Namibia: Lofdal project can help cut reliance on Chinese rare earths

By David Whitehouse
Posted on Friday, 9 September 2022 06:00

Tesla Model X electric cars recharge their batteries in Berlin
Rare earths are needed for electric car batteries. REUTERS/Fabrizio Bensch

The Lofdal project being developed by Namibia Critical Metals (NCM) has the potential to become a “globally significant” supplier of heavy rare earths, CEO Darrin Campbell tells The Africa Report.

The project in Namibia’s southern Kunene region contains reserves of dysprosium and terbium. These are needed for the permanent magnets in batteries for electric cars and wind turbines, as well as for defense and medical technologies. Drilling in 2020 increased the mineral resource estimate of the project more than seven-fold to 44.76 metric tonnes.

The International Energy Agency says that global demand for rare earths may increase by between three and seven times by 2040. China currently dominates supply of dysprosium and terbium, and, according to Wood Mackenzie, manufactures about 95% of high-strength rare earth permanent magnets. “The world has woken up to the danger of reliance on China,” Campbell says.

Dysprosium and terbium are classed as heavy rare earths because they have a higher atomic weight than “light” rare earths. They command higher prices, with terbium currently fetching around $2,000 per kilogram and dysprosium about $400, versus $100 for light rare earths. A preliminary economic assessment at Lofdal is due at the end of September. That will lead to a pre-feasibility study in 12 months, with a start of production 36 months away, Campbell says.

NCM is listed on Canada’s TSX Venture Exchange and has operated in Namibia since 2005. The company has a pipeline of projects in Namibia, of which Lofdal is the most advanced. It secured a 25-year mining license for the project in 2021. In May, Australian uranium development company Bannerman Energy, which operates the Etango project  in Namibia, bought a 41.8% stake in NCM.

  • The project will run on solar power, with NCM planning its own solar plant with capacity of between 12 and 15 megawatts.

Japanese Backing

The Lofdal project is a joint venture with Japan Oil, Gas and Metals National Corporation (JOGMEC), a government agency charged with securing stable resource supplies. Japan is the most important consumer of dysprosium outside of China. JOGMEC has a 50% interest in the Lofdal project in return for $20m in exploration and development funding.

The agency has the option to buy 1% further in the project for $5m, which would give it a majority stake. They would then have the option to fully fund the project into production, which will cost about $200m, and have an offtake agreement.

Radioactive material will be removed onsite at Lofdal to facilitate export. The rare earths will need to go to a specialised separation facility before dispatch to the final customer. China currently controls 84% of global rare earth processing capacity. Campbell is confident that there will be a range of separation facilities outside China available in the US, the UK and Estonia by the time production starts.

  • Namibia is one of the best mining jurisdictions in Africa, with “strong infrastructure and a strong regulatory regime,” Campbell says.
  • It would be a great place for a rare earths separation facility to be built, he argues. The country’s uranium mines mean that there is sufficient expertise in working with radioactive materials.
  • Such a facility would cost between $200m and $500m to build, depending on size.

Bottom line

The world’s need to avoid relying on China opens the door for Namibia to climb the value chain.

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