Kenya Hits $100bn Rare Earth Jackpot

Rare Earth Minerals Discovered In Kenya
China is the world’s number one producer of rare earth minerals

AFRICANGLOBE – Kenya’s profile as a potential top rare earth minerals producer rose a rung higher after mineral explorer Cortec announced it had found deposits worth $62.4 billion.

Mrima Hill, in the coastal county of Kwale, has one of the top five rare earth deposits in the world. The area also has niobium deposits estimated to be worth $35 billion.

“This is by far the largest mineral deposit in Kenya and the find at Mrima Hill will make Kenya one of the largest rare earth producers in the world,” said David Anderson, managing director of Cortec Kenya Mining.

The Kenyan government will earn a paltry three per cent royalties from the nobium project and five per cent from the rare earths mining. Under the Constitution, 80 per cent of these earnings will go to the central government, 15 per cent to Kwale County and five per cent to local residents.

A global scarcity of rare earth in a market largely controlled by China has kept prices high, with Japan, which accounts for a third of all global demand, hard-hit by scarcity and looking to diversify its supply sources.

China has been supplying 90 per cent or more of the world’s rare earth minerals for over a decade, but it is also the largest consumer (72 per cent in 2012).

Cortec, which holds the mining licence for Mrima Hill, has also confirmed a deposit of 680 million kilogrammes of niobium, held in 105 million tonnes at 0.7 per cent niobium pentoxide.

The global demand for niobium, used to strengthen steel, is rising rapidly, with Mrima Hill now positioned in the world’s top six deposits.

Kenya is poised to join Tanzania as a rare earth supplier. In March, Tanzania announced the discovery of lower grade deposits within the Wigu Hill Rare Earth Project located 170 km south-west of Dar es Salaam.

If Cortec’s lab results are confirmed, Kenya will serve the hungry global market including Africa that is scrambling for the meagre supply of the element.

With the demand rising in China as its electronics market grows, the country could only produce enough of some elements for its own needs and limit some exports, giving new entrants like Kenya a chance to capture the global market.

What makes them valuable and useful in manufacturing is the way they interact with other elements to get results that each could never achieve alone.

Rare earths have numerous applications in technology and manufacturing. They are used to make high power magnets for lightweight electric motors and MRI imaging.

They are also used in manufacture of car engines and chemical factories, rechargeable batteries and generators for wind turbines. It is red phosphors from rare earth elements that made the colour television possible, and by extension, computer screens, laptops and mobile phones.

These elements are also crucial in military technology, such as in missile guiding systems, jet fighter engines, anti-missile defence, space-based satellites and communication systems.

Demand for electric vehicles is also forecasted to increase in the coming decades as fossil fuels dwindle and consumers become more environmentally conscious, and rare earths are essential in the manufacture of electric engines.

Mining and refining of rare earths has serious environmental concerns if not properly, as they can result in radioactive wastes, and toxic acids are required in extraction.


Global Demand For Rare Earth Minerals

World demand for rare earth elements is estimated at 136,000 tonnes per year, with global production around 133,600 tonnes in 2010. The difference is covered by previously mined stocks.

World demand is projected to rise to at least 185,000 tonnes annually by 2015. But the global supply of rare earth has been the centre of intrigue and controversy.

Although many of the rare earth metals are not necessarily rare to find — some are more abundant in the earth’s crust than lead, gold, copper or platinum — they often exist in very small concentrations, making extraction difficult. And because of their similar chemical properties, rare earths tend to clump together, usually with radioactive elements such as thorium and uranium, making separation complicated and expensive.

In the 1990s China was accused of using unscrupulous practices, such as unregulated dumping of toxic by-products, to conquer the rare earth market.

As a result, many industrial countries resorted to stock-piling reserves, with searches for alternative sources now going on in several prospecting sites around the world, such as Australia, Brazil, Canada, Greenland and the US.

China’s dominance has kept prices high, and has created incentives for miners to flout rules, as global demand surges, with illegal production and smuggling still rampant.

Japan receives 82 per cent of its rare earth elements from China. 40 per cent of China’s exports go to Japan and 18 per cent to the United States. The US, too, is looking to guarantee its future rare earth needs, with a 2012 report by the Congressional Research Service (CRS) underscoring the need for US to secure an alternative source for the material, critical to US national security and increasingly more important in defence applications.

In March 2012, the Obama Administration announced the filing of a World Trade Organization case against China, citing unfair trade practices in rare earths.

Part Two