Rainbow Rare Earths (LON: RBW) has cleared a key technical hurdle at its Phalaborwa rare earths project in South Africa through an offtake and processing agreement with Neo Performance Materials (TSX: NEO), paving the way for a prefeasibility study (PFS) in the fourth quarter.
The memorandum of understanding gives Toronto-based Neo offtake rights to 40% of Phalaborwa’s annual production of separated neodymium-praseodymium (NdPr) oxide and 65% of its mixed SEG+ heavy rare earth carbonate. Pricing will be based on relevant rare earth indices under commercial terms.
In exchange, Neo will provide technology, design input and technical support for Rainbow’s final solvent extraction circuit. Test work using material from Phalaborwa is underway at Neo’s facilities in Estonia and will be followed by an integrated pilot-scale campaign in Johannesburg.
“We are delighted that Neo has agreed to partner with us,” Rainbow CEO George Bennett said. “Their deep understanding and experience in rare earth separation and magnet materials is invaluable.”
The partnership resolves what Rainbow described as the remaining step needed to define its process for extracting rare earths from phosphogypsum waste. The company expects the PFS to establish its final products, processing route and waste streams with enough certainty to advance financing and permitting. A definitive feasibility study is planned for the first half of 2027.
Processing solution
Phalaborwa would recover rare earths from legacy phosphogypsum stacks left by fertilizer production rather than mine fresh ore, potentially reducing some of the development requirements associated with conventional greenfield mines.
The SEG+ product includes samarium, europium and gadolinium as well as magnet rare earths dysprosium and terbium. Neo operates commercial light and heavy rare earth separation capacity in Estonia, where it also has a sintered magnet manufacturing facility.
The companies are considering toll treating the remaining 35% of Phalaborwa’s SEG+ production at Neo’s facilities. Under that arrangement, separated dysprosium, terbium and yttrium would be returned to Rainbow to market independently.
The memorandum remains subject to binding long-form agreements, which the companies have begun negotiating. That leaves commercial terms to be finalized as Rainbow works towards its feasibility, financing and permitting milestones.
Western supply
Rare earths are essential ingredients in permanent magnets used in electric vehicles, wind turbines, defence equipment and electronics. China’s dominance of rare earth processing and magnet manufacturing has spurred Western governments to support alternative supply chains.
Phalaborwa fits that effort by offering a potential African source of magnet rare earths linked to European separation and manufacturing capacity. The agreement would give Neo additional feedstock for its Estonian operations while providing Rainbow with an established route for processing products that require complex separation.
The project’s development schedule has nevertheless slipped. Rainbow now targets completion of its DFS in the first half of 2027, after previously working towards an earlier study timetable. Its ability to move from feasibility into construction will still depend on completing permitting, securing financing and converting the Neo memorandum into definitive agreements.
Rainbow has previously estimated Phalaborwa’s development cost at $326 million. The upcoming PFS is expected to provide the market with its first updated assessment of project economics since an interim study published in December 2024.
Source: https://www.mining.com/rainbow-rare-earths-deal-with-neo-clears-path-for-phalaborwa-study/
