This morning Tantalus Rare Earths AG (FRA: TAE) announced that it has signed a Letter of Intent (LOI) with Rhodia to advance its lateritic clay deposit in Northwestern Madagascar. Rhodia is a company with expertise and technical knowledge of rare earth processing that is part of the Solvay Group (FRA: SOV), an international chemical company. This news comes amid the race to production the rare earth industry is currently experiencing coupled with an ever-increasing focus on vertical integration. In essence this announcement comes as the complete opposite of what we have been seeing — while Molycorp, Lynas and Great Western Minerals have adopted vertically integrated rare earth processing strategies, Tantalus Rare Earths is strategically selling its ore to Rhodia in an exclusive agreement.
David Rigoll, CEO of Tantalus Rare Earths reiterated that he is delighted to be competing on even terms with China with Tantalus Rare Earths’ ionic clay deposit and that the exclusive partnership with Rhodia is a very significant development for the advancement of the project in Madagascar at 15,000 tonnes per year.
As for where processing will occur; Rhodia has a rare earth processing facility in La Rochelle, France, however given the significant offtake agreement of 15,000 tonnes per year, Rhodia could look to build a rare earth processing facility in Madagascar. While the benefits that Tantalus Rare Earths will reap by partnering with an experienced rare earth industry player like Rhodia are clear and Rhodia’s involvement sends strong validation for the project, this agreement is also strategic for Rhodia.
Why Rhodia also benefits? Rhodia is one of the largest consumers of up-stream rare earth products globally and has been actively looking to diversify its supply chain and bring its industry expertise elsewhere amid China’s efforts to consolidate its rare earth sector companies. The exclusive agreement guarantees Rhodia access to a feed source of rare earths from a deposit located outside of China. Further, having access to a feed source outside of China makes sense especially amid tightening export quotas. Rhodia has operated rare earth separation facilities in China and industrial manufacturing facilities inside and outside of China for the past two decades. In the event that Rhodia gets pushed out of China it will still have access to a rare earth supply source and processing capabilities.
We understand the Chinese ionic clay deposits to be about 90 square kilometers. To put Tantalus Rare Earths’ deposit into perspective, estimates indicate that their deposit ranges between 150-170 square kilometers.
Here are some more highlights of Tantalus Rare Earths’ heavy rare earth deposit in Madagascar:
- Tantalus is amongst the handful of rare earth companies in possession of an ionic clay-like deposit. Testing that has been completed to date indicates rare earth bearing lateritic clays at the Tantalus project bear close similarities with Chinese ionic clays.
- Typical hard rock deposits that require crushing, grinding, and complex processing techniques whereas ionic clays can be easily processed into rare earth concentrate using simple leaching methods and therefore have the benefit of greatly reduced production costs.
- Having a simple metallurgy will allow Tantalus Rare Earths to ultimately leapfrog other rare earth mining ventures still in the process of developing complex processing techniques for hard rock deposits.
- The deposit does not contain dangerous radioactive by-products and therefore the issue of disposing of radioactive waste is minimized significantly.
- The project is rich in heavy rare earth elements (HREEs), with roughly 20% of total rare earth oxides (TREO) consisting of heavy rare earth oxides. The TREO grade of the ore is roughly 0.8% though when coupled with the low production costs this low grade becomes an insignificant issue.
- Though not yet verified, current estimates put the TREO content of the project at as much as 1.5 million tonnes and with an annual production capacity of roughly 15,000 tonnes per year, a mine life of nearly 100 years can be anticipated.
* Prices taken from Google Finance at 12:55pm EST 2012-04-23.
Disclaimer: Tantalus Rare Earths AG is a sponsor of RareMetalBlog.