The global race to secure a plentiful supply of rare earth metals, a grouping of 17 somewhat peculiar elements that are crucial to the manufacture of all manner of hi-tech products and facilitating renewable energy, is at the heart of geopolitical strategy for the world’s major powers, and for good reason – our goal to build a prosperous sustainable economy of the future depends on it.
Take neodymium, praseodymium, dysprosium and terbium, for example: the key rare earth metals that are used in the manufacture of permanent magnets. A wind turbine with a power output of one megawatt requires one ton of permanent magnets to operate, whilst an EV (electric vehicle) typically uses over 10 kilograms of neodymium and other rare earth elements for its engine and rechargeable batteries. And this is just the tip of the iceberg – rare earths are used to manufacture iPods, home appliances, solar panels, 5G internet cable and energy-saving lightbulbs in a civilian capacity, and are also essential in the manufacture of key defence technologies. Suffice to say their nickname ‘green gold’ is well-earned:
“A lot of governments globally want to be carbon neutral by 2050, and they’re going to need these elements for their offshore wind turbines as a minimum, let alone EV targets. There are many, many very high-end applications that realistically cannot be developed without rare earths: if countries don’t build up stocks, they may have difficulties meeting their long-term aspirational needs.” explained Tim Harrison, Managing Director and CEO of Ionic Rare Earths.
He continued: “At this point in time the heavy rare earths sector is completely dominated and controlled by China, which basically produces around 95 to 98% of the world’s supply. They have a substantial monopoly over the market and in the future will be able wield immense control. I think the events of the last 18 months regarding COVID-19 has probably indicated the fragility of the global supply chain, which has probably pushed a lot of countries towards seeking independence in supply chain.”
Unlike other key metals such as copper, iron, gold, and zinc, rare earth elements (REEs) rarely occur in sufficient enough concentrations to justify the expense of extracting them, but contrary to their name, rare earth elements are not actually rare per se, as recent geological surveys have shown. However, whilst rare earth deposits that are suitable for development might be plentiful enough on paper, at present, it is virtually impossible to source the mix of magnet rare earths outside of China – a state of affairs that is causing quite the headache for an increasingly resource-hungry world.
Demand for magnet rare earths is forecast to increase dramatically over the next decade, and with the green energy revolution gaining momentum this supply-demand gap is only going to increase. Moreover, it is a tragic reality that strained relations between China and many of the world’s other leading nations is contributing to anxiety in some capitals regarding the long-term viability of the current rare earths market status quo. In the face of such challenges, efforts to diversify rare earth supplies by building production capacity has become a geopolitical imperative, and as a result an ever-increasing number of REEs projects are being evaluated across the world.
It is well-known that a growing number of rare earth deposits have been studied in Australia, Greenland, Finland, the US, and South Africa in recent years, but today all eyes are on the development of Ionic Rare Earth’s flagship Makuutu project in Uganda, a site of extraordinary promise that holds significant quantities of ionic adsorption clay – an astonishingly unique magnet rare earth element rich type of deposit that is seldom found outside of the East/South-East Asia region:
“I’ve heard adsorption clay mineralisation, like we’ve got at Makuutu, called the holy grail of rare earth deposits because they’re so highly sought after, but so very difficult to find. Ionic adsorption clays are very rare outside of southern China – there’s less than a handful of these deposits known globally. When it comes to ionic absorption clay deposits the size of Makuutu, there’s ourselves, there’s another one in Brazil, there’s a small one in Chile, and potentially maybe a few popping up here in Australia but work needs to be completed on those to confirm their claims.
When the company came across the Makuutu asset back in mid-2019, they moved very quickly to secure an option over it. That decision back in 2019 has now placed Ionic Rare Earth in a fantastic position to develop what is one of less than a handful of true ionic adoption clays outside of southern China and South-East Asia. It’s a tremendously good position to be in. The rare earths we’re going to produce will be increasingly more difficult to find in the future, and we’re going to be in a position where we’re driving the development of that asset.
Makuutu stands apart from a lot of the other rare earth projects being evaluated globally. It supplies the full mix of rare earths that are required – critical and heavy – of which the bulk presently come from China with no real alternative. So as a long-term option to help the world find that alternative rare earth supply that it’s going to need to be able to move towards carbon neutrality, Makuutu ticks all the rare earth boxes.”
Located 120km east of the Ugandan capital, Kampala, Makuutu hosts a resource of around 315 million tonnes that has been identified within a fraction of the 37km length of mineralisation trend, with much more resource growth potential to come. With a projected operating life of more than 30 years, or “multi-generational” as described by Harrison, the project is believed to have the potential to generate a high margin product, and is also prospective for a low-cost Scandium co-product.
Ionic RE is advancing the Makuutu Rare Earths Project with the aim of becoming a world-leading supplier of critical and heavy rare earths, to support growing global demand as the world transitions to cleaner renewable energy and transportation. A number of light rare earth projects have been evaluated around the world in recent years , but only a few critical heavy rare earths projects identified outside of China: this is where Makuutu’s basket of REEs, which includes significant quantities of heavy and critical rare earth elements, sets Ionic RE apart from most other rare earths project developers.
The company is in an enviable position, as Tim admits, when he elaborated further on how Ionic came to acquire Makuutu and the status of its development: “Ionic RE, back in August of 2019, acquired a 20% interest in the Makuutu project. We as Ionic are earning into the project – we’re funding the development, all of the technical work programme, the studies, all of the work that’s required for the tenements to be converted from exploration tenements to ultimately a mining lease, and then a mining operation.
Over the past 18 months, since I’ve been involved, the company has been solely focused on advancing the project, getting the work programme completed to de-risk the project, and move to the next level of investment.
At present, development of the Makuutu project is progressing at a tremendous rate. It is anticipated that a feasibility study should be completed for November 2022, and initial projections expect that Makuutu will be ready to enter production for 2024 which could see the project produce 800–1,000 mt/year of rare earths oxide initially, ramping up funded by free cash flows generated by the project.
Going forward, whilst there is much work to do to ensure that Makuutu is able to fulfil its enormous potential and begin production in 2024, Tim is understandably upbeat about the future of Ionic RE and what the coming year holds for the company. He concluded:
“We have got a very, very valuable product, we’ve got a very large deposit. We’ve got a lot of it. And because of that, it’s a tremendously strategic project. It’ll be very interesting to see how the project unfolds over the next 12 months. Currently, we’re talking to lots of groups around the world. We have got a non-binding MOU with the Chinese group – they did 12 months of due diligence on the project to try and get comfortable and understand its potential. We also have groups in Europe and North America interested on accessing our basket of rare earths for the next 50 years. I think it’s only a matter of time before other groups, including OEMs, join the dots on the future supply shortfall in heavy rare earths, too, which means that ultimately, we’ve got an even more valuable project longer term. I think 2022 will really see a step change in the awareness of the importance of Makuutu to global government’s ambitions of carbon neutrality.”