INTERVIEW: Uganda Ready To Play In Global Rare Earths Market

Tim Harrison, IonicRE Managing Director

Ionic Rare Earths Limited (IonicRE), a majority shareholder in Ugandan company Rwenzori Rare Metals (RRM) Limited, is focused on developing a new supply chain of magnet and heavy rare earths, including the life cycle ownership of rare earths through magnet recycling.

IonicRE is developing its flagship Makuutu Rare Earths Project in Busoga region, Eastern Uganda into a significant long-life, low-cost, supplier of high-value magnet and heavy rare earths.

Makuutu, which is 100 per cent owned by RRM (of which IonicRE is the 51 per cent owner), is an advanced-stage, ionic adsorption clay (IAC) hosted project highlighted by near-surface rare earth element (REE) bearing clay mineralisation.

Makuutu also possesses significant exploration upside, excellent metallurgical characteristics and access to tier-one infrastructure.

We spoke to IonicRE Managing Director, Tim Harrison on the progress of the project and what all that means for Uganda.

What makes Makuutu a world-class mining destination? 

The ionic adsorption clay (IAC) hosted geology at Makuutu is similar to major rare earths projects in Southern China, which are responsible for the majority of global supply of low-cost heavy and magnet rare earths, specifically the high value magnet heavy REEs (Dysprosium and Terbium), of which approximately 98 per cent originate from ionic clays in China.

Metallurgical testing at Makuutu has returned excellent recovery rates, which provide multiple avenues for a simple process route.

IonicRE has built a very capable team, including a very strong team in Uganda, to deliver Makuutu REEs project from an exciting opportunity to an operating mine.

Core logging from Makuutu Phase 4 drill program

Why should Ugandans be excited about Makuutu?

Makuutu is a very large ionic adsorption clay (IAC) project. These types of deposits are very rare – the primary rare earth minerals have weathered over millions of years, and the REEs exist within the clay bonded to the alunino-silicate structure of the clay.

Given this preferential weathering process, IACs can be processed via much lower capital process plants, such as heap leaching, to chemically extract the REEs from clay, and produce a value-added mixed rare earth carbonate (MREC) product with a rare earth oxide content above 90 per cent.

As such, it is not a beneficiated mineral concentrate, but a value added product.

Makuutu, as a source of new supplies of magnet rare and heavy rare earths, will help facilitate the move towards renewable sources of energy, and also the development of electric vehicles (EVs).

It is expected rare earth magnets will maintain dominant market share as key inputs powering EVs and wind turbines this decade. Significant demand growth is, therefore, expected, but supply availability is less certain, especially new supplies of Dysprosium and Trebium.

China dominates the supply chain with 100 per cent of the world’s refined supply of DyTb coming from China. Makuutu is a very unique type of rare earth project, an ionic adsorption clay (IAC) deposit, which is very rare outside of southern China and Myanmar.

It is these IAC deposits which are amongst the most strategically important mines globally, accounting for between 95 per cent and 98 per cent of the world’s production of DyTb, and only two development-ready deposits identified and available for near-term development in the next two to five years not controlled by China.

IAC deposits are very highly sought-after for their low-capital development costs, simple mining and processing requirements, favourable metallurgy and high value, high-margin product free of radionuclides.

Makuutu is aiming to produce a mixed rare earth carbonate (MREC) product, and has interest from global strategic partners looking to get access to this unique, magnet and heavy rare earth product.

At the Makuutu Rare Earth Project, the content of magnet rare earths – Nd, Pr, Dy and Tb – in the product basket of 15 rare earths represents approximately 33 per cent of the product content.

However, this 33 per cent of content volume represents 85 per cent of the rare earth basket value.

It is expected that Makuutu can produce enough magnet rare earths to develop up to two million EVs annually once in production, hence the global importance to EV manufactures now. As a result, it is expected that the already tight market and elevated price levels for the key magnet rare earths will continue this decade.

Lastly, it should also be noted that these magnet rare earths also have competing demands in high-end defence applications, further elevating the geopolitical importance of this supply chain of magnet rare earths.

Location diagram of the Makuutu project

At what exploration stage is Makuutu?

The updated Mineral Resource Estimate (MRE) reported at Makuutu in May 2022 provides the project with an indicated resource that is over 500 per cent larger than that used on the 2021 scoping study, providing a very strong platform for a very robust project and mining license application due to be completed later in 2022.

The large, near-surface resource, which is typically under shallow cover of approximately three metres, and has clay zone of thickness between five and 30 metres thick, is expected to provide a very long-life project with near-term potential for more to come.

The updated Exploration Target announced in June 2022 highlights the potential of the overall Makuutu Project to increase further, with the potential to provide on overall mineralised system stretching over 37 kilometres long end-toend, and a total size potentially in excess of one billion tonnes.

The scale over the overall system and development approach provide the capability for Makuutu to rapidly ramp up, in the longer term, produce much more magnet and heavy rare earth product than is forecast today.

To further add to the already large MRE of 532 million tonnes at 640 parts per million (ppm) Total Rare Earth Oxide (TREO) grade, IonicRE will look at a longer phase five drill program to better define the full potential of the Makuutu deposit.

