R1bn-a-year mine to reopen
STEENKAMPSKRAAL: BIGGEST KNOWN RESERVE OF RARE EARTH MINERALS GLOBALLY
he determination and patience of five private shareholders, who stuck with their vision for nearly 20 years, will eventually see the reopening of the Steenkampskraal mine in the Northern Cape to extract one of the world’s largest reserves of rare earth minerals.
The Steenkampskraal ore body is considered to contain the largest known reserve of rare earth minerals, estimated to exceed 605 000 tons of ore containing an average of 14.4% rare earth minerals. Rare earth minerals comprise a group of 17 essential chemical elements that are used in applications such as electric vehicles, wind turbines, LED lighting, laptop computers, tablets and sophisticated cellular telephones.
The main use of rare earth minerals is in the manufacturing of lightweight powerful magnets for use in electric motors, especially for use in the primary drive motors of electric vehicles. If it is a high-end electric car such as a Tesla, rare earth minerals will also be found in the motors that adjust the seats, mirrors, steering wheel and open the doors.
Steenkampskraal Holdings Ltd (SHL) says that the total global demand for rare earth minerals increased from less than 5 000 tons per annum in the ’60s to 145 000 tons in 2015. The company predicts demand will probably exceed 200 000 tons next year.
In contrast, there are only a few deposits worldwide that contain concentrated amounts of these rare elements to enable economic mining and refining. China is the largest producer, but halted export of the strategic minerals last year. Steenkampskraal was the world’s largest producer of rare earth minerals between 1952 and 1963, when Anglo American mined the deposit primarily for radioactive thorium, which was used for fuel in nuclear reactors in Britain, Germany and America. Anglo American shut the mine when nuclear reactors worldwide switched to uranium.
Rare Earth Extraction Company (Rareco) acquired the mine from Anglo American in 1989 with plans to reopen it, but faltered when rare earth prices fell sharply. The mine was almost forgotten, except that the dormant Rareco had to publish its results and annual report as it still maintained its listing on the JSE for a few years, until it even gave up on that and the share was suspended.
Rareco and its mineral rights were acquired by a Canadian mining company, Great Western Minerals Group, for R150 million in 2010. They spent about R400 million to refurbish the mine, but left it for dead once again when the holding company was liquidated in Canada.
Some of the previous Rareco shareholders still believed in the project and acquired the old mine from the liquidators in 2015. They changed the name back to the original Steenkampskraal and have since spent about R100 million.
Trevor Blench, chairperson of SHL and driving force behind the effort to reopen the mine since 1989, is optimistic the project will succeed. “Most of the work on the mine itself and the surrounding infrastructure have been completed. We also received the necessary licences and certificates to restart production,” he said.
These include new mining rights, valid until 2030 and renewable, approval of the mining plan and the mine’s environmental management plan, as well as a certificate of registration from the National Nuclear Regulator to mine, process, transport and store materials that are radioactive by nature.
Legal issues that followed the liquidation were eventually laid to rest a few months ago when the Western Cape High Court dismissed the last claims against the company.
“It took the past three years to sort out the mess of the liquidation,” said Blench, “and it had to be settled before we could complete our final feasibility study”.
The feasibility study will include the final detailed designs for the refining plants, determine the optimum level of production and capital requirements.
In the meantime, SHL completed its exploration of the ore body and conducted major metallurgical tests. These tests confirmed earlier work indicating the Steenkampskraal deposit has the highest grade in the world with an average grade of more than 14%, compared to other mines that are mining ore bodies with an average grade of 2%, according to test results published by SHL.
The company also carried on with work to refurbish the old mineshaft left by Anglo American and had to look at supporting infrastructure, like new offices, security fences and access roads.
Blench estimated SHL would probably need another R500 million to complete the refurbishment and build a new refining plant to separate unwanted elements from the concentrate of valuable minerals and to separate the radioactive thorium.
There is a ready market for thorium and SHL has an additional opportunity to refine it further in a specialised plant to manufacture nuclear fuel and medical isotopes to treat cancer.
The estimated capital requirement of R500 million to reopen the mine seems reasonable given the value of the rare earth minerals. According to a preliminary feasibility study SHL completed last year, the target production of 2 700 tons of rare earths per annum has a value of $66 million – close to R1 billion. “Prices of rare earth minerals has increased steadily over the past few years due to the development of electric vehicles and growth in renewable energy technology. Demand increased significantly,” said Blench. “It had a dramatic effect on prices.” –