Great Western to build REE plant with Chinese partner

Great Western Minerals (GWG-V) plans to set up a joint venture with a Chinese company to build a rare earth (RE) separation plant in South Africa. 

The RE junior will own 75% and China’s Ganzhou Qiandong will own the remaining 25% of the joint-venture company, which will process concentrate from Great Western’s planned Steenkampskraal mine, 350 km north of Cape Town. 

The monazite mine is expected to start production in January 2013. The proposed separation plant will be fed with RE chloride from Steenkampskraal and with feedstock from other sources in the region.  

Ganzhou Qiandong has processed RE oxides and metals for the last two decades, Great Western says, and has supplied its wholly owned subsidiary, Less Common Metals, for the last 15 years.

Jim Engdahl, Great Western’s president and chief executive, said the agreement with Ganzhou Qiandong “marks one of the most significant developments so far in the delivery of our fully integrated rare earth business model,” and noted that “the new facility will be at the cutting edge of solvent extraction processing.”

Construction of the processing plant will start in early 2012.

The Steenkampskraal mine is expected to initially produce 2,700 tonnes RE a year, and then ramp up to 5,000 tonnes a year.  

Great Western Minerals supplies specialty alloys used in the battery, magnet and aerospace industries that are produced by Less Common Metals in the U.K. and Great Western Technologies in Troy, Michigan. The alloys contain aluminium, nickel, cobalt and RE elements.

Great Western holds 100% equity ownership in Rare Earth Extraction Co., which owns a 74% stake in the Steenkampskraal mine.

China currently dominates production of RE with 95% of the market. On July 14 the country’s Ministry of Commerce unveiled its RE export quotas for the second half of the year – 15,738 tonnes of RE materials to 31 different companies in China. Seven of the companies are contained within two different business groups. 

For the full year the quota is 30,246 tonnes, nearly the same amount China allocated in 2010, according to data compiled by Technology Metals Research, an Illinois-based consulting firm.

At presstime Great Western traded at 98¢ apiece. Over the last year it has traded in a range of 18¢ (July 27, 2010) and $1.23 (Feb. 2, 2011). It has about 382 million shares outstanding.