Africa home to a prime rare earth hunting ground

Africa, Australia and Canada likely hold the key to a geopolitical battle being fought to end China's stranglehold over obscure elements used to build high-tech items from headphones to missiles.

The three are the most likely home to vast reserves of rare earth elements. The commodities are almost exclusively produced by China, which unnerved global powers last year by threatening to restrict exports to help it settle political scores.

While all three have promise, Africa may offer the most potential, with geologists saying it has more than half the world's deposits of carbonatites, a type of rock formation seen as prime hunting ground for rare earths.

"That immediately makes Africa a destination of choice if you want to find rare earth elements in carbonatites," said Paul Nex, senior geologist at Umbono Capital.

Another advantage Africa offers is vast amounts of monazite sands left over from other mining operations on the continent from which rare earths can be extracted, experts said.

Carbonatite deposits are found in most African countries, according to geological surveys, with investment likely going to states with little red tape, infrastructure to take ore to ports and deposits large enough to make ventures profitable.

The Great Western Minerals Group's Steenkampskraal project in South Africa has some of the highest concentrations of certain types of rare earths of any mine outside of China.

Rare earth -- not as rare as their name suggest -- are some of the world's most obscure elements used in some of the world's most familiar devices including cell phones, flat screen TVs and microwave ovens.

DIGGING IN AFRICA

Rare earth stocks were the darlings of 2010. Now investors are casting a discerning eye over the sector, betting that only a handful of companies will survive the race to supply the world with the high-tech metals of the future.

For now, the main hunting grounds are a handful of the revived mines in Australia, Canada, South Africa and the United States where rare earths were extracted before China jumped into the field and priced them out of the market.

These include Molycorp's Mountain Pass mine in California, Great Western Minerals mine in Steenkampskraal, South Africa; Avalon Rare Metals' operation in Nechalacho, Canada; Lynas Corp's facility in Mount Weld, Australia; and Arafura Resources mine in Nolans, Australia.

Canadian rare earth processor Great Western Minerals Group says it expects output of 2,700 tonnes a year from its South African rare earth mine in two years' time.

"Within the next five years, there is going to be extreme pressure on mines outside of China to get into production. There is going to be a significant number of them that are not going to get there based on their own expectations," CEO Jim Engdahl said in an interview with Reuters.

"It is a very complex business. It is a very complex mining and a very complex metallurgy," he said. "For the next five years I think you will significant shortages in most of the rare earth elements."

Analysts said there could be a supply crunch in the next few years when Chinese demand is expected to outpace domestic production, with China then turning into a net importer.

With mining firms eyeing a supply shortage and demand surge, new ventures have been launched around the planet, with several in Africa that include Australia's Southern Crown Resources' projects in Zambia, Mozambique and Burundi.

Another promising site is Kangankunde Hill in Malawi, according to the U.S. Geological Survey and Lynas Corp.

（Source Reuters）