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Great Western sees S.African rare earth production
Wed Feb 9, 2011 11:51am GMT

* S.African rare earth mine to help cut Chinese dominance

* Great Western to explore for other sites in S.Africa

By Wendell Roelf

CAPE TOWN, Feb 9 (Reuters) - Canadian rare earth processor Great Western Minerals Group (GWG.V: Quote) expects output of 2,700 tonnes a year from its South African rare earth mine in two years' time, company executives said on Wednesday.

When Steenkampskraal mine, 400 km (250 miles) northwest of Cape Town, cranks up again -- it was officially closed in 1965 -- it will make Great Western one of the few non-Chinese firms mining and processing rare earth minerals.

"Not only will we be one of the very few integrated rare earth producers in the world, we will be one of the first to produce the critical heavy rare earths," chief executive Jim Engdahl told an African mining conference.

Rare earths, which are used in electronics such as smartphones and hybrid cars, as well as in the aerospace industry, abound in the high-grade ore at Steenkampskraal, Engdahl said.

"As a result of the grade, it will produce more heavy rare earth per tonne than any other known deposit in the world today," he told Reuters.

China produces over 95 percent of the world's rare earths, triggering global concerns about the Asian economic powerhouse dominating production, especially after recent cuts to export quotas sent prices of individual oxides soaring.

Engdahl said South Africa, already the world's top platinum and a major gold producer, could emerge as a global leader in rare earth exports, driven by Chinese demand for the minerals.

"The big opportunity here that people haven't recognised is that China will become a net importer by 2014/15," he said. "We believe South Africa will become one of the leaders in this industry outside of China."

Great Western is spending 300 million rand ($41 million) rehabilitating Steenkampskraal after its closure nearly 50 years ago because of a lack of profitability.

However, the site has about 30,000 tonnes of known rare earth deposits, enough for 10 years' production at a planned output rate of less than 3,000 tonnes a year.

Further exploration is planned at Steenkampskraal and other sites in South Africa in a bid to boost annual production to 5,000 tonnes, Engdahl said. Rare earths might also be recoverable from the by-product of platinum mining, he said. (Editing by Ed Cropley)