12 Jul The Angolan rare earth project that will power the electric motor boom
Perhaps one day the future will be fantastical, all flying cars, engaging hyperdrives and beaming people up, but the nearest future, the one that matters, has far more pressing concerns.
If we want to make it far enough to one day entertain such sci-fi fantasies, we first need to rapidly transition to a low-zero carbon economy. Pensana Metals is helping achieve this with a good old fashioned piece of science that sits at the cutting edge of technology.
But first a quick quiz. What are Neodymium and Praseodymium? a) magical elixirs from Lord of the Rings; b) the elemental components of Thor’s hammer; c) rare earth metals that will drive the next phase in electric motor technology – think electric vehicles (EVs), wind turbines, industrial tools, healthcare, household appliances, automation and robotics.
Let’s assume you chose ‘c’ – Neodymium and Praseodymium, commonly and more easily referred to as NdPr, are rare earth metals at the vanguard of electric motor technology. You’ve probably heard the investment case for battery metals, such as lithium and cobalt, and its undeniably sound, batteries are vital in the scope of the EV and broader green energy theme.
However, these metals will not be the biggest beneficiaries. Whatever type of battery is used – hybrid, plug in hybrid or pure battery – electric motors will be needed to drive the wheels on an EV or to get the blades on a wind turbine rotating.
Step up NdPr, the critical energy transition metal that forms super-strong permanent magnets (note: that good old fashioned piece of science mentioned earlier) increasingly deployed in electric motors, and therefore electric vehicles and wind turbines, both boom themes.
The EV theme is estimated at $400 billion and will drive a 350% increase in demand for NdPr over the next six years, while offshore wind turbines, which require three tonnes of magnets compared to EV’s 2kgs, will see global growth of 1500% over the next 20 years.
Pensana’s Angola NdPr project
The world needs a lot of NdPr for a greener future. Which is where we come to Pensana Metals’ Longonjo NdPr project in Angola. As a pure play rare earth metal investment with low-cost initial capital outlay, long-term growth potential and razor sharp ESG credentials, it’s a veritable gold… scratch that… NdPr mine.
With a thick blanket of NdPr mineralisation over 1.5km, Longonjo is one of the largest and highest grade deposits in the world. The most recent estimates in late 2019 represent a well over four-fold increase on the amount of NdPr Pensana had originally expected after its maiden Mineral Resource Estimate back in September 2017. This translates into 56,000 tonnes per annum of NdPr rich concentrate, which will be exported cost effectively thanks to world class local infrastructure: a recently built rail line will link the project directly to the recently upgraded Port of Lobito where Pensana already has capacity to ship concentrate to China for processing. Factor in also that the project is located near a hydroelectric power plant and Pensana will be able to mine and export at low CO2 emissions.
Furthermore, according to Pensana chairman Paul Atherley, getting the Longonjo project up and running will only cost $131 million, with production getting underway in early 2020, when it will be the world’s second largest NdPr concentrate producer. Compare this to the largest NdPr mine, located in Australia, which took a $2 billion investment and 10 years to develop.
In fact, Longonjo is expected to generate over $500 million of free cash flow in the first five years, supported by soaring prices for NdPr – 20-35% since 2017. Indeed, Fidelity has already taken 10% of Pensana Metals on the prospect and the company, already listed on the Australian Stock Exchange, plans to list on the London Stock Exchange’s main board in early 2020.
Supporting the local communities
Good news for all, not least to the country of Angola, which is trying to diversify its economy away from oil, gas and diamonds into mining, agriculture and tourism after years of brutal civil war. If the Longonjo project is successfully funded, then Pensana will work with the local authorities in finding ways for the community to benefit from the project, not only by providing training to locals (with a focus on equipping local women with technical skills), paying living wages (in an area with high unemployment), but also building roads and potentially a school.
Pensana’s goal is to provide industries with a low-cost, high-quality, reliable solution to drive the production of greener energy and the electrification of transport around the globe, and along the way ensure its impact locally in Angola is positive. And maybe one day all this will lead to flying cars and teleportation, but for now, Pensana, Angola, Longonjo and NdPr are future enough.