It’s old, doesn’t look like much and is located well out of the way in an arid part of western SA. 

But the Steenkampskraal mine may be about to become piping hot mining property thanks to some of the world’s highest-grade deposits of rare-earth metals.

“Steenkampskraal will become a very important source of rare earths for the global industry,” Trevor Blench, chairman of Steenkampskraal Holdings, said during a recent tour.

The mine, located about 350km north of Cape Town, used to produce thorium, a component of nuclear fuel, in the 1950s and 60s. But now it has been found to also have monazite ore, which contains high-grade rare-earth minerals including neodymium and praseodymium, elements vital to cutting-edge industries.

Manufacturing uses range from tinted welding goggles to industrial magnets, strong alloys for aircraft engines, military hardware, hybrid cars, consumer electronic devices, medical equipment and even the flints in cigarette lighters.

China produces the largest share of so-called “tech minerals”, with a domestic output of 120,000 tons in 2018. That is vastly more than the US, which relies on China for about 80% of its rare-earth imports.

But now Beijing has threatened to cut off the supply as trade friction mounts, prompting US President Donald Trump on July 22 to give the Pentagon an executive order to find other sources of the crucial elements.

Rare-earth elements are a group of 17 minerals unique for their magnetic, catalytic and electro-chemical properties.

For the first time since 1985, China in 2018 became a net importer of some rare earths for its industrial needs, while the government cracked down on illegal exploration and production.

Global sales of electric cars, which need the minerals, jumped by 68% in 2018 to 5.12-million, with China selling over a million vehicles, according to the International Energy Agency.

“China may, as a result of its own requirements, just export less and less to the rest of the world,” Blench said.

Steenkampskraal Mine could just be the answer to growing demand, he suggested.

“About 14% of this rock is rare earths. That is an extraordinarily high grade and we don’t know anything like it on the planet,” Blench said, holding a small but heavy reddish brown rock.

Worldwide, many mines have around 6% or less rare earths in their ore.

No mines for rare-earth elements currently operate in SA, but the government has confirmed the presence of yet-to-be tapped tech minerals.

“SA is certainly on par with any other country that would lay a claim to being able to supply rare-earth elements to meet this increasing demand,” said mineralogist Deshenthree Chetty at Mintek, a government mineral and metallurgy research department.

She added that it would be “a great deal for our country to be able to supply, and we are in a position to do so, as long as those markets are favourable”.

“We have an abundance of rocks in which rare-earth elements are found,” Mosa Mabuza, CEO of the Council for GeoScience, which surveys mineral deposits, said.

Steenkampskraal has secured all the licences required to start mining. It plans an initial production of 2,700 tons a year once funding of $50m has been secured, with further plans to expand.

But the road to global success risks being rocky for the South Africans, cautioned Diego Oliva-Velez, a commodities analyst with Fitch Solutions in London.

The rare-earth sector in SA is largely undeveloped and could easily fall behind the US, Australia, India, Russia and Vietnam which all have “significantly larger proven reserves of rare earths”, he said.

Steenkampskraal’s reserves are also mostly so-called “light rare earths”, which are comparatively abundant.

“Steenkampskraal will have to compete with many other producers in this area globally,” said Oliva-Velez.