasingly strategic resource, according to Mintek, the governments mineral technology organisation.
Great Western Minerals refurbishing the Steenkampskraal mine
The most recent US Geological Survey (USGS) report on worldwide rare earth mineral reserves estimates that South Africa has around a million tonnes of these minerals, compared to the five million tonnes potential Australia is said to have.
However, Mintek general manager for business development Peter Craven believes the figures for South Africa in the US Geological Survey 2010 report are a gross under estimation of the resource, because they are based solely on past geological activities in the country.
The USGS did not take heavy mineral sands into account, and there is huge potential to find exploitable REEs in this area along the east coast of South Africa right up into Mozambique.
Nor did it factor in the rare earth residues that can be extracted from phosphoric acid. So we believe there is no reason South Africas REE potential is not equal to that of Australias. We have REE potential in each of the three sources known to contain the elements, he told IM.
South Africa produced REEs before the 1980s from heavy mineral sands and at Steenkampskraal mine, a thorium operation in the north Western Cape province which had among the highest known concentration of REEs in the world.
But public concern over the radioactivity of thorium, the rise of China as a competing major player in the REEs market, and the fact the metals are not often found in concentrated and economically exploitable deposits forced the local industry into dormancy.
However, Chinas strangle hold over the REE market and the ever increasing need for the REE in the production of high-tech electronics, among other things, has made mining the minerals in South Africa viable again, said Craven.
There are a lot of international companies involved in REE exploration around South Africa. The field is dominated by entrepreneurial junior companies, and currently there are a few operations in the pipeline, he said.
Great Western Minerals
Now, Great Western Minerals Group Ltd, a company based in Saskatoon, Canada, is refurbishing the old Steenkampskraal mine it bought from the South Africas Rare Earth Extraction Company, and it aims to begin production on January 1 next year, with an expected 5,000 tonnes of rare earth oxide a year.
Great Western CEO Jim Engdahl says the monazite mineral that is to be mined is a vein deposit of an extraordinarily high grade and it will be further processed to a mixed rare earth chloride and possibly carbonate.
It will be further processed in the Steenkampskraal region to separate rare earth metal oxides and other compounds and other custom-made products for South African and International markets. Our group of companies has existing rare earth products and sales into US, Europe and the far East (notably Japan and Taiwan), he said.
Engdahl added the first resource estimate had been published for the mine at approximately 27,000 tonnes of rare earth oxide (REO) contained as noted in the NI 43-101 Resource Estimate and Technical Report published on May 31, 2012.
We continue investigation of the full resource on our mine property and expect to revise estimates as we proceed and we have plans to explore further afield. We are building a processing plant with capacity for 5,000 tonnes per year of REO. The resource estimate is encouraging for the rare earth split that it shows with 33.5 per cent, he concluded.
Frontier, KORES, eye resources
Another company, Luxembourg-based Frontier Rare Earths, is also building a mine in the Namaqualand, a semi-desert region located 60 miles north of Steenkampskraal.
Last December, the Korea Resources Corporation (KORES) said it had reached a definitive agreement to secure a 10% interest in developing Frontiers rare earth element project at Zandkopsdrift mine.
The Korea statement said the agreement included an optional condition allowing it to acquire a stake of up to 30% in the project once production begins in 2016.
The South Korean state-run company expects an annual production of 20,000 tonnes of rare earth materials from the mine, which it estimates has around 39m tonnes of reserves.
Craven went on to say that Mintek is looking at the viability of a South African rare earth refinery that would process REEs mined from around the region so the country could realise the full potential.
A world class refinery could cost in the region of $750m, and would require a larger production rate for economy-of-scale benefits than that which can be supported by the individual South African deposits.
According to Minteks Craven, a regional Southern African refinery could draw on the production potential of the considerable REE resources in Sub-Saharan Africa.
There is currently significant exploration and project development activity in countries such as Namibia, Malawi, Mozambique and Tanzania. A regional refinery could increase the viability of developing these resource opportunities.
Australian rare earths miner, Lynas Corp, has been involved in a promising rare earths project in Malawi but the company recently ran into trouble with the development due to a legal challenge over who is the rightful owner of the Kangankunde project.
In 2007 Lynas struck a deal with the Malawi government to buy Kangankunde for USD4 million in 2007 that was finalised. The Kangankunde Carbonatite Complex deposit had been subjected to extensive geological and process test work completed between 1987 and 1990 by the French geoscience organisation Bureau de Récherches Géologiques et Minières.
However, the deposit was not developed at that time due to political unrest in neighbouring countries. In a statement following the 2007 deals announcement Lynas said the deposit has an inferred resource of 107,000 tonnes of Rare Earths Oxide (REO) at an average grade of 4.24% REO, using a 3.5% REO cut-off grade. Importantly, the deposit has extremely low thorium and uranium levels for a rare earths deposit, said the company.
However, at the end of last year a South African geologist launched a court action against the government that claimed it did not have the right to sell the deposit because it did not own it. Lynas was successful in obtaining a ruling from the Malawi High Court in May 2012 that it be added to the proceedings as an affected party. However, another high court judge has since made remarks in a related matter that appear to contradict that May ruling, according to Lynas.
"Lynas intends to appeal the recent court decision, however in light of the decision, Lynas is reassessing the projects risks in the context of Malawis present governance and institutional frameworks," the mining company said in a statement it issued on June 13 last.
Reached by IM last week, a Lynas spokesman said the company had no further comment for the time being.