LONDON: Rainbow Rare Earths, a company that produces rare earth elements from waste materials, has secured a US$50 million investment from TechMet, a US-backed fund that focuses on critical minerals.
The investment will give TechMet a direct stake in Rainbow’s Phalaborwa project in South Africa, which aims to produce four key rare earths for the green economy: neodymium, praseodymium, dysprosium and terbium.
The Phalaborwa project will process phosphogypsum stacks, a byproduct of historic phosphoric acid production, using a proprietary separation technology that is safer and more environmentally friendly than traditional methods. The project will also clean up the legacy environmental issues on the site and sell the benign gypsum that is produced as a by-product.
The project has strong economic potential, with a base case NPV10 of US$627 million, an average EBITDA operating margin of 75% and a payback period of less than two years. The project is expected to be highly cash generative across the rare earth pricing cycle.
The investment by TechMet follows a period of extensive due diligence by the fund and its strategic partner, the U.S. International Development Finance Corporation (DFC), a sovereign wealth fund that addresses critical mineral investment for the U.S.
The DFC and TechMet visited the site and ensured that the project meets the high standards of environmental, social and governance criteria required by the U.S. government.
The four rare earths that will be produced at Phalaborwa are designated as critical minerals by the U.S. because they are essential for the economic or national security of the country and have a supply chain vulnerable to disruption.
These rare earths are used in permanent magnets for electric vehicles, wind turbines and other advanced technologies, including those for strategic defence purposes.
Rainbow Rare Earths is pleased to announce the confirmation of the funding agreement, which will enable the development of the Phalaborwa project as a near-term production opportunity of all four of the permanent magnet rare earths required for the green energy transition.
Adonis Pouroulis, Chairman of Rainbow, commented: “This approval of funding from the DFC confirms that Phalaborwa offers a strategic source of the four most economically important rare earths that are vital to the green energy transition.
Furthermore, Phalaborwa will use our innovative processing technique to take its material all the way through to separated rare earth oxides, unlike most rare earth projects that produce an intermediate mixed rare earth concentrate which is then sent to China for further refinement.
By providing an independent and reliable source of separated rare earth oxides, Phalaborwa will help the U.S. to deliver on its goals to develop a U.S. down-stream supply-chain including specialist alloy, REE permanent magnets, drive trains, and ultimately EV/wind turbine manufacture.”
Scott Nathan, CEO of the DFC, commented: “The Phalaborwa Rare Earths Project being developed by Rainbow Rare Earths represents a compelling opportunity to extract and refine four critical minerals essential to both the green energy transition and economic security. DFC is pleased to be able to support this project which will remediate the effects of legacy mining activities, boost local economic growth, and diversify the critical minerals supply chain.”
Brian Menell, Chairman and CEO of TechMet, said: “Rainbow’s Phalaborwa Project has an immensely exciting future and this funding gives it the potential to become one of the world’s most environmentally friendly and low-cost rare earth projects anywhere.
“We congratulate Chairman Adonis Pouroulis and CEO George Bennett for the fantastic progress that the Rainbow team has made. TechMet looks forward to continuing our partnership and bringing the project to fruition. Rainbow’s proprietary separation technology provides a terrific opportunity to fast-track production of the four most economically important rare earth elements essential for future supply chains for electric vehicles, wind turbines and other products vital to the energy transition.”
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