Tanzania: the New Rare Earths Destination
Peak Resources Ltd (‘Peak’, ASX: PEK; OTCQX: PKRLY) has issued a release on January 23 outlining its very favorable outlook for its Ngualla rare earth project in Tanzania. In 2010, the project area drew attention to its large rare earth oxide deposits and Peak was able to confirm this in 2012 after 13,600m of drilling. The deposit has a maiden mineral resource of 170 million tons at 2.24% REO, one of the largest and highest grade rare earth deposits in the world.Peak has noted that the Ngualla project is proceeding on schedule and that it will have relatively low operational cost (USD$ 10.09/kg REO – on average these exceed USD 11/ton – and capital costs of USD$ 400 million with annual revenues of USD$ 361 million) and long term potential as suggested by the scoping study and preliminary economic assessment. The Ngualla project also offers metallurgical advantages given the fact that the deposits have shown a mineralization, bastnaesite, with very little uranium and thorium content, which eases processing and reduces capital cost requirements. In a company release dated January 23, Peak announced that it expects to start building ” an SX pilot plant in January 2013…. to become one of the select few leading rare earth developers.”
The context in which Peak Resources will be developing its Ngualla rare Earth Project in Tanzania is equally favorable.
Those who have not been paying attention may be surprised by the fact that in 2012, a year marked by deep recession in Europe and North America, the economies of Sub-Saharan Africa grew at 4.6% in 2012 according to the World Bank. The Washington based Institution has projected growth to improve in the 2013-2015 period, exceeding 5%. This rate becomes 6% when South Africa is excluded. The region will not be free of challenges, but the prospects for increased investment are favorable, supported by a recovery in the world economy. These factors should sustain high commodity prices and interest in the mining sectors benefiting a rise in export volumes of several countries where mineral deposits have been discovered in recent years. Tanzania is one such country and it has been cited as having one of the most promising economies in Africa.
Chinese demand accounts for approximately 50% of the minerals exported from Africa, and should investment from Beijing drop, it could lead to a deterioration of the region’s growth prospects; however, not all minerals have the same value or appeal and the rare earth sector can expect continued interest – even from China. As noted in an article published yesterday on ProEdgeWire, while China is still leading in the mining and production of rare earths, it is exporting less and welcoming the idea of additional resources being developed beyond its borders. Tanzania has some obvious advantages when it comes to commodities trading: shipping ports. Significant discoveries of natural gas will also contribute to growth and infrastructure development, helping to improve and boost power generation even in the most remote areas.
Tanzania expects to ‘graduate’ from Least Developed Country (LDC) status into a middle income nation by 2025. “Tanzania looks right across the Indian Ocean at the growing markets of India and China … If current trends continue; India and China will grow into membership of the three largest markets on the planet for these products.” China is indeed interested in East African minerals and several Chinese mining firms have taken stakes – and considering further investment – in projects in Tanzania and the Indian Ocean, which is an ideal area for export logistics to China. India has also shown interest in this region as shown by the effects on the East African coal sector. The major offshore gas discoveries will only serve to increase investment interest in Tanzania, already East Africa’s second largest economy.
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