Amid a looming global rare earth supply shortage, Aim-listed Galileo Resources is considering the options for its 34%-owned Glenover rare earth/phosphate project, in Limpopo, South Africa.
The company stated in a release issued on Wednesday that, should China stop exports of rare earth minerals for a prolonger period, an extended supply disruption could cause significant shocks throughout the US and global mineral supply chains.
China’s economic planning body has reportedly been studying proposals to establish export controls on rare earths to the US, if the trade dispute between the two nations deepens.
China supplies about 80% of the US’s rare earths and accounts for around 70% of global rare earth output.
Rare earth prices have been on the rise amid the expectation of a possible supply shortage.
Galileo is considering two exploitation options for the Glenover project – primary rare earths production with phosphate as a by-product; or primary phosphate production with the recovery of rare earths from the phosphate tailings.
The company’s board believes the project is well placed to benefit from the potential upturn in the rare earths market.
Should the company choose rare earths as the primary mineral production option for Glenover, it could produce 400 000 t/y of rare earth minerals for seven years.
CEO Colin Bird pointed out that 80% of the US’s rare earths demand was for the so-called “lighter” lanthanum and cerium rare earths, both of which were oversupplied around the world.
“However, export restrictions, which could cover relatively higher priced and less abundant light rare earths (neodymium and praseodymium) and heavy rare earths (dysprosium), all widely used in permanent magnets in motors in industries from automobiles, to consumer goods and wind turbines, would be a devastating blow to the US economy.”
Bird added that these less abundant and higher-priced rare earths form nearly 30% of the suite of rare earths that could be produced at Glenover.
"In 2011, the west was much concerned with China's dominance of the rare earths market against an increasing western requirement for rare earths, including in military use. This concern prompted several western governments to take initiatives, including the US having a special Senate committee and other steps to develop western rare earths production capability.
“This alternative source requirement did not dissipate, but was overtaken by subsequent relative geopolitical calm thereby, negatively impacting on the rare earths price. This calm has now evaporated and the spectre again of a rare earths deficit, particularly, the heavy rare earths, is again emerging,” noted Bird.
Galileo will, with its project partner FerMinOre, reappraise the market potential for bringing the Glenover project into production.