Welcome to the latest Ticker TV interview. I'm Donald Leggett, and I'm joined today by George Bennett, CEO at London Main Market listed Rainbow Rare Earths. Rainbow specialize in turning phosphogypsum feedstock, a waste product from historic mining, into in-demand rare earths using a chemical process flow sheet. RBW's flagship project is at Phalaborwa in South Africa, where the company are patiently piloting a flow sheet capable of extracting 99.5% pure rare earth materials. Welcome, George. How are you today?
I'm very well. Thanks for having me on, Donald.
It's a pleasure as always, George. Now, I suspect you've been very busy because you've got all sorts of things going on. Tell us about the or give us a brief overview of one, the Phalaborwa project, and two, what you're aiming to achieve with the pilot plant that you've been working on in South Africa.
The Phalaborwa project is moving along very effectively, if I might say, in the sense that we published an updated economic assessment in December last year, confirming that our capital and our OpEx numbers that are published in our PEA in October 2022 were still in line with the market. We haven't blown out on our capital, and we haven't blown out on our OpEx. In fact, both are in line with inflation over a two-year period. I think that's a good result because we've seen globally a huge amount of not only rare earth projects, but also just projects and various other minerals blowing out their capital numbers by, you know, 50%, 100%. We were in line with inflation 6% per annum.
That I think was good testament to the team at Phalaborwa. We are basically on target to complete our definitive feasibility study or bankable feasibility study by the end of 2025. Part of that is that we moved our pilot plant that we had operating in Florida back to South Africa last year. A, to reduce the cost of running our pilot in terms of all our assays and all our test work. B, to have better control over our final optimization of our back-end flow sheet. We ran a large-scale pilot plant in South Africa in 2023, 2024, which produced a mixed rare earth carbonate, which is a very sellable product. We're not stopping at a mixed rare earth carbonate.
We are going all the way through to what's known as separated rare earth oxides. It's a further step of beneficiation downstream. It's similar to what we see Mountain Pass are trying to achieve now in America and what Lynas have been achieving in Australia for many years. They're the two biggest rare earth producers in the Western world right now. Rainbow, as I said, is going further downstream than just a mixed rare earth carbonate. We're going to separated oxides. The reason being that we capture the full value of those oxides in the value chain. Very importantly, these separated oxides will now be able to feed into the midstream, which needs to be built out in the West.
We've achieved a purity level in Florida of above 90%, but we now have to take that purity up to 99.5% as a sellable product. Our team's working on that in Phalaborwa on a very low-cost environment. We're seeing, you know, very good successes coming through. The pilot plant we moved back from Florida is at Mintek in South Africa, where we're renting space. That pilot plant right now is being put together after the bench scale test work that we've been doing over the last three or four months at Mintek. As I said, with our own laboratory, we built our own laboratory as well, and I can report to the market that that decision was unbelievable.
The right decision in hindsight because the cost of that laboratory will pay within six months by doing it in-house rather than sending to outside laboratories. Not only is there a massive cost benefit, but we're getting a massive increase in turnaround time. All the laboratories around the world are very busy at the moment. You're waiting two, three weeks for test results. We get test results within a few hours and sometimes 24 hours or 12 hours is a long time for results. It enables us to move our process a lot quicker. It means that we'll be able to achieve our final purity level in terms of our timeline with much more control by doing it in our own laboratory and doing it in our own in-house controlled environment managed by Rainbow's technical team.
When you hit your 99.5% level of purity, does that make you one of the world's lowest cost producers, George?
No. Well, the purity level is what everybody has to achieve in terms of a sellable product to go further downstream. What we've shown with our updated economic assessment in December and what has been independently verified by August Media is that we're the highest margin rare earth business in development in the world today. Our cost of producing rare earth oxides, separated oxides, is running at about $12-$13 per kg. Our cost for the four magnet rare earth oxides is running at around because now we're not looking at all the separated oxides, we're just looking at the four that are key and make up 95% of the value of our basket.
The cost of producing those separated oxides is below $40 a kg, and that we know is significantly lower than anybody in the West out there. We believe it's even lower than the Chinese cost of separated oxides.
