Peak can block 80% of cerium — and transform project economics
In these days of subdued rare earth prices, scant investor interest in the sector, and the need to do something to attract the market’s attention, strategy is a key requirement.
Peak Resources (ASX:PEK) has already signalled it is prioritizing toward concentrating on the REE that are used in magnets. Today the company has refined that strategy. Magnet metals are in the planned mix, cerium not so much. The company has found a way to reduce the amount of cerium being produced in its treatment plant, a technology that will be watched with interest by the rest of the world’s rare earth industry (including, one assumes, by the Chinese companies)
The magnet metals – particularly praseodymium and neodymium – are (by value) of increasing importance to the global rare earth market. That much we know, but Peak today puts some interesting statistics in front of us: the magnet metals have risen sharply in value terms from 47% of the world rare earth market in 2011 to 54% in 2012, 68% in 2013 and – in 2014 – constituting 74%.
Peak says that, in its Ngualla project in Tanzania, it has “one of the world’s highest grade neodymium-praseodymium development projects”. Those two will now be the focus.
But the problem is that in its weathered Bastnaesite (at 3% cut-off) cerium constitutes 48.2% of the resource. Praseodymium makes up 4.73%, neodymium 16.6%. The other LREE, lanthanum, comprises 27.6% of the Ngualla production zone, with samarium at 1.6% (all other REE being below the 1% mark). So much cerium, so few buyers.
Now the company claims to have overcome that problem.
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Peak says laboratory work has demonstrated that it is possible to reject 80% of cerium at an early stage during the leach recovery process. Peak expects this will allow it to build a smaller plant as the capacity of the separation unit will be reduced by 40%; it will also slash the major operating cost drivers – hydrochloric and oxalic acid – by up to 60%; and while slicing only 6% off the project’s total revenue projections, the operating margins will actually be increased (because the production cost of cerium exceeds the sale price).
At current prices, and with Ngualla’s new projected rare earth production profile, 81% of revenue will now be derived from neodymium and praseodymium.
Peak signaled the cerium breakthrough last August, but now test-work has been completed on samples of high-grade mineral concentrate produced by the improved beneficiation process which demonstrate that it works. It makes sense: as the company points out, cerium is a low value rare earth that is now in over-supply, a problem when (until now) Ngualla’s production mix was going to be 45% cerium.
This ability to market the Tanzanian output will also help the marketing effort. Trying to sell cerium is no easy task. But say that Nd and Pr are available, then buyers begin to pay attention.
Incidentally, a recent Peak presentation has another interesting statistic: the breakdown in 2014 of the magnet sector shows that Neodymium had a 60% share, praseodymium a 25% share, followed by dysprosium (11%), terbium (3%) and samarium and gadolinium at 1% each. Nd and Pr make up 30% of the rare earth business by volume – but more than double that by value.
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