Rainbow Rare Earths has selected Neo Performance Materials to design the separation circuit at its Phalaborwa rare earths project in South Africa, handing Neo offtake rights to future output. The project processes legacy phosphate-fertiliser waste already sitting at the surface.
At a glance
- Rainbow Rare Earths has chosen Neo Performance Materials to design the final separation circuit at its Phalaborwa rare earths project in South Africa.
- Neo will receive offtake rights to 40% of annual neodymium-praseodymium oxide output and 65% of mixed heavy rare earth carbonate.
- Phalaborwa's 35-million-tonne resource sits in legacy phosphate-fertiliser waste already at the surface, avoiding the need for new mining.
Background
Phalaborwa's rare earths sit inside phosphogypsum, a gypsum byproduct left over from decades of phosphate fertiliser production, already piled at the surface rather than buried underground. A separation circuit is the chemical plant that splits a mixed rare earth concentrate into individual elements, such as neodymium and praseodymium, that magnet makers actually buy. Rainbow Rare Earths (LSE: RBW) is a London-listed developer also working on projects in Brazil and Burundi.
What happened
Rainbow Rare Earths has selected Neo Performance Materials (TSX: NEO) to design the final separation circuit at its Phalaborwa rare earths project in South Africa, under a memorandum of understanding. In exchange, Neo secures offtake rights to 40% of Phalaborwa's annual separated neodymium-praseodymium oxide output and 65% of its mixed heavy rare earth carbonate, priced against standard rare earth indices.
Phalaborwa holds a 35-million-tonne resource grading 0.44% total rare earth oxides, contained in phosphogypsum stacks left over from historic phosphate fertiliser production. Because that material already sits at the surface, Rainbow does not need to open a new mine to reach it.
Why the waste-stack source matters
Neo chief executive Rahim Suleman said the material is already at the surface and requires no new mining. That gives the project potential for a lower development risk profile than a conventional rare earth mine. Test work on Phalaborwa material is already under way at Neo's facility in Narva, Estonia, where Neo runs the only integrated neodymium magnet plant outside China. The two companies plan a further pilot-scale processing campaign in Johannesburg.
What it means
Rainbow expects to complete a prefeasibility study for Phalaborwa in the fourth quarter of 2026, followed by a definitive feasibility study in the first half of 2027. An earlier interim economic study put initial capital costs at $326.1 million and after-tax net present value at $610.9 million. That study assumed the plant would process 2.2 million tonnes of material a year over 16 years.
Locking in Neo as both technical partner and buyer gives Rainbow a customer for its output before financing is arranged. That addresses the two biggest hurdles rare earth developers outside China face: building separation technology, and finding a buyer willing to pay outside China's price-setting system.
Our read
Outlook: neutral. A single project's offtake and processing deal does not move globally traded neodymium-praseodymium prices on its own, but it strengthens the case for South Africa as a non-China rare earth separation source that magnet makers are counting on.
What to watch
- Rainbow Rare Earths' prefeasibility study for Phalaborwa, due in the fourth quarter of 2026.
- Results of the integrated pilot-scale processing campaign planned with Neo in Johannesburg.
- Whether Rainbow secures project financing after the definitive feasibility study, expected in the first half of 2027.
For information only, not investment advice.
Neodymium price in India
metalscost.com India reference price as of 2026-10-03.
Detailed analysis
Timeline
- 2026-09-25: Rainbow Rare Earths announces the separation-circuit agreement with Neo Performance Materials for Phalaborwa.
Technical view
Price is trading above both its 20-period and 50-period moving averages, a bullish alignment.
Computed from metalscost.com's own stored price history.
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