Pensana completes FEED study for magnet metal rare earths

Highlights

• Completion of FEED and VeS for rare earth separation hub at Saltend Chemicals Park and the Longonjo Operations.
• Study demonstrates sustainable operations with strong economics based on the most recent independent base case NdPr oxide price forecasts:
  • Generates an unleveraged post-tax NPV8% of US$3.5 billion.
  • Average annual EBITDA first five years steady state production US$630 million.
  • IRR of 71%.
  • Payback of 1.5 years.
  • Initial capital expenditure of US$494 million.
• Study prepared by leading technical consultants Wood Plc, SRK, Snowden Mining Industry Consultants and Paradigm Project Management.

Pensana Chairman, Paul Atherley, commented: “Completion of this study is an-other important step for Pensana in its plans to establish an independent and sustainable rare earth processing hub in the UK. The strong fundamentals and robust economics provide a solid platform for the financing and development of the project.

“The growing concerns over supply chain resilience and the burgeoning demand for magnet metals from the electric vehicle and offshore wind sectors is reflected in the growing customer demand for our products.”

The study outlines the plans to establish the world’s first independent and sustainable magnet metal rare earth separation hub at the Saltend Chemicals Park in the Humber Freeport, UK, treating material sourced from the Longonjo Operations in Angola and third-party feedstock from a variety of other sources.

Saltend is targeting production of 12 500 tpy of separated rare earths, including 4500 – 5000 t of neodymium and praseodymium (NdPr) oxides, representing around 5% of the projected world demand in 2025. The study has been prepared by Wood Plc, SRK Consulting, Snowden Mining Industry Consultants (Pty) Limited and Paradigm Project Management (Pty) Ltd.

Financial and production summary

The study estimates have been prepared by Wood Plc in conjunction with Paradigm Project Management (Pty) Ltd under the review of Professional Cost Consultants (PCC).

The key fiscal terms are:

• 2% royalty on revenue.
• 20% national tax and 5% municipal tax following an initial two-year tax holiday.
• Custom duties exemption on imported mining and processing equipment.
• Full five year capital repayment allowance.
• Dividend tax exemption for three years.

he Longonjo mining licence is renewable for a period up to 35 years and has the same basis as the internationally accepted oil and gas contracts through which the country has successfully financed its main revenue industry.

The Saltend Refinery

The Saltend Refinery will be the first major new rare earth concentrate facility to be established in over a decade once commissioned and would be one of only three major producers located outside China when it comes into full production in 2024.

Benefitting from Humber’s Freeport status, the Saltend Refinery will be a major step in establishing a magnet metal supply chain outside China and has the potential to bring high-value manufacturing jobs back to the UK. The US$195 million facility will create over 150 permanent high value jobs, with over 500 jobs during the construction phase and an estimated 750 indirect jobs created as a consequence of the investment.

Saltend is set to become one of the world’s largest rare earth processing hubs, eventually importing sustainably sourced feedstock from around the globe, and processing it into magnet metal and other rare earth products largely for export to customers in South East Asia, Europe and the US, as companies look to re-orientate their supply chains in light of recent geopolitical events.

The Saltend Refinery will make use of the existing Saltend Chemicals Plant infra-structure with the utilities and maintenance skills provided by the pxGroup as its owner and operator.

The high value manufacturing process involves separating and purifying the various rare earth metals. This is accomplished by dissolving the mixed rare earth sulfate received from Longonjo and other sources treating the resulting solution through several chemical dissolution and solvent extraction processes before precipitating the separated elements back into a purified solid state for sale.

Four products are to be separated, NdPr oxide, lanthanum carbonate, cerium concentrate, and the mid and heavy rare earth elements including terbium, dysprosium, samarium, europium, and gadolinium carbonates.

The Saltend Refinery is designed in a manner to easily allow for an increase in capacity, especially in the NdPr separation process and to allow for expansion into separation of the heavy rare earths to cater for mixed rare earth carbonates sourced from ionic clay deposits.

