Production starts up at non-Chinese rare earth site

Published: Thursday, 14 December 2017

Rainbow's project in Burundi is in commercial operation, with 5,000 tpy targeted for next year.

Production is gearing up at one of the world’s only non-Chinese rare earth producers, with 5,000 tonnes of rare earth concentrate expected to reach the market next year, following the first commercial shipments and a fresh £2.8 million ($3.7 million) share issue.

On 5 December Rainbow Rare Earths announced that it has sold its first shipment of rare earths from the Gakara project in Burundi, with the unusually high grade of the deposit helping the projects commercial viability.

With production now expected to ramp up rapidly in the coming months, Rainbow looks set to be one of very few rare earth projects outside China.

The company has shipped 25 tonnes of high-grade rare earth concentrate by road to the port of Mombassa in Kenya, it said.

The material will then be shipped to steel maker ThyssenKrupp. This concentrate can then be separated out in different rare earth elements.

Mining is already taking place at the site, while the processing plant is in final commission, and is expected to be completed by the end of the month.

Capital expansion

On 12 December, Rainbow announced it had raised £2.8 million in a share issue, in order to enact its current production plans, and to further explore the tenement.

"Some of the money is to accelerate our planned growth," Rainbow CEO Martin Earles told Industrial Minerals. "Part of the raise is for a drilling campaign."

The money will help the miner hit its previously announced target of 5,000 tpy of concentrate next year, increasing to 6,000 tpy by 2019.

The US Geological Survey saw world rare earth production in 2016 at 126,000 tonnes, with China making up 105,000 tonnes and Australia the next largest at 14,000 tonnes.  

But the money will also be used to examine "interesting anomalies" in the deposit which could allow for further expansion of production.

"We don’t see the target of 6,000 tonnes as the end of the process," Eales said.

The existing offtake agreement with ThyssenKrupp will cover production of up to 10,000 tonnes per year, over the next 10 years.

China dominates market

Although the so-called rare earths are actually relatively common in the earth’s crust, concentrated deposits are rare, and separation of the ore into different elements is both laborious and potentially environmentally destructive.

Chinese rare earth producers came to dominate the market in the early 2000s. New projects started, and others were restarted, around the world in 2011, when prices started to rise. But an increase in Chinese output and exports sent prices crashing back down in 2012, with non-Chinese production falling.

Since then, almost all the world’s rare earth production has remained within China, with effectively the only other source of the elements being Lynas Corp, in Australia.

So even with the recovery in pricing this year, being driven both by rising demand and a drive to rationalise the Chinese industry, Eales said he did not expect to see many new developments outside China.

"Fundamentally it is pricing that has held back development," Eales said. But he said that the high purity of the deposit meant that the Burundi facility was on the "low part of the cost curve".

"Even at the start of the year, we had a profitable operation," Eales said, adding that given the grade, "we could operate profitably where the prices were at the start of the year".

Favorable mix

In addition to the high rare earth oxide content of the ore mined at Gakara, the specific mix of elements in the deposit makes it more commercially viable.

The mix mined at Rainbow’s facility is particularly rich in neodymium and praseodymium, which make up some 20% of the total rare earth oxides in the ore, and around 80% of its total value.

Neodymium and praseodymium are used in the production of permanent magnets. Demand for these materials is currently rising rapidly thanks to their application in electric motors, used in battery powered cars, and in the generators used in wind turbines.

"I don’t think there’s any disagreement that demand is increasing," Eales said. "Everyone has a difference view of the rate of change... but there is not a lot of new supply." 

This article was corrected to show that the amount raised in Rainbow's most recent share issue was £2.8 million, not $2.8 million. 

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