New Mines: 9 Years, 10 Steps

Nothing much happens quickly in mine development. And it tends to happen even less quickly in development of rare earths projects. There has been so much discussion of late about the rare earths supply crunch – how bad will it be, which elements will be in most critical short supply, etc.

One side of the equation is how much the Chinese will export, and there have been further somewhat dramatic developments in the past week with news of more restrictions on availability. The other side of the issue is non-Chinese supply (potential and probability) and, again, this is a hotly debated and wildly speculated upon issue. Announcements by explorers and emerging producers come thick and fast these days, and it is becoming increasingly difficult to keep track of who is where in the rare earths race. But now we at least have a sensible guide.

Australian rare earths expert Dudley Kingsnorth, in the latest edition of his report Meeting Rare Earths Development in the Next Decade, lays out the 10 steps to developing a rare earths mine. His conclusion: the minimum time-line is nine years, which means that, with the exception of Mountain Pass in the US and Mt Weld in Australia, it is unlikely in his view that any other substantial project will be in full production by 2015. He does allow, however, that small additional production contributions may come on line by then from Dubbo in Australia, Dong Pao in Vietnam and Steenkramskall in South Africa.

There will, of course, be companies that dispute this. Australia’s Arafura Resources, for example, is sticking by its plan to be producing in 2013.

Kingsnorth, who runs Industrial Minerals Company of Australia from an office in Perth and with more than 40 years in the international mining industry, sets out the 10 steps to REE production. He adds a note of caution in this time of investor interest in companies with REE projects. Noting the storm about supplies from China and the interruptions to supply to Japan, Kingsnorth writes: “In the resultant self-serving panic created by the promoters of some nascent rare earths projects, the issues associated with the development of a rare earths project have been under-estimated,” he writes. “However, the norm is that it may take between seven and 20 years to develop a project.” Mt Weld – where he was project manager under a previous owner – was discovered in 1970 by Molycorp, brought through the development studies stage by Ashton Mining, and will come into production next year under Lynas Corp.

His steps are:

1. The establishment of a resource, along understanding grades and distribution This can take two to five years (or more).

2. Understanding the mineralogy.

3. Scoping study. This includes bringing the resource to an inferred level and other milestones such as environmental studies. One to three years.

4, 5, 6. Pilot plants – beneficiation, extraction and separation, including producing samples from all three stages and disposal plans for uranium and thorium. Two to 10 years.

7. Environmental approval.

8. Letters of intent. Miners have to integrate their operation into the supply chains of their customers which requires mutual trust.

9. Definitive feasibility study and financing. Raising funds for these projects is no easy matter, and may consume between six and 12 months.

10. Engineering, procurement, construction and start-up. This final step can take two to three years and the build-up to full operational capacity a further two or three years.

Nine years is the minimum for all these stages to be worked through.

The above has been only a brief summary of a much detailed and thoughtful guide compiled by Dudley Kingsnorth. But it should add a sobering note to the debate about who will and won’t succeed in the rare earths business.