Ethically sourced rare earths from Longonjo Operations in Angola

Pensana will establish the Longonjo Operations in Angola to supply the Saltend Refinery. The free dig, at surface, weathered carbonatite resources will be mined and treated through a flotation concentration plant followed by further hydrometallurgical beneficiation to produce a high-grade mixed rare earth sulfate (MRES) in the mixed rare earth sulfate refinery.

The Longonjo Operations are adjacent to the fully recommissioned Caminho de Ferro de Benguela railway line, which links directly to the Atlantic deep-water port of Lobito and will use very low-cost hydro-electric power from the Angolan National grid system, recently contracted at US$00.02/kWh for 10 years.

The Longonjo Operations will treat 1.5 million toy for a period of 20 years, with the material being sourced from measured (45%) and indicated (55%) mineral resources, producing approximately 40 000 tpy of MRES for export to the Saltend Refinery.

The Longonjo design includes the opencast development, concentrator and MRES refinery plants, tailings storage facility (designed to meet the requirements of the Global Industry Standard on Tailings Management), process water supply, hydro-electric bulk power supply, mine infrastructure, workshops, offices, accommodation village, recreational facilities, and other associated port and rail side infrastructure.

The operations will represent a major investment in the Angolan mining sector supporting the government’s policy to diversify the economy away from the dominant oil and gas and diamond industries, as well as providing employment in an under-developed region.

In September 2020, a substantial upgrade to the Longonjo mineral resource estimate was announced. International mining industry consultants SRK Consulting reported an upgraded measured, indicated and inferred mineral resource estimate of 313 million t at 1.43% rare earth oxides (REO), including 0.32% NdPr for 4 470 000 t of REO including 990 000 tonnes of NdPr, making it one the world’s largest undeveloped rare earth deposits.

Rapid route to production

The overall development schedule provides 14 months for main construction and six months for commissioning and ramp-up to full production in mid-2024. With a view to accelerating the project execution phase, various activities have been initiated to mitigate the post-COVID supply chain disruptions, material price increases and other inflationary pressures including:

• Over 70% of the equipment packages for both Saltend and Longonjo have been tendered and priced externally including all of the Tier 1, 2 and 3 packages.
• The EPCM contractual arrangements for Saltend and Longonjo are currently being finalised. Key project execution personnel have been identified and retained for both sites to enable a seamless transition from FEED.

The Saltend facility will be commissioned on third party feedstock ahead of feeding the plant with high grade MRES when operations at Longonjo come online.

Should there be delays, Saltend will continue to treat third party feedstock until Longonjo comes online. Design, costing, and contractor selection for the Longonjo Mine site infrastructure, along with the provision of bulk services, have been completed and ready to be mobilised.

Modularisation (by ADP in Cape Town, a company with 25 years of experience in Angola modular processing plants) of the Longonjo plant to optimise the site construction crew size and do pre-commissioning tests before despatch to site.

Marketing and offtake

The company is in discussions for ~50% of Saltend’s capacity of NdPr oxides to supply directly to an Asian magnet manufacturer. In addition, the company has developed a marketing agreement with a major Asian trading house to market 30% of the production capacity within Asia to secure direct offtake agreements with customers.

The company has been in talks with most of the major automotive original equipment manufacturers (OEMs) within Europe and the US who are seeking to secure a sustainable source of material independent from China and will update the market on these developments in due course.

Within Europe, there has been a transition towards OEMs of both electric vehicles and offshore wind purchasing rare earth materials directly to supply the magnet manufacturers in order to secure supply of these critical materials. Pensana has been approached by the offshore wind industry to secure 500 tpy of NdPr oxide from 2024 in order to meet the increased demand of the global wind energy market.

In addition, due to challenges securing the supply of cerium and lanthanum products from China, the European customer base has approached Pensana to offer an alternative supply from the Saltend facility. Furthermore, a UK based manufacturer has shown interest in 1000 tpy of cerium carbonate to be applied in the catalyst and water treatment industries.

It is anticipated that this growing interest in the products planned to be produced from Saltend will be translated into formal offtake agreements over the forthcoming weeks and months.

Read the article online at: https://www.globalminingreview.com/finance-business/26052022/pensana-completes-feed-study-for-magnet-metal-rare-earths/