In a strategic move that underscores its commitment to both environmental stewardship and economic viability, Rainbow Rare Earths Ltd (LSE:RBW, OTC:RBWRF) has signed a Letter of Intent with NEXUS Intertrade that will see the former clean up gypsum stockpiles for sale by the latter.
This preliminary accord paves the way for NEXUS to acquire benign gypsum, a by-product of Rainbow's operations at the Phalaborwa project in South Africa.
Slated to commence production in 2026, the project is designed to extract rare earth elements whilst simultaneously neutralising accumulated acid water in existing gypsum stacks.
The Phalaborwa initiative involves a process of treating unlined gypsum stacks that have, over time, become reservoirs of acid water.
Through Rainbow's proprietary process, this acid water will be neutralised, rendering it suitable for utilisation within the processing plant.
A benign form of gypsum, the product will be stored in new stacks compliant with International Finance Corporation standards and Equator Principles.
NEXUS reckons annual demand for the finished product will be 400-600,000, emanating from diverse sectors including domestic cement manufacturing, gypsum board and plaster production, as well as the agricultural industry. It is hoped the companies can formalise an exclusive five-year offtake agreement.
Rainbow's chief executive George Bennett said the putative agreement was a "win-win" for all parties involved.
"The Phalaborwa process is founded on the principles of circularity. We are taking a waste product, cleaning it, and extracting value from it—both via the recovery of the rare earth elements and then via the sale of the benign gypsum," he added.
Moreover, the sale of benign gypsum is expected to contribute to the complete environmental rehabilitation of the Phalaborwa site, as the existing stacks will eventually be fully depleted.
With a current mineral resource estimate of 30.4 million tonnes and an anticipated operational lifespan of at least 14 years, the Phalaborwa project promises not only to be a long-term venture but also to exert a positive socio-economic impact on the local industry.