I remember interviewing you years ago, George, and you told me then that rare earths would be in tremendous supply for industrial purposes, you know, magnets and so on and so forth. Lo and behold, you turn out to be correct. Now, this was true then, and it's true now. China dominates that rare earth processing supply chain. They're in charge of a lot of the world's resource, and therefore they can control the pricing. Where does Rainbow fit into all that global picture? And are you in a good place?
Well, right now, not only Rainbow, but most rare earth projects are in a good place because what we've seen since the new administration came into power in the U.S. is that extra focus on critical minerals. I mean, Donald Trump signed the Executive Order specifically naming rare earths as being one of the key critical minerals that is dominated by China and the West needs to focus on building an independent supply chain outside of China. There's a lot more emphasis over the last few months on rare earths and rare earth projects, which obviously bodes well for Rainbow.
The fact that we've successfully proved that we'll be the lowest cost producer means that even at this low point in the rare earth price cycle, if we were in production today, we'd still be significantly profitable compared to other rare earth projects. I think that shows that Rainbow is resilient to the cyclicality of the rare earth price cycle, which is very important. Also what's key is that we've seen China start to weaponize rare earths in terms of they've banned the export of certain rare earth elements. This is in retaliation to tariffs in America. By banning the export of these key rare earth elements, it puts a lot of modern technology in the West at risk.
It's something that is not healthy for any sort of business in the West to depend on one dominant supplier for these critical elements. Not only are they critical for all your consumer electronics, from your cell phones to your earphones, your handheld drills, your drones, but also very important in wind turbines. We know they're very important in defense. All your key high-tech defense requires rare earths. An F-35 fighter jet has got 420 kg per jet. You know, it goes into your night vision goggles, your heat-seeking missiles, your missile guidance systems. It goes into everything strategic in terms of defense.
Very importantly, the next frontier that's coming up is robotics. I mean, Elon Musk forecasts there'll be 10 billion robots on the planet by 2040. Now, even if he's conservative, there are only 2 billion robots by 2040, that's still 4 x more EVs that will be on the planet. A robot takes 3x-5 x more permanent magnets than an electric vehicle in a robot. These humanoid robots' growth is gonna explode. As I said, already we've seen that in China. We've seen Tesla announce their range of humanoid robots. Just a couple of weeks ago, there was a big article about where's Elon Musk gonna get his permanent magnets for his robots.
You know, apart from EVs, wind turbines and all the other uses for permanent magnets which require rare earths is a massive new frontier in terms of robotics out there that's gonna even be more significant in terms of demand than we've seen in EVs.
Can I ask you just about China? Given that they previously had this control over the rare earths market, that to an extent has put them in charge of pricing and has allowed them to, shall we say, manipulate the price. My words, not yours. What's the current situation? Has that changed given that over the past couple of years, the West has actually woken up, as you say, to the importance of rare earths?
Yeah. Unfortunately, there has been some price control, let me say that, by the Chinese. We're all aware of that. We saw the price come back in 2022 from $150, $180 a kg for neodymium and praseodymium, two of the key rare earth elements that go into permanent magnets, all the way down last year at one stage to $55 a kg. That's a very low point historical in the price cycle for these rare earth elements. We're sitting at about $60 a kg, and at $60 a kg, there are no rare earth projects in the world that are really making money. Except if Rainbow was in production, as I've mentioned, we would still be quite profitable.
At the end of the day, that's not the right price for these rare earth elements, neodymium and praseodymium, the two key rare earth elements in permanent magnets. You know, the price should be around about $100-$120 a kg. What we've seen over the last three months with these export bans by China on certain rare earth elements, we've seen two other key rare earth elements for permanent magnets called dysprosium and terbium traded 3 x higher in Europe compared to where they're trading in China. I think that's a forerunner to a real pricing scenario happening in the West compared to what's being controlled in China.
We'll start seeing this more, and especially, hopefully in neodymium and praseodymium in the near future, we will see a real price being quoted in Europe for these rare earth elements which are ex-China supply. The Chinese price hopefully will become irrelevant because we know there's some control there, and the control is even below what Chinese producers can make money at in China at the moment. At some stage, that dam will burst. We've seen it starting to happen with the prices of these other rare earth elements trade far higher in Europe than they are trading in China.
