Global magnet crisis sparks rush for SA's rare Earth treasure - John Matisonn

Key topics:Steenkampskraal mine to produce rare earths by 2026 amid global shortageChina’s export ban triggers shutdowns in US, Europe, and Japan car plantsHigh-grade SA mine draws investor interest from Europe, Canada, and US.Sign up for your early morning brew of the BizNews Insider to keep you up to speed with the content that matters. The newsletter will land in your inbox at 5:30am weekdays. Register here.Support South Africa’s bastion of independent journalism, offering balanced insights on investments, business, and the political economy, by joining BizNews Premium. Register here.If you prefer WhatsApp for updates, sign up to the BizNews channel here.The auditorium doors will open for BNIC#2 on 10 September 2025 in Hermanus. For more information and tickets, click here..By John Matisonn.Listen to this story instead:.South Africa has substantial deposits of rare earths needed to make magnets for EVs and other products that are now in such short supply that car factories in the US, Europe and Japan have shut down production lines.The rare earths mine Steenkampskraal, 381 km north of Cape Town on the N7, has one of the highest grades of rare earth elements used in these magnets and one of the lowest production costs in the world.Operated by Anglo American from 1952 to provide thorium for nuclear fuels in Britain, it closed in 1963 because the market was limited. With new technologies and new uses, the 1960 market of 5,000 tonnes ballooned to 240,000 tonnes by 2020.After several changes of ownership it was relicenced in 2010, reactivated in 2019, and in 2024 it was taken out of care and maintenance. R1billion has already been invested, minor upgrades to infrastructure with ablution blocks, security, are being completed. Steenkampskraal CEO Graham Soden said he expects to begin production in 2026. The crisis in global supply is caused by China’s decision to restrict exports on April 4, two days after US President Donald Trump’s “liberation day”, when he launched his tariff war.China, which provides 90% of the world’s production, suspended almost all exports of seven kinds of rare earth metals, as well as very powerful magnets made from three of them.It was these rare earths that South African born billionaire Elon Musk and Commerce Secretary Howard Lutnick referred to in the closed door meeting at the White House last month, and it appears to be the most urgent reason Trump has tried to reopen negotiations with China.Last week, Ford temporarily closed its Ford Explorer sport utility vehicle factory in Chicago for a week for lack of magnets. Several European auto parts plants and production lines have already been shut down, and Japanese automaker Suzuki Motor suspended production of its Swift car due to China’s rare earth curbs, Reuters reported. On Thursday Trump and Chinese president Xi spoke for the first time since the US president’s inauguration on January 20, after a stand-off because the Chinese leadership felt disrespected by the sudden tariff cut and Trump’s announcement that he expected all the countries he tariffed to approach the US with offers to resume full trade relations.Xinqua News Agency reported that the call had taken place, but offered no details.Trump is especially concerned that China did not resume rare earths supplies after agreement was reached on May 12 date to cut the tariff levels back to 30% and restore all non-tariff barriers to trade for 90 days. China has said that the rare earths ban is not part of its reciprocal punishment, because supplies have been restricted to all countries, not just the US. In the White House meeting, Musk and Lutnick both referred to the need for rare earths for magnets, but it does not seem to have discussed access to Steenkampskraal’s output, which will not be producing soon enough to relieve the current global pressure.In a podcast interview with Linda van Tilburg, Steenkampskraal CEO Graham Soden said companies in Norway, Germany, France and Canada had contacted him and some supply contracts have been signed. He said he was “surprised that US interest had been low, but said recently some US end users have been in touch. He said the business was close to fully funded, but if an end user isolates a specific product stream that might need expanded capacity, there is some equity left as well as debt finance. The value of the company “is skyrocketing”, Soden said.Soden said among the advantages his mine enjoyed was its high concentration of thorium, the shallowness of the mine at only 60 metres, and an established transport system.He foresaw output increasing to 1.1% of global production, with an average ore grade of 14.5%, which is the highest in the world. Tests showed the mine will process 12 tonnes of ore to produce 1 tonne of rare earths, compared to a global average of 50 tonnes for 1 tonne of rare earths.The main consumer of these seven metals is the car industry, which uses a lot of heat-resistant rare earth magnets. But these elements are also needed to manufacture semiconductors, medical imaging chemicals, robots, offshore wind turbines and a wide range of military hardware.They are used in smart phones, speakers, wind turbines and electric windows, batteries, computers, cell-phones, TV sets and air-conditioners. Radium is used in certain cancer treatments.Rare earth magnets are up to 15 times as powerful as iron magnets of the same weight. They are essential for the dozens of small electric motors found in today’s cars. Motors in brakes, steering and many other systems all rely on rare earth magnets. A single luxury car seat may include 12 rare earth magnets for the motors that adjust it, and electric cars have additional rare earth magnets for the motors that turn their wheels.

Global magnet crisis sparks rush for SA's rare Earth treasure - John Matisonn

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