Rare earths from Steenkampskraal - for Europe's industry
Financial specialist Andreas Kroll knows that timing is everything when it comes to investments. He already had the “right instinct” when it came to the price development of important commodities, which is why he is often referred to by insiders as “the commodities pope”.
By 2040, we will need seven times as many rare earths as in 2018
Today, timing means timely investments in strategic metals, without which our industry cannot function. Andreas Kroll has therefore long been on the lookout for rare earths, for which the security of supply for European industry is particularly at risk. According to a study by Deutsche Bank, demand for these metals is expected to increase sevenfold by 2040 compared to 2018. He finally found what he was looking for in the summer of 2022. On the internet, he came across the homepage of a disused thorium mine in South Africa. His research revealed that Steenkampskraal, as the mine named after its location is known, has the rarest ore in the world. He had to see this mine. And while governments around the world are still considering how to stop sourcing 40% of a single critical metal from just one third country, he flew to South Africa with the entire management team of the Noble Group to go “commodity sightseeing”.
China is making it increasingly difficult for Western countries to establish their own supply chains
China still dominates the rare earths market. The 90% of these commodities that arrive in our country still come from there. The Middle Kingdom knows how to maintain its monopoly: just last year, the Chinese government banned the export of machines for separating and processing rare earths. This makes it even more difficult for Western countries to establish their own supply chains.
The geopolitical situation between China and Taiwan is also extremely risky for our security of supply of rare earths. Should the conflict escalate, almost no supplies would reach us due to the blocked route across the South China Sea. In addition, the tightened reciprocal sanctions between the USA and China would also have an impact on us – exploding prices and a serious supply shortage for our industry could be expected.
Mine ore with a high content of rare earths required for magnets
On February 14, 2023, Andreas Kroll and his team set off in an off-road jeep. The 28-kilometre Steenkampskraal mine site has no fixed address; somewhere in the middle of nowhere, the GPS tells you to “turn left”. Adventurous directions, but they worked. The owner awaits Andreas and his team at the site – and after a brief introduction on how to behave in a mine, an arduous descent into the shaft, which is over 100 meters deep. There are over 500 steps to descend, and some of the visitors, who are not used to the arduous life in a mine, got very out of breath. But what they finally found in the shaft was more than worth all the effort: the glowing blue monazite ore can be seen in several places on the tunnel wall. It has a rare earth content of 14.4% and contains large amounts of the rare earths neodymium oxide, terbium oxide, praseodymium oxide and dysprosium oxide, which are central to magnet construction. During their descent, Andreas and his team only saw a small part of the 1.2-kilometer-long vein of ore that stretches across the site. With an estimated reserve of 605,000 tons, this discovery could make a major contribution to the security of supply for Europe’s industry. After all, it needs high-performing magnets more urgently than ever before.
One wind turbine contains up to 600 kilograms of rare earths
After Andreas Kroll had climbed the 500 or so steps back up to the surface, he almost collapsed from exhaustion. At the same time, he was thrilled because he had found exactly what he was looking for. The automotive industry alone will need a huge amount of rare earths in the future. According to Statista, there were around 27.7 million electric cars worldwide in 2022, over ten million more vehicles than in the previous year. According to the International Energy Agency, this trend is likely to continue. According to one study, it can be assumed that the number of e-cars will rise to 350 million by 2030. If you realize that an electric car contains an average of 10 kilograms of rare earths, you quickly realize that the automotive industry alone will need a huge amount of these commodities. Above all, however, this discovery is of crucial importance for the success of the energy transition. Depending on its design, a wind turbine contains between 200 and 600 kilograms of rare earths. According to a BDEW estimate, Europe will need around 1,500 new wind turbines per year by 2030 in order to manage the energy transition. This is expected to lead to an immense increase in demand.
We want to produce green rare earths in South Africa
South Africa is a very advanced country compared to other African countries on the black continent. On the way to the mine, Andreas and his team carried food and water for four days, but that wouldn’t have been necessary. There were petrol stations and stores everywhere along the way where they could stock up on supplies. With its excellent conditions for solar and wind power, the country also makes it possible to produce rare earths using green energy. The labor laws are also compatible with Western standards, meaning that the mine could become an important hub in the network of an ESG-compliant supply chain that is independent of China. Andreas and his team are currently signing the final contracts with the mine owners. Also on board is a Swiss finance company specializing in mines, which is organizing the financing of the mine together with the Noble Group. The Noble Group has been commissioned to raise investments of 100 million dollars. We hope to finance part of this via the commodities fund, while the lion’s share should come from private and industrial sector investment.