This could start as early as later in 2022 but we have already defined a very large resource. Makuutu already has a substantial resource base to define a very robust project, and additional resource is likely to provide an organic growth pipeline to ramp up production in the longer term.

The Mining Licence application in October 2022 is shaping up as a defining landmark for IonicRE and a signal to the market of the longer-term strategic value of Makuutu in a global manufacturing context where its product will have an increased value beyond the next few years, as demand far exceeds the ability to supply in a global context. Makuutu is expected to be in construction mid-2023, and operation in 2024.

What’s your outlook for Makuutu in terms of generating value for the company and the country?

Makuutu has a lot of potential and will see the mined ore converted via processing into a value-added mixed rare earth carbonate product. The basket of rare earth elements in the Makuutu product will likely increase in value over time, and through this, significant expansion of the Makuutu Project is possible.

One of the biggest challenges will be to develop Makuutu with new supply chains into the downstream components that will be produced using the rare earth oxides. Significant investment for this is required, along with substantial technical investment.

The opportunity for Makuutu to be a long term source of magnet and heavy rare earths will likely result in significant strategic partnerships developed with key Western countries, which could result in further investment in Uganda long term.

Makuutu also represents the first potential investment in Uganda’s mining industry by western investors for nearly 50 years. So, it does have significance on a global stage.

The world is watching how Uganda supports international investment in exploration and mining project development, and a positive result for Makuutu will likely see substantial new exploration investment and a vote of confidence in Uganda’s new mining industry.

The flipside, however, is also true; a failure to support international investment will likely drive it away for another 50 years as global mining investors will be attracted to more favourable exploration and mine development jurisdictions. It’s a very competitive climate for exploration investment.

Patience Singo, RRM Country Manager addressing ESIA hearings at Bugweri and Mayuge

What is IonicRE’s market capitalization and what strategies do you have in place to meet your financing needs?

IonicRE has a market capitalisation of approximately $150 million. We intend to increase our 51 per cent stake in Makuutu to a 60 per cent ownership in October 2022.

We also expect a formal mining license application to be submitted in late October 2022 in order to obtain a mining licence in early 2023 such that the mine can start operations in 2024.

So far, the development to date of Makuutu has seen investment of over $12 million to complete exploration and evaluation studies. The increased demand for the product from Makuutu is likely to see the initial capital for the project increase with double the potential production likely to be targeted from the commencement of operation in 2024. This is likely to require a capital investment of between $130 and $150 million.

How would you describe the significance of REEs today, especially with clean energy dominating debate globally?

REEs are a selection of 17 elements on the periodic table. Elements in the lanthanide series, elements 57 (Lanthanum) to 71 (Lutetium), plus element 21 (Scandium) and 39 (Yttrium).

They have numerous applications and a number of roles in technology today – from renewable energy, EVs, military and defence, communication, medical and optics. Of these, the most highly sought-after are the magnet and heavy rare earths.

With regards to the move to clean energy, magnet rare earths and the permanent magnet products they go into are critical to power the energy transition.

Permanent magnets (PMs) internally create persistent magnetic fields in normal conditions. In the context of the energy transition, PMs are crucial inputs of offshore wind turbines.

They are the most dependable/durable and are thus dominant in offshore wind turbines, and their overall performance. They convert wind energy to electrical energy.

Rare earth magnets (NdFeB PMs) deliver undisputedly best-in-class EV performance and thus dominate market share. In this application, the PMs convert electrical energy to mechanical energy proving the torque that moves the EVs.

Uganda is keen on value addition of its raw minerals. IonicRE has stated before that a refinery would be a consideration. Please elaborate on that.

At Makuutu, we are value adding. We propose to process the ore to make a mixed rare earth carbonate, which is a chemical intermediate precipitate. The value addition sees the ore upgraded from a head grade of around 800 parts per million to over 900,000 parts per million in the final product on an equivalent basis.

This value-added product sees the payability of the product increase to approximately 65 per cent, which is more than double that of a mineral concentrate.

Refining rare earths is a very complex process, much more difficult than gold refining. The requirement to separate all 16 rare earths produced by Makuutu into 16 different high purity oxides requires very complex process control and analytical support.

Additionally, to build a refinery, however, requires huge investment in additional infrastructure, including high purity reagents, establishing high purity product capability and substantial investment and development time for human capital.

Given the complexity of processing for rare earth separation and refining, and the processes involved, a significant investment and time is required, which would see a requirement for several government-funded research and development programs and capacity building.

Several Western countries are evaluating the development of such a facility providing substantial funding incentives, coupled with existing infrastructure to quickly develop downstream processing. Given the lack of expertise in Uganda for solvent extraction, this would need to be developed over a decade or more, at a very high cost to the Ugandan government.

This interview first appeared in our sister publication the Deep Earth Wrapper for August 2022.

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Deep Earth International critically examines developments in the extractive and energy sectors in Uganda and the wider East African region. Drawing from the vast experience of its founders who have each covered and written about these sectors for at least fifteen years, this website is the go-to platform for anyone seeking to get a better understanding of the same.

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