Ionic Rare Earths has timed the release of its Makuutu Stage 1 Definitive Feasibility Study with exquisite precision following as it does on the heels of the European Union introducing legislation to secure supplies of critical minerals.
The Makuutu Stage 1 DFS confirms the technical and financial viability of its Makuutu ionic adsorption clay rare earths project in Uganda for sustainable, long life supply of valuable magnet and heavy REEs.
This is clearly highlighted by the numbers with net present value and internal rate of return, both measures of a project’s profitability, estimated at $580m and 32.7% respectively.
Ionic Rare Earth’s DFS also estimates that the Stage 1 development at Makuutu will deliver earnings before interest, taxes, depreciation, and amortisation of $2.29bn and post-tax free cash flow of about $1.46bn over its 35-year mine life.
Makuutu will produce a 40,900t of value-added product – consisting of mixed rare earth carbonate and scandium – per annum through a modular heap desorption processing plant with a 5Mtpa capacity.
Capital expenditure has been estimated at a very palatable US$120.8m ($180m).
As part of the DFS release, the company has also defined a maiden Ore Reserve of 172.9Mt grading 848 parts per million (ppm) total rare earth oxides (TREO).
The study will also form the basis of the company’s Mining Licence Application, which covers the central tenement of the greater Makuutu resource area.
“These Stage 1 results support what we think is a unique, geopolitically strategic asset to supply magnet and heavy rare earths into Western supply chains,” managing director Tim Harrison noted.
“Evidence currently shows that countries are motivated to secure sustainable, traceable supplies of these critical raw materials to support their domestic manufacturing ambitions and to support both the energy transition, and increasingly, military and defence requirements to provide sovereign capability and global security.
“Furthermore, this Stage 1 study provides a path to production at Makuutu, which has the potential for significant growth into the future through the conversion of the other tenements at Makuutu towards additional MLAs over the coming decade.”
Harrison added that the company is now working towards a final investment decision as well as the construction of a demonstration plant that will seek to improve capital efficiency by increasing production capacity, improved extractions and minimising the dissolution of impurities.
Makuutu Stage 1
The Makuutu Stage 1 DFS envisions an open pit mining operation with a throughput of 5Mtpa and payback three years from the start of production.
Near surface mineralisation will be mined using free dig bulk mining methods, with a low strip ratio, to feed to a processing facility, which chemically washes the ore with a salt-based solution at mild acidic conditions.
This extracts the REEs into a value added intermediate chemical precipitate known as MREC with about 71% magnet and heavy REO content.
Notably, the DFS only covers the initial RL 1693 with further growth expected from the other tenements at the project.
European Critical Raw Materials Act
While the numbers for Makuutu Stage 1 are positive in their own right, the European Union’s recent proposal for a comprehensive set of actions to ensure its access to a secure, diversified, affordable and sustainable supply of critical raw materials puts further impetus to its development.
The Act identifies a list of strategic raw materials, which are crucial to technologies important to Europe’s green and digital ambitions and for defence and space applications.
It seeks to ensure domestic capacities along the critical raw materials supply chain of:
At least 10% of the EU’s annual consumption for extraction,
At least 40% of the EU’s annual consumption for processing,
At least 15% of the EU’s annual consumption for recycling,
Not more than 65% of the Union’s annual consumption of each strategic raw material at any relevant stage of processing from a single third country.
The last point is particularly relevant for REEs as the EU currently sources 98% of its REE needs from China, which the development of Makuutu could quite easily alleviate or even solve.
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Critical minerals take central stage in US-China rivalry
Critical minerals have become the new frontline of the rivalry between the world’s two superpowers.
The United States looked to have taken a giant leap in this arms race late March with the signing of a cooperation agreement with Japan covering various minerals for electric car batteries.
Under this swiftly negotiated agreement, the US and its Asian ally will refrain from imposing export duties on lithium, cobalt, manganese, nickel and graphite.
The countries would also share information on potential labor violations in the supply chain for those critical minerals and “identify opportunities to build their respective capacities”, a statement said.
There are already growing fears that China’s export policy could extend to an outright ban on some minerals, in particular rare earths, for which it is by far the world’s largest producer.
Of the estimated 120 million tons of rare earth deposits worldwide, the bulk of those at 44 million tons are found in China.
The nation now accounts for 60% of rare earth mining, 85% of rare earth processing and 90% of high-strength rare earth permanent magnet manufacturing.
Rumblings of a China ban on rare earth exports first emerged in 2019, which caused angst amongst Western powers, pushing them to consider other sources of supply and establish new partnerships.
And while it has been “all talk, no action” since, China’s threat remains a ticking time bomb.
Things could be heading in a precarious direction, though, following Washington’s recent decision to impose restrictions on exports of high-end semiconductors to Beijing.
Reports are coming out that China is now considering the possibility of banning certain rare earth magnet technology exports.
The reality of China cutting off rare earths could prove catastrophic for the US, whose high-tech sectors imported 78% of their rare earth metals from China between 2017 and 2020, according to the US Geological Survey.
The Biden administration’s national security strategy, published in October 2022, has already identified rare earth supply chains as a major issue.
A 2021 Defense Department review also concluded that overreliance on China “creates risk of disruption and of politicized trade practices” that would hit commercial sectors particularly hard.
China previously suspended exports of rare earths to Japan following tensions in 2010 surrounding the Senkaku Islands, which also alarmed those in Washington.
The US has since moved to bolster its domestic rare earth supply chain, with a degree of success.
USGS data shows that China’s share of all rare earths produced globally dropped to roughly 70% last year from about 90% a decade earlier.
Nevertheless, China still has a firm hold on the processing of rare earths, and amid the heightened trade tensions, it would be fascinating to see what unfolds next.
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