London-listed Rainbow Rare Earths is upbeat about its Phalaborwa project in South Africa, saying rapid global green energy transition, robotics and air mobility will prop up prices for commodities from the project.
Two saleable commodities - including rare earth carbonate - have been proven to be commercially viable from the phosphogypsum derived from phosphate ore found at Phalaborwa.
Rainbow said yesterday that it had completed an updated economic analysis of Phalaborwa in the second half of the current year.
The study had confirmed that the Phalaborwa project “remains resilient to the rare earth element (REE) price cycle, with an average production cost of $40.83 per kilogram magnet of rare earth oxides”.
This equates to an operating cost of $12.91 per kilogram of rare earth oxide that includes non-magnet rare earth element commodity. However, the latest study by the company did not include rare earth elements in its economic assessment.
“The longer-term outlook for REE pricing is supportive given the unstoppable global megatrends of the green energy transition and decarbonisation, as well as new exciting markets such as robotics and advanced air mobility which are primed for exponential growth,” said the company.
Rainbow Rare Earths explained that the low operating cost of the project establishes Phalaborwa as the highest margin REE project in development outside of China.
It has an updated up-front capital cost of $326.1 million, much lower than the the preliminary economic assessment capex of $295.5m adjusted for inflation. With a $63m steady state earnings before interest, tax, depreciation and amortisation per year, Rainbow is upbeat about prospects of Phalaborwa.
Moreover, there are “further opportunities for operating and capital cost optimisation” that will be explored in the first half of next year “alongside separation test” works.
Additional revenue streams will also be available from the sale of other, non-magnet, REE and final gypsum residue, all expected to further enhance economics of the South African project.
“The findings of the interim study confirm the exceptional economics of Phalaborwa after two years of significant inflationary pressure,” said George Bennett, CEO of Rainbow.
“The capital and operating cost estimates, now at a much higher level of economic confidence than at the PEA stage, confirm that Phalaborwa remains the highest margin rare earth project in development today outside of China.”
He added that the latest study reaffirmed that Phalaborwa was “extremely well positioned to contribute to the establishment of an independent and resilient supply chain for the REE critical to decarbonisation, defence and emerging” technologies.
“Going into the new year, we now look forward to focusing on opportunities to drive further optimisation of our capital and operating costs, and to completing the separation test work,” added Bennett.
BUSINESS REPORT