Peak Resources: A rare earths magnet
Darren Townsend sees getting the metallurgy right as the number one priority given, as he puts it, “all the disasters with the rare earth companies over the years”. His Peak Resources Ltd. (ASX:PEK) has completed pilot plant tests for the beginning and the end parts of the process, and is now concentrating on filling in the “missing link” between them. The key bankable feasibility study due to be completed by December will pull all the loose ends together.
The Australian company, of which Townsend is managing director, this week ticked off another box: increasing the size of the resource. At the Bastnaesite Zone within in the Ngualla project in Tanzania, there are now 19.9 million tonnes at 4.9% rare earth oxides, for 980,000 tonnes of contained REO. Peak expects that higher grades (up 8% since the last statement) will contribute to further reducing costs.
The estimated cost for developing Ngualla is now $367 million, including a 30% contingency buffer. As Townsend sees it, the main barrier to Peak getting into production is not any of the project fundamentals, but the illegal exporting from China that has been the main contributing factor to the 30% fall in neodymium/praseodymium prices in the past 12 months. They’re now trading at around $45/kg, a long way from the $70 that prevailed back in 2014 and at which non-China projects would be viable. Townsend notes that the “crazy” prices means that even 90% of China’s REE industry is operating at a loss. “You just can’t have 90% of an industry losing money,” he adds. When and where Beijing gets a handle on that problem no one (including probably those in Beijing) knows.
So far with the metallurgy, the initial stage has seen concentrate grades raised from 5% to 41%. This, as we have previously reported, involves technology to remove the majority of the cerium; this not only eliminates spending money on producing something that would lose the company money, but has enabled the downscaling of the processing plant – and, consequently, delivering capital (and operating) expenditure savings.
(Incidentally, Townsend makes it clear that he is not taking a poke at other REE companies that assumed cerium as part of their revenue stream: after all, when many of these projects were being planned, the cerium price was a good deal higher than it is now.)
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Peak, after conducting pilot plant tests on beneficiation then jumped to the final solvent extraction phase, with a pilot plant operated at Ansto Minerals in Sydney. The company wanted to make sure that worked before completing all the other work. It did.
Peak’s big selling point is that it has what it describes as “the highest magnet metal (neodymium and praseodymium) grades of any rare earth development project in the world”. Townsend sees the main growth markets being permanent magnets for the wind turbine and automobile industries. According to a recent presentation by Chinese high-end magnet manufacturer JL-MAG Rare Earths, the growth in both sectors has been impressive. Wind turbine numbers have increased from 10,000 in 2005 to 70,000 in 2014. By 2020, the annual production of electric vehicles worldwide (including hybrid) will reach 16.3 million.
At present permanent magnet sales are growing at an average compound annual rate of between 6% and 7%. Demand from hybrid vehicles and wind turbine manufacturers is rising at 15% a year – one of the few areas, along with lithium demand, that is going against the global commodity downturn.
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