Despite low pricing and the higher growth rates for plug-in hybrid electric vehicles (PHEVs) than for full electric vehicles (EVs), London-listed rare earth elements (REEs) project developer Rainbow Rare Earths remains bullish about demand and the prospects for its operations, particularly the Phalaborwa project, in South Africa.

Company CEO George Bennett also stresses the importance of countries and regions establishing independent and diversified supply chains for those critical minerals, including REEs, that are needed for decarbonisation, defence and other strategic purposes.

He points out that China controls about 75% of the global REE supply and more than 90% of global REE processing capacity.

"The increasingly fraught nature of geopolitical relations globally has demonstrated that the West and aligned territories must act to establish an independent and diversified supply chain for . . . critical minerals," he says in an interim results update to shareholders, published on March 19.

Rainbow notes that the uptake of EVs globally will continue to grow to 2050 and, although the growth rates for PHEVs are higher than for full EVs, this is unlikely to have a significant impact on REE permanent magnet demand.

It explains that, while PHEVs have smaller batteries than full EVs, the average power of the motors in the drive trains is not significantly different, representing substantial growth in demand for REE compared with traditional internal combustion engine cars.

Likewise, the use of REEs in wind turbines remains a significant demand driver.

"Permanent magnet REE will continue to be used in many of the daily products we have come to rely on in our lives, such as our household goods, computers, smartphones and speakers. However, there are also exciting new markets emerging that are primed for exponential growth, particularly robotics and advanced air mobility. Both sectors use significant amounts of REE permanent magnets in order to provide power, efficiency and functionality benefits," Rainbow states.

Further, it points out that the pricing of REEs has remained weak and is estimated to be well below the average breakeven price for the industry.

This is likely to worsen the future supply outlook, with future demand expected to outstrip supply.

Rainbow's operations are being established as low-cost suppliers of magnet REE outside of China.

"Rainbow's processing technology is unlocking a low-cost and responsible supply of magnet REE from phosphogypusm, starting with Phalaborwa, in South Africa, [and] followed by Uberaba, in Brazil, and with other global opportunities [in the] longer term. 

"These projects have an inherently different cost structure to traditional rare earth mining projects, providing economic resilience to the rare earth price cycle, and they offer a traceable and ethical supply of both light and heavy separated rare earth oxides. As such, Rainbow is in a strong position to contribute to an independent supply chain," Bennett states.

Rainbow produced the first magnet REEs in saleable form at its Phalaborwa project.

Mineralogy and hydrometallurgical testwork carried out on phosphogypsum material from the Mosaic Company’s Uberaba site, has also shown similar characteristics to the Phalaborwa project.

Rainbow and the Mosaic Company in July 2023 entered into a memorandum of understanding to study the potential of extracting REEs from Uberaba.