Rainbow Rare Earths (LSE: RBW) has signed a development agreement with Mosaic (NYSE: MOS) to advance the Uberaba rare earths project in Brazil.
An economic assessment released along with the Mosaic agreement last week pegged the phosphogypsum retreatment plant’s after-tax net present value (NPV), discounted at 10%, at $916 million (C$1.3 billion). It outlined a 45% internal rate of return on initial capital costs of $279 million. Uberaba is to treat 2.7 million tonnes of tailings material per year over a 30-year life and produce 1,971 tonnes of neodymium-praseodymium oxide plus 659 tonnes of samarium, europium and gadolinium, plus other rare earths to 99.5% purity.
“We are extracting value out of the waste product that they weren’t doing before,” CEO George Bennett told The Northern Miner. “They were just selling their phosphogypsum into the agri industry in Brazil.”
The Uberaba brownfield site, inside Mosaic’s existing fertilizer complex in Minas Gerais, adds another dimension to Brazil’s developing greenfield rare earths sector as governments move to develop rare earth supply chains outside of China’s control. Brazil hosts South America’s only rare earths mine – Serra Verde’s Pela Ema project – and several advanced exploration projects have drawn hundreds of millions of dollars in support from U.S. government agencies.
Rainbow’s London-listed shares have gained about 135% over the past 12 months to close at 23p late Friday, giving the company a market capitalization of £148 million (US$200 million). Mosaic’s New York-listed shares were down 13% over the same period, last trading at $24.58 mid-Friday, for a market capitalization of $7.9 billion.
2030 output start
Rainbow and Mosaic are targeting first production in 2030 at Uberaba, where Mosaic already mines phosphate rock and makes phosphoric acid on site, leaving rare earths concentrated in phosphogypsum residue.
The agreement gives Rainbow a second large rare earths project built around fertilizer waste rather than new mining. Uberaba is about 650 km northwest of Rio de Janeiro.
Rainbow Rare Earths CEO George Bennett. Credit: Rainbow Rare Earths
Rainbow plans to carry over the flowsheet it has been developing at Phalaborwa in South Africa, where a large pilot plant is generating design data for a definitive feasibility study.
That starting point cuts out mining, concentrate-making and chemical cracking, the expensive early stages of most rare earth projects. At Uberaba, Mosaic has already mined the phosphate rock and run it through a phosphoric acid plant, leaving the rare earths concentrated in phosphogypsum as a chemically cracked residue that Rainbow says can go straight to leaching and separation.
At Uberaba, the companies are to start a prefeasibility study soon, Rainbow said. If that succeeds and they move to a definitive feasibility study, they plan to form a joint venture, with Mosaic holding 51% and Rainbow 49%.
Quick build
Uberaba’s brownfields setting gives it power, sulphuric acid and operating infrastructure from the start, while the cleaned phosphogypsum stream would return to Mosaic’s tailings facility. Rainbow’s work at Phalaborwa should help compress the Brazilian schedule.
“Most mining projects from discovery to production average about 20 years,” Bennett said. “We’re talking between six and seven years in Brazil.”
Rainbow values Phalaborwa at an after-tax NPV, discounted at 10%, of $611 million with average annual EBITDA of $181 million over 16 years. Unlike a conventional rare earth mine, Phalaborwa is a brownfields retreatment project that would process two surface phosphogypsum stacks left from earlier phosphate operations through a hydrometallurgical plant.
The economics remain early stage. The assessment does not meet JORC-compliant scoping-study standards because it is not based on a formal resource estimate. Instead, it uses sampling data from Mosaic’s existing operations, assumes a 0.51% total rare earth oxide head grade and 57% recovery, and Rainbow says the numbers could change as later studies and joint venture terms advance.
The Uberaba study used a $128 per kg basket price and projected annual revenue of $319 million at steady state, with operating costs of $38 per kg and average annual earnings before taxes, depreciation and amortization (EBITDA) of $217 million.
Rare metals
The Uberaba chemical plant’s product stream is also expected to contain about 60 tonnes of dysprosium, 14 tonnes of terbium and 188 tonnes of yttrium per year.
Rare metals are central to both the Rainbow projects’ appeal. Neodymium, praseodymium, dysprosium and terbium go into permanent magnets used in electric vehicles, wind turbines, defence systems and other high-performance applications.
“Everybody’s looking for these rare earths. We’ve seen significant offtake interest in Rainbow over the last six to eight months, from Japan, South Korea, Europe as well as the U.S.,” Bennett said. “There’s no project in the world that comes close to us in terms of margin and capital intensity.”
