“Burundi was a loss-making operation when I was appointed,” says George Bennett matter-of-factly.
“The first thing I did was to cut costs to ensure that we could survive.”
Well and good.
Rainbow Rare Earths Ltd as it was at the time of Bennett’s appointment, and Rainbow Rare Earths as it is now, are quite different propositions.
The Gakara asset in Burundi is still on the books, and its merits remain – it’s one of the highest grading rare earths projects known to exist anywhere in the world. But just as George was really getting to grips with making it work, the government in Burundi pulled the plug, as it did with every other mining project in the country.
So, for the time being, Gakara is being held in a holding pattern with very little holding costs. Thanks to the fixes Bennett has already applied, though, it ought to be cashflow positive when operations re-start, allowing that it will take about three months to get production up to pre-suspension levels.
Significantly, there’s an existing rare earth concentrate stockpile there that will pay all the upfront re- start-up costs.
In the meantime, Rainbow’s attention has shifted to what’s the new flagship project, Phalaborwa, in north-eastern South Africa.
Bennett brought this asset into the company in late 2020, and even at the time the market recognised it as a transformational deal. Through all the ups and downs that we’ve been through since - as Covid has unwound and the Ukraine war has eaten away at sentiment - Rainbow’s shares are nevertheless still worth around twice as much now as they were before the deal was signed.
In a way, Phalaborwa is a straightforward enough proposition.
It currently boasts a 38.3mln tonne resource grading 0.43% total rare earth oxides, or TREOs. This is contained in phosphogypsum residue built up as a result of a long-standing nearby phosphate mining operation owned by Foskor.
Subsequent to mining, Foskor then supplied a phosphate slurry as feedstock for a Sasol plant that produced phosphoric acid for the fertiliser industry.
The gypsum residue was created as a by-product of this phosphoric acid manufacturing process, and was deposited on two gypsum stacks.
On its own, the hard rock ore that was originally mined by Foskor over the past 60 years or so, wouldn’t merit much attention from a rare earth miner. But gypsum residue is another matter, given that it is already mined and crushed and is the result of the phosacid production process by Sasol.
Inside the gypsum residue, the rare earths present in a decent enough grade to look worthwhile, especially when compared to grades in ionic clay rare earths deposits
Bennett reckons Rainbow will be able to hydraulicly process the residue at the cost of less than US$1.00 per tonne.
What’s more, the grades of certain individual elements within that total rare earths grade, are very attractive.
“The neodymium-praseodymium grade is good,” says Bennett. “At 29.1 %, it’s materially higher than most projects I’m aware of.”
Grades of dysprosium and terbium are also encouraging. Between them, these four rare earths represent 95% of the basket that Rainbow is likely to be producing.
The key to all this is the current processing, of course.
And here, Bennett comes into his own.
He’s a man who’s built multiple mines and processing plants all across Africa. He even built the Foskor plant that generated the phosacid feed and has now produced the gypsum residue that Rainbow is now looking to process itself.
So, he’s on familiar ground, and very much at his ease inside the technical world of the chemistry and engineering that Rainbow will need to get right to make a success of Phalaborwa.
“We start two-thirds of the way down the flow sheet,” he explains, drawing attention again to the processing that Foskor and Sasol has already done.
“We start with a cracked, chemical concentrate, and go from there.”
Because of Foskor’s and Phalaborwa Mining Company ‘s long history of activity in the area, there’s plenty of infrastructure in place, which also helps keep a downward pressure on costs.
“We’re in a mining town, we have reagents on our doorstep, and OEM supplies on our doorstep. I believe we will be in the lowest cost quartile, if not one of the lowest-cost operators in the world.”
It’s important to note too, that production at Phalaborwa will be an order of magnitude bigger than it was – and may be again – at Gakara, by some eight to ten times.
The current thinking is that throughput at Phalaborwa will run at 2.2mln tonnes per year over a 16-to-18 year project life. Recent additional deals cut by Bennett may yet see that project life stretch out indefinitely, but let’s take one thing at a time.
Current plans put production of neodymium and praseodymium at around 2,000 tonnes per year, with significant dysprosium and terbium credits. Overall, that could bring in between US$320mln and US$350mln on current prices.
How much it will cost to get up and running remains to be seen. Bennett reckons he’ll have a capex number out in the market in around two months’ time, when a preliminary economic assessment should put a lot of flesh on all sorts of bones.
For now, Rainbow is funded until well into next year, which, as Bennett says, “is a good position to be in.”
Near-term plans, though, include the construction of a bulk pilot plant to provide hard proof of concept.
If the concept is proven, and Rainbow does make it into production at Phalaborwa as potentially the lowest producer of some of the world’s key rare earth elements, then its future will surely be secured for the long-term. Rare earths are essential for the greening of the world’s economy, and they are in relatively short supply in the west.