Rare Earths Discovery in Madagascar Could Loosen China's Global Monopoly

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Written by Richard Finlayson, Senior International Editor for Industrial Info Resources (Sugar Land, Texas)--An Indian company announced this week that it has discovered what could be a major rare earth minerals resource in Madagascar, off the southeastern coast of Africa. For information on the global supply of rare earth minerals, see February 9, 2011, article - Mongolia and California's Molycorp to Challenge China's Rare Earth Market Grip.

The Varun Industries Group (BSE:532917) (Mumbai) said that it has so far discovered a total of 266.8 million tons of heavy minerals in 10 exploratory and mining lease blocks. This type of heavy mineral ore deposit is a source of zirconium, titanium, thorium, tungsten, rare earth elements, industrial grade diamonds, sapphire, garnet, and sometimes precious metals and gemstones. Varun sees the Madagascar rare earth discovery making a significant difference to the balance of global supply, which is crucial to high-end technology products and defense applications. Varun Industries has interests in steel, minerals and energy. For further market information, see June 22, 2011, article - Rare Earth Prices Double in June and Soar 500% in 2011.

The group's subsidiary Varun Mines & Minerals Limited (Mauritius) has already acquired 1,011 blocks in Madagascar and is acquiring another 100 blocks that are reported to have major reserves of uranium and thorium, as well as traces of gold.

The company's initial exploration on the island was for thorium, gold minerals and oil, when it acquired 6,950 square kilometers on 99 year leases. Ten of the blocks were for heavy minerals with the rest reserved for thorium and gold. Varun's vice president for exploration said, "The initial survey has thrown up very high-grade deposits of heavy mineral concentrations of 23% to 39%. Most of the current mining is being done in ore with 5% to 7% concentration."

Gold, a byproduct of the company's uranium and thorium mining projects, has also shown a high content of 12 grams per ton. Varun has gone into a partnership with Torian Resources NL (Hornsby, Australia), which will cover 75% of the gold mining costs.

The 10 blocks, covering 62.5 square kilometers in the island's Anosy region, have indicated deposits of titanium minerals that include 221 million tons of ilmenite; 1.84 million tons each of rutile and leucoxene; 1.84 million tons of zircon; 9.2 million tons each of garnet and spinel; 2.76 million tons of sillimanite; and 9.2 million tons of rare earth containing monazite.

Days before the Varun announcement, University of Tokyo scientists had published an article in Nature Geoscience that catalogued rare earth deposits on the Pacific Ocean floor, which have been deposited at the rate of less than half a centimeter per thousand years for millions of years. The scientist reported a 1-kilometer square hot-spot area off the Hawaiian coast that could hold 25,000 tons of rare earths. The total quantity of these minerals on the ocean floor may exceed the 110 million tons in land-based deposits, which have been confirmed by the U.S. Geological Survey. For news on the global rare earth market, see July 6, 2011, article - Japan Further Diversifies Rare Earth Supplies Through Agreements, Discovery.

Although the deposits could be removed by diluted acid leaching rinsing in a matter of hours, the prospects for commercial ocean mining at depths of four to five kilometers presents major physical and technological hurdles, which, say scientists , could make retrieval of the mineral-bearing mud impractical for the foreseeable future.

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