Harena Resources builds bridges into the USA, as feasibility study for Ampasindava nears completion

Ivan Murphy has been on his travels lately.

In his capacity as chairman of Harena Resources (HREE) , he’s been spending significant amounts of time in Washington DC building up relationships with potential US customers, including the US government. And recently, he was also a noted speaker at the African Down Under conference in Perth, Australia’s biggest Africa-focussed event.

Murphy’s busy schedule is reflective of the status of Harena’s Ampasindava rare earths project in Madagascar. Harena, Murphy is keen to point out, is not an exploration company. Rather, at Ampasindava it has an established asset with a well-defined 600,000 tonne resource and a pre-feasibility study that will be submitted to the relevant government ministry within the next few weeks. 

At Africa Down Under Murphy was travelling with a delegation representing the Madagascan government, so relations at the official level are likely to be strong when it comes to permitting. All told, Ampasindava is a project that isn’t far away from an investment decision and, accordingly, the initiation of construction.

In the meantime, Harena will move forward with the a lab and a pilot plant so that once the green light for the wider project is given it will be able to hit the ground running.

But what is it about Ampasindava that’s taken it this far, and which will likely take it all the way into production within the near future? 

Put simply, there are two intertwining factors – the global context and the quality of the asset itself.

“The Chinese control rare earths,” says Murphy, “because they have ionized clays which are easy to mine, easy to process, separate and treat. We’re fortunate enough to have an ionic clay project which allows us to be competitive at that level.”

So, Ampasindava is competitive in a world that’s become sensitive to the supply-demand dynamics of rare earths, but it stands completely independent of the world’s dominant supplier, China.

It’s that independence which Murphy regards as a key selling point. Situated right on the northern coast of Madagascar, Ampasindava is well outside of any Chinese zone of influence. Its position on the coast and in the vicinity of major shipping terminals means that when product is loaded and shipped, it’s next port of call can be some city on the US Atlantic coastline.

That accessibility to the US market is one of the key messages that Murphy is driving home on his regular visits to Washington DC. 

“A lot of US government agencies have made investments in rare earths,” he points out. And given the unique nature of Ampasindava, it’s quite easy to see why such an agency might consider putting up development finance. 

But, given the nature of the rare earths market, funding from the US is all about supply these days, not just return on investment. The idea would be for the US to lock in supply from Ampasindava in return for a loan to get the project built in the first place.

This is a fairly standard way to proceed.

But the headlines about rare earths have become more frequent in recent years, and given the frenetic nature of global relations at the moment, it may be that decisions end up being made much faster than they might otherwise have been. 

As far as Harena’s plans for Ampasindava go, such a context is all to the good.

True, the company still needs to upgrade the licence and attain the necessary waivers to start building a pilot plant. But that’s well in hand. 

And, all told, from the time the relevant licences are granted Murphy reckons Ampasindava can be in production within 12-to-18 months. 

As it stands, the life of mine is set to run for about 15 or 20 years, with production likely to be around 30,000 tonnes of total rare earth oxides per year. These numbers will be firmed up in the coming weeks, at which point interested parties in the US will really start getting down to the business of crunching hard data. 

In the meantime, it’s unlikely that Murphy will slow the pace of his schedule. Harena is a young company as far as its London listing is concerned, but it’s already achieved a great deal in a short time. If the company keeps this pace up, a great deal more will be achieved before the year is out.