Magnet metals and rare earths miner Pensana has completed the front-end engineering design (FEED) for its UK-based Saltend rare earths production facility and its Angola-based Longonjo mine, reducing the capital expenditure (capex) costs of the projects and improving the operating profitability of both.

A comprehensive value engineering and enhancement programme is well advanced and is expected to be reported in April, which is intended to result in a further reduction in the capital costs.

Saltend is being designed as the UK’s first rare earths processing facility and will produce 12 500 t/y of separated rare earth oxide, of which 4 500 t/y will be magnet metal rare earths – neodymium and praseodymium oxides, equivalent to about 5% of the projected world demand.

Working alongside Wood Group’s Perth (Australia), Reading (UK) and Johannesburg (South Africa) offices, project management and engineering company Paradigm Project Management (PPM) and Professional Cost Consultants (PCC) have managed to reduce the capital required to establish the projects.

As such, the estimated capex for the projects has been reduced from $525-million to $494-million, with Saltend requiring $195-million and Longonjo needing $299-million.

Although the cost of the Saltend refinery is set to increase from $190-million to $195-million, the mixed rare earth sulphate refinery cost is set to decrease from $152-million to $127-million; while the Longonjo concentrator will decrease from $134-million to $123-million.

This leaves both the Longonjo mine and infrastructure costs, and the operational expenditures, unchanged at $49-million and $15/kg, respectively.

This adjustment will result in Pensana producing higher revenues, increasing from the December 2021 estimate of $648-million a year for the first five years, to $705-million a year for the first five years.

In turn, this will result in Pensana’s earnings before interest, taxes, depreciation and amortisation increasing from a previous estimate of $413-million a year for the first five years, to $459-million a year for the same time period.

In addition, the adjustment increases the project’s net present value from $2.1-billion to $2.4-billion, and its internal rate of return from 50% to 61%.

Considering these metrics, Pensana plans a payback period improvement on its investment from 2.3 years to 2.1 years.

Pensana chairperson Paul Atherley says that reducing its capital and operating costs is a significant achievement by the technical team led by CEO Tim George, especially considering the inflationary pressures and supply chain constraints affecting projects globally.

“The lower capital and strong operating margins will make the project attractive to our Financiers and are expected to lower the overall cost of finance,” says Atherley.

Global supply chain constraints and inflationary pressures, which could have impacted both the Saltend and Longonjo projects, have been largely mitigated by the detailed enhancement and value engineering processes.

Consequently, specific workstreams involving capital and operation cost savings are currently under way, including using spent acid regeneration to increase the recycling efficiency of the sulphuric acid plant.

This will be integrated with off-gas from the calcining of concentrate at Longonjo, which is an important aspect of the process and constitutes a significant reduction of the carbon footprint through reduced reagent consumption.

The piloting of a more cost-effective flotation concentrate calcining process offers a vendor alternative post-FEED, which would enable a significantly shorter lead time for fabrication and ease of installation at Longonjo.

In addition, enhancement of Saltend’s civil and earthworks for load-bearing structures is being undertaken alongside the completion of detailed geotechnical investigation, which will shorten the construction period and enable future affordable expansion into downstream activities associated with magnet metal production, magnet recycling and processing of heavy rare earth oxides.

Further, Pensana plans to pilot process simplification opportunities discovered in the mixed rare earth sulphate precipitation circuit at Longonjo.

“We continue to have very positive discussions with some of the world’s major automotive and wind turbine manufacturers, which recognise the strength of Pensana’s model and the security of supply we can provide for these essential industries.

“With only one major magnet metal rare earth producer outside China, transparent and independent capacity is urgently required, particularly in Europe,” he says.

Atherley adds that Pensana is “excellently positioned” to bring high-value manufacturing back to the UK and be a first mover in meeting this burgeoning demand for critical magnet metals.