The U.S. government has identified Rainbow as a future supplier of rare earths to the U.S., and the U.S. Development Finance Corporation has proposed $50 million of financing for Phalaborwa. I believe they did that 18 months ago, which sounds ideal. My question for you, George, is why Phalaborwa?
Well, we've been able to prove to the DFC, which is the Development Finance Corporation out of Washington, that we are probably the lowest cost producer. We will be the lowest cost producer in the West. That means we are resilient to the price cycle of rare earths as I've indicated to you that we already have, when we publish our economic assessment, it's all there, and it's all on our website. The fact that we will be in production no matter what is key for the U.S.
We are a low-cost supplier of separated rare earth oxides, and very importantly, the fact that we're going into separated oxides, one of the few projects in the West that are going that far downstream, means that we'll be able to in terms of supply of separated rare earth oxides, that will support circa 6,000 tons of permanent magnet production in the U.S. or the West. That means we'll be a significant supplier, low-cost supplier, and very importantly, we've got dysprosium and terbium as well, which are the two heavy rare earth elements that are also very significant for defense applications as well as in those permanent magnet applications as well. I think this is why we're strategic to the U.S. government.
You will have seen I tweeted on our a few weeks ago, we had a congressional delegation down at Phalaborwa or down at in South Africa again, come to see the pilot plant, come to see the progress of our laboratory in South Africa, and that was both you know the Republicans and the Democrats as well as the DFC were on that site visit literally about three-four weeks ago. We're still very much in the plans of the U.S. government, I'm very happy to say.
The Phalaborwa definitive feasibility study is due to be published by the end of the year. In December, I believe. Not long now. What's the pathway to commercial production from there then, George?
Well, on completion of the bankable or definitive feasibility study, we'll be in a financing process next year, and I'm hoping that we'll have the financing in place to enable me to start construction towards the end of 2026. That's sort of November, December. Start with some early works on site, and by the end of 2027, the plant should be complete, and we should be commissioning to be in full commercial production in 2028.
Now, of course, it's always useful to have different revenue streams for your technology. Let me ask you, how is the Brazil 50/50 JV with Mosaic at Uberaba progressing? Is that going well?
We're progressing very effectively and very well with Mosaic in Brazil. We are busy finalizing the flow sheet. We've been working on a flow sheet for the last six or seven months with test work we've been running in Brazil. Once we've got that flow sheet nailed down, which is literally one or two months away, we'll then be progressing into the PEA or economic assessment on the Uberaba project, which is very significant. It's very large. It's higher grade than Phalaborwa, and we're very excited about it. We expect very good news to come out of the Uberaba project in the short term.
It does make Rainbow a significant producer in terms that we'll have two large scale projects, very low cost producer in both those jurisdictions. You got country diversification with the project diversification. Very key.
My final question, you've made Phalaborwa and your flow sheet processing work for you, and you're now working towards commercial production. Why should Rainbow Rare Earths or RBW be on people's watchlist?
Well, I think like anything, you know, you've got to look at projects that will actually go into production. Unfortunately, there are many, many projects out there in the world that will never see the light of day in terms of production. You know, in terms of our capital cost intensity, which is very low for a rare earth project because of the nature of us taking the risk out of a waste dump, both at Phalaborwa and in Uberaba in Brazil, means that we've got a very low capital intensity. We've got a very low operating cost; means we'll survive in this pricing environment. If you look at some of the rare earth projects that have been spoken about, you know, I mean, Donald Trump mentioned the rare earths in Ukraine.
There are no rare earths of any economic value in the Ukraine, and even if there were, it would take 20 years to get those into production. People talk about projects in Greenland. You know, these things are running at 0.5% total rare earth oxides. It's impossible to make anything at 0.5% grade work in the rare earth space. You know, you've got Lynas and Mountain Pass, Mountain Pass in America at 8.5% grade, and at this current pricing environment, they're battling to make money. I can't see how a project running at 0.5% grade got any chance of surviving. Rainbow, as I said, you know, we are a real project, and we will be in production, and that's why we should be on people's radar.
Thank you for joining us today, George. It really was fantastic to catch up. Rainbow's such an interesting company, and I always enjoy my chats with you. Thank you so much. It was very useful to hear about the latest developments at Rainbow. Thank you so much.