Great Western Minerals to build plant with Chinese partner

Great Western Minerals (GWG-V) plans to set up a joint venture with a Chinese company to build a rare earth separation plant in South Africa.

The rare earths junior will own 75% and China’s Ganzhou Qiandong will own the remaining 25% of the joint venture company, which will process concentrate from Great Western’s planned Steenkampskraal mine, about 350 km north of Cape Town.

The monazite mine is expected to start production in January 2013 and the proposed separation plant will be fed with rare earth chloride from Steenkampskraal and with feedstock from other sources in the region.  

Ganzhou Qiandong has processed rare earth oxides and metals for the last two decades, Great Western says, and has supplied its wholly owned subsidiary, Less Common Metals, for the last 15 years.

Jim Engdahl, Great Western’s president and chief executive, said in a statement that the agreement with Ganzhou Qiandong “marks one of the most significant developments so far in the delivery of our fully integrated rare earth business model” and noted that “the new facility will be at the cutting edge of solvent extraction processing.”

Construction of the processing plant will start in early 2012.

The Steenkampskraal mine is expected to initially produce about 2,700 tonnes of rare earths a year, and then ramp up to 5,000 tonnes a year. 

 Great Western Minerals currently supplies specialty alloys used in the battery, magnet and aerospace industries hat are produced by Less Common Metals in the United Kingdom and Great Western Technologies in Troy, Michigan. Teh alloys contain aluminium, nickel, cobalt and rare earth elements.

Great Western holds 100% equity ownership in Rare Earth Extraction Company, which owns a 74% stake in the Steenkampskraal mine.

China currently dominates production of rare earths, with roughly 95% of the market.

On July 14 the country’s Ministry of Commerce unveiled its rare-earth export quotas for the second half of the year-15,738 tonnes of rare earth materials to 31 different companies in China. Seven of the companies are contained within two different business groups.

For the full year the quota reaches 30,246 tonnes, nearly the same amount China allocated in 2010, according to data from Technology Metals Research, an Illinois-based consulting firm.

At presstime in Toronto Great Western was trading at 98¢ apiece. Over the last year it has traded in a range of 18¢ (July 27 2010) and $1.23 (Feb. 2 2011). It has about 382 million shares outstanding.