Pensana PLC (OTCMKTS: PNSPF) (FRA: 48W) got a major investment this week. An anonymous buyer purchased 95 million shares for US$100 million.
The neodymium-praseodymium (NdPr) miner and processor will be using the capital to keep operations running smoothly at its vast Longonjo operation in Angola, Africa.
“Funds will be used to maintain the Longonjo mine development ahead of the U.S. ban on use of Chinese-origin rare earth magnets/materials in U.S. weapon systems from 2027,” explained Chairman Paul Atherley in the London Stock Exchange announcement, “and to provide an alternative source for civilian use of NdPr following the announced 25 per cent tariff on rare earths from China starting in 2026.”
Furthermore, it will propel new drill campaigns aimed at extending the life of mine by identifying new targets, assist with production of heavy rare earth oxides and support the company’s upcoming listing on the Nasdaq.
Chinese rare earth materials will soon be banned in all Department of Defense weapon systems. This upcoming national security measure will also prohibit the usage of rare earths produced or refined in Russia, Iran and North Korea. The DoD’s National Defense Industrial Strategy from last year aims to achieve a fully domestic “mine-to-magnet” supply chain within the next couple of years.
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Ban to be implemented in phases
Full prohibition won’t begin until in 2027. Affected materials will include heavy rare earths samarium, terbium and dysprosium. These three are essential components in rare earth magnets. Also, tungsten heavy alloys and tantalum based compounds.
Reducing reliance on China for these heavy rare earths is particularly difficult because the Americans currently have no national separation facilities.
Additionally, Pensana seeks to help provide an alternative source of light rare earths neodymium and praseodymium as a new tariff looms. The upcoming 25 per cent U.S. tariff on rare earth imports from China, set to take effect early next year as part of escalating trade measures, will drive up costs for American manufacturers in defense, electric vehicle and tech sectors by 15 to 30 per cent due to China’s near-monopoly on processing these critical minerals.
While this could accelerate domestic production investments by companies like MP Materials Corp (NYSE: MP) (FRA: 55H0), short-term supply shortages and retaliatory Chinese export curbs risk production halts and broader supply chain disruptions for major companies such as Tesla Inc (NASDAQ: TSLA), Boeing Co (NYSE: BA) (ETR: BCO), and NVIDIA Corp (NASDAQ: NVDA) (ETR: NVD).
Longonjo is fully licensed and permitted
Beginning in 2027, the open pit rare earths operation will enter the commercial production phase. Its lifespan will extend for approximately 20 years.
Prior to the latest equity financing, Pensana secured US$268 million for the project’s development. Capital was provided by Africa Finance Corporation, Absa Group Ltd (OTCMKTS: AGRPY) and the Angolan Sovereign Wealth Fund earlier this year.
Material mined at Longonjo will be capable of supporting the production of more than 10,000 tonnes of rare earth permanent magnets. It is one of the world’s largest rare earth projects. The mine will position Pensana as one of the top international suppliers outside of China. Atherley also expects Longonjo to attract attention from offtake partners looking to reduce reliance on the Chinese.
The Angolan Sovereign Wealth Fund holds a 10 per cent stake in Pensana’s majority-owned project. Other investors retain a 6 per cent interest.
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