Equatorial Congo Airlines (ECair), which filed for bankruptcy in 2016, has signed a memorandum of understanding with South African company Allegiance ... Capital to restart its operations. Who is this partner? Where will the capital come from? Will the Congolese state’s support be enough?
In April, Burundi’s government suspended the export of rare earths produced from trial mining and processing at Gakara. “They have stopped us in contravention of the mining conventions and Burundi law,” Bennett says
Bennett in early July met with President Evariste Ndayishimiye in an attempt to resolve the dispute. The president, Bennett says, was “surprised” that operations had been suspended. Ndayishimiye wanted exports resumed as soon as possible, Bennett says.
An advisor to the government is now claiming that deposits at the Gakara site south of the capital Bujumbura have a total rare earth oxides (TREO) ratio of around 80%, which Bennett says is impossible. He says the ratio is around 54% to 56%, adding that the world’s highest TREO level, found in the US, is around 58% to 60%.
The advisor is also using a “totally incorrect pricing benchmark,” he says.
- Independent laboratories in Canada and China have verified the TREO grades, which are also accepted by German engineering group ThyssenKrupp, with which Rainbow Rare Earths has an offtake agreement, Bennett says.
- Prices were agreed by the government and have also been validated in a report commissioned by the World Bank at the government’s request in 2019, he adds.
The gulf in the figures being used suggests more than a commercial disagreement. Bennett says the government is using a figure of $22m for a tonne of praseodymium oxide, which he says is worth about $94,000. “The Burundi government is making a mistake. We are becoming a political football.”
- The company’s mining conventions with Burundi are “good as they stand,” Bennett says.
- Still, he is in principle willing to renegotiate, on condition that the company is allowed to resume production and exports.
- The stoppage is not costing the company much in terms of maintenance, he says.
- Bennett is ready to talk as soon as convenient. The government “says it’s urgent, but there is no action.”
Rare earths, the global supply of which is dominated by China, are crucial to energy transition. They are used in hybrid and electric vehicles, as well as wind power turbines. Bennett points to the contribution that the Gakara project has made to government coffers and the economy.
- Taxes, royalties and payments to Burundi suppliers to date total $12.1m, he says.
- Suppliers in turn pay taxes and generate a knock-on effect in the economy, he adds.
- “That’s just for a trial mining operation. Those numbers will be ten times higher” if commercial production starts.
Bennett says he has “no idea” about what political motives may lie behind the government’s change of stance, but suspects that resource nationalism may be at work. He points to Tanzania and Zambia as examples of countries where resource nationalism may be on the retreat, following the death of Tanzanian president John Magufuli in March, and the defeat of former Zambian president Edgar Lungu by Hakainde Hichilema in elections this month.
- Previous policies prevented the mining industry from developing six or seven new mines in Tanzania, he argues.
Rainbow Rare Earths is also planning to produce rare earths from gypsum stacks generated by hard-rock phosphate mining near Phalaborwa in northeast South Africa. The fact that the stacks are on the surface reduces the cost as only chemical processing, not mining, is needed.
- Bennett expects “very positive” scoping study results in October.
- The Phalaborwa project, he says, is potentially worth eight to ten times more than that in Burundi.
- “Burundi is a nice project, but it’s not the be-all and end-all.”
Investors should base their view of Rainbow’s potential on the South African Phalaborwa project.
Understand Africa's tomorrow... today
We believe that Africa is poorly represented, and badly under-estimated. Beyond the vast opportunity manifest in African markets, we highlight people who make a difference; leaders turning the tide, youth driving change, and an indefatigable business community. That is what we believe will change the continent, and that is what we report on. With hard-hitting investigations, innovative analysis and deep dives into countries and sectors, The Africa Report delivers the insight you need.View subscription options