Rainbow Rare Earths (LON: RBW) is a slight oddity in mining stocks. For it's not actually trying to go mining for anything at all. Instead, the aim is to process a waste pile from previous activity and thereby be able to produce rare earths. That imposes a certain limit on how large Rainbow can get - the size of that old waste pile. On the other hand there are many waste piles around of the same material so it might be possible to extend operations over time.
The really basic thing to understand here about Rainbow is that it's doing something sensible. Note that “sensible” and “definitely makes a profit” are not the same thing, although the first is often a good guide to the second. But the logic of what they're trying to do works. Old fertiliser mining leads to vast piles of phosphogypsum lying around the countryside. This is known to contain rare earths. So, given that the material is already above ground, already ground into fine pieces, it is possible to extract those rare earths. Simple, right?
Well, not quite, because that same material also contains thorium, uranium and radium. But, as it happens, a process which extracts the rare earths will also extract those. Converting the phosphogypsum into gypsum which can be sent off for use in plasterboard. This leaves us with a rare earth concentrate and the radioactive are easy enough to extract from that. It's absolutely vital that the local law then allows sensible disposal of those radioactive into storage. But assuming that (and in South Africa the law is sensible) then the plan should work.
Rainbow Rare Earths price from London Stock Exchange
The next stage is then to convert that RE concentrate into the individual rare earths, which is to be done in Florida. This is important, that location.
The latest news is that Rainbow's pilot plant is about to operate. Few within the business expect much difficulty here.
The entire process is logical, accords with what is known about geology and chemistry and so on. The one hang up is the local rules about the disposal of those radioactives. Not about doing it safely, that's well known, but does local law get hysterical about anything radioactive or not?
We'll find out whether this really works when we see the numbers from the pilot plant of course. But after that there's a big prize available for Rainbow. Risky, politically driven, but it is there. This is why Florida matters. For central Florida is simply covered with mountains - literally, the piles are the highest points of central and South Florida - of exactly this same phosphogypsum. And if the process can be proven in Soth Africa then perhaps there might be something that can be done with those piles too?
