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The entrance gate to Steenkampskraal mine, located in a remote corner of South Africa's Western Cape province. The mine was abandoned in 1963 and is now being turned into a rare-earth facility. (Erin Conway-Smith/Erin Conway-Smith for The Globe and Mail)
The entrance gate to Steenkampskraal mine, located in a remote corner of South Africa's Western Cape province. The mine was abandoned in 1963 and is now being turned into a rare-earth facility. (Erin Conway-Smith/Erin Conway-Smith for The Globe and Mail)

For rare earths, an abundance of interest Add to ...

“I’m working 25/8,” says Vincent Mora, the newly hired project director at the site. “The company gets e-mails from me at 1 o’clock in the morning and 3 o’clock in the morning. I’m holding a minimum of two to three meetings a day with different contractors. If the contractors can work at the same time, we do it. We don’t wait for the signature of the contract – they start working right away.”

Because of the radiation at the mine site, Mr. Mora and his colleagues are required to carry dosimeters and wear plastic covers on their shoes as they tramp around the mine site. The site is fenced off, with signs warning of the radiation risk, although it fails to deter the neighbouring sheep farmers who drive their truck into the mine site to discuss the jackals and lynxes that are killing their animals.

Great Western is competing with other companies such as Lynas Corp. in Australia and Molycorp Inc. in the United States to develop new sources of rare-earth supply outside China. The company is aiming to start production in South Africa by the end of next year, about 18 months ahead of the original schedule. The South African mine can produce a range of rare-earth minerals, and it will be integrated into a supply chain with Great Western’s downstream production plants.

“If we’re first into production with all of the rare earths and the downstream capacity, it will make us a leader in this game,” says president and chief executive officer James Engdahl.

Great Western acquired the mine by purchasing the South African company Rare Earth Extraction Co. Ltd. (Rareco) for about $20-million, and is planning to spend a further $60-million to put the abandoned mine into production and build a separation facility. By acquiring Rareco, it inherited a deal with the South African government that exempts it from royalty payments if it cleans up the radioactive waste material on the mine site, which would otherwise be the government’s liability.

Great Western says the radioactive waste will be processed and then stored underground at the mine site in a layer of impermeable clay. The storage would be safe because the clay is thick and the site is remote and arid.

Great Western already has plants in Britain and the United States where it produces rare-earth alloys for use in magnets, batteries and aerospace products. It aims to produce about 5,000 tonnes of rare-earth oxides annually at the South African mine – almost double its original plan of 2,700 tonnes.

The Pentagon gets interested

While its investment is relatively small by global standards, Great Western has already attracted attention from U.S. politicians, who are seeking ways to block China’s control of a strategically important industry.

“They’re realizing that rare earths are absolutely critical to all of their weapons – your cruise missiles, your laser-guided bombs and so on,” Mr. Engdahl said in an interview. “The U.S. is looking beyond its borders, particularly to Canada. They’ll want to have Canadians involved in solving the issue.”

Last month, a U.S. congressional committee invited Great Western’s president to testify about the industry. Describing the situation as a “crisis,” Mr. Engdahl told the committee that the United States needs to plug the holes in its supply chain, especially in the manufacturing side, if it wants to avoid a dependence on specialized imports from China and Japan for its energy and military technologies.

The supply crisis has become a politically sensitive subject in the United States, provoking a series of counteractions, especially after China cut its rare-earth exports to Japan last September when the two countries were feuding over their rival claims to disputed islands in the East China Sea.

The Obama administration has ordered the Pentagon to devise a plan to ensure U.S. access to rare-earth minerals. Several members of Congress from both parties are planning bills to build stockpiles of the minerals and to provide support for a domestic rare-earth industry. One bill, recently approved, authorizes the U.S. Energy Department to make loan guarantees to support rare-earth exploration and development in the United States, with the aim of creating a complete supply chain and production capability within the next five years.

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