Rainbow Mining Burundi

Rainbow Mining Burundi was a public-private mining enterprise established to develop and operate the Gakara rare-earth project in Burundi. The company was formed as a subsidiary of Rainbow International Resources, a British Virgin Islands company wholly owned by Rainbow Rare Earths, with the Burundian state retaining a minority interest representing its ownership of the country’s subsoil resources. Its principal asset was the Gakara rare-earth deposit, located approximately 20 kilometres south-southeast of Bujumbura in the Kibaran Fold Belt. The project was notable for the reported concentration and composition of its ore. The mineralisation occurs in narrow veins dominated by bastnäsite, with monazite also present. A December 2018 JORC-compliant resource estimate identified more than 1.2 million tonnes of ore at the Kiyenzi area, with an average total rare-earth-oxide grade of about 22%. Smaller deposits at Gasagwe, Murambi South and Gomvyi Centre were reported to contain approximately 12,000 tonnes of high-grade ore grading around 55% total rare-earth oxides. The deposit contained a high proportion of magnet rare earths, particularly neodymium and praseodymium, which are used in permanent magnets for electric motors, generators, wind turbines and electric vehicles. Rainbow received an exploration permit for the Gakara area in May 2011. In April 2015, Rainbow International Resources obtained a 25-year exploitation permit and mining agreement covering roughly 39 square kilometres. Commercial development progressed through open-pit bench mining, which began at Gasagwe in September 2017 and at Murambi during the third quarter of 2018. A processing plant was constructed near Kabezi in 2018, between Lake Tanganyika and the RN3 road. The plant used crushing and gravity separation to produce a high-grade rare-earth concentrate, reported at an average of approximately 58.3% total rare-earth oxides. The concentrate was initially transported by road to Mombasa, Kenya, and later moved by truck to Dar es Salaam for shipment to China. Thyssenkrupp Materials Trading agreed to a 10-year distribution and offtake arrangement covering up to 10,000 tonnes of concentrate, beginning in January 2018. The company’s output remained well below its long-term target. It exported approximately 350 tonnes in 2019 and 500 tonnes in 2020, compared with a stated target of 5,000 tonnes per year. Earlier operating information reported 575 tonnes exported by 30 June 2018 and 476 tonnes sold at an average price of US$2,263 per tonne. The project became embroiled in a dispute over the economic terms of the mining arrangement and the value attributed to exported concentrate. In April 2021, Burundi’s Ministry of Hydraulics, Energy and Mines temporarily suspended permission to export Rainbow’s concentrate while the parties reviewed the agreement. Government officials argued that foreign mining contracts did not provide Burundi with a sufficient return and sought renegotiation. President Évariste Ndayishimiye subsequently ordered foreign mining companies to suspend their activities in July 2021. Rainbow said it would continue exploration, trial mining and processing while the issue was being addressed, but by August 2021 almost all staff had reportedly been placed on suspension. Rainbow Rare Earths later concluded that the Gakara project offered a lower return than its other opportunities. It made no further investment in the project, and Gakara’s net assets were fully impaired to nil in the parent company’s accounts for the year ended 30 June 2023. The available material does not establish whether Rainbow Mining Burundi was formally dissolved, permanently closed, or retained in a dormant or suspended legal state. Its documented operating history therefore ends with the suspension of activities and subsequent impairment of the project.

Rainbow Mining Burundi developed the Gakara rare-earth project in Bujumbura Province under a public-private structure involving Rainbow International Resources and the Government of Burundi. Rainbow was granted an exploration permit covering rare earths and associated minerals around Gakara in May 2011. In April 2015, its wholly owned subsidiary Rainbow International Resources received a 25-year exploitation permit and mining agreement. Rainbow Mining Burundi SM was subsequently structured with Rainbow International Resources holding 90% and the Burundian state holding 10%. The mining licence covered approximately 39 square kilometres. The project’s base camp was located in Matambu village in Gasenyi Commune, while the Gakara deposit lay about 20 kilometres south-southeast of Bujumbura. The ore bodies occur in narrow veins within the Kibaran Fold Belt and are principally associated with bastnäsite, with secondary monazite. The resource was considered unusually attractive because of its high grade and substantial proportion of magnet rare earths, including neodymium and praseodymium. Open-pit bench mining began at Gasagwe in September 2017 and at Murambi in the third quarter of 2018. A processing facility near Kabezi was built in 2018 to crush ore and separate the heavy mineral fraction by gravity. The resulting concentrate averaged about 58.3% total rare-earth oxides. The operation exported concentrate through regional transport corridors, first using the port of Mombasa and later routing material by truck to Dar es Salaam before shipment to China. A 10-year distribution and offtake agreement with Thyssenkrupp Materials Trading began in January 2018 and covered up to 10,000 tonnes of concentrate. Production remained at an early and relatively limited scale. Information available for June 2018 recorded 575 tonnes of concentrate exported and 476 tonnes sold. Reported exports were about 350 tonnes in 2019 and 500 tonnes in 2020, compared with a target of 5,000 tonnes annually. The project reportedly employed more than 250 permanent workers and had attracted approximately US$6 million in investment by 2021. The central dispute concerned the return received by Burundi from the project and the method used to value rare-earth concentrate. A 2019 SRK Consulting report commissioned by the World Bank at the government’s request examined concerns about concentrate pricing. The valuation approach deducted transport and processing expenses from the final value of the contained rare earths, and a 4% government share of that value was reportedly agreed. Burundian officials later argued that the existing arrangements did not adequately benefit the country and initiated a broader review of foreign mining contracts. In April 2021, the government temporarily suspended Rainbow’s export permission. Rainbow stated that it intended to continue exploration, trial mining and processing while negotiations continued. Gilbert Midende, the company’s managing director and a former Burundian mines minister, retired on 1 May 2021 for health reasons. In July, President Évariste Ndayishimiye ordered foreign mining companies to suspend mining operations. By August, almost all employees connected with the Rainbow operation had reportedly been suspended. The project did not return to normal commercial production in the documented period that followed. Rainbow Rare Earths concluded that Gakara offered a weaker economic return than alternative projects and made no additional investment. The parent company fully impaired Gakara’s net assets in its accounts for the year ended 30 June 2023. The available sources do not confirm a formal liquidation or final legal dissolution of Rainbow Mining Burundi, so its present corporate status remains uncertain.

• 2023

  Gakara assets fully impaired

  [1]Rainbow Mining Burundien.wikipedia.org

  Rainbow Rare Earths recorded a full impairment of the Gakara project’s net assets in its accounts for the year ended 30 June 2023.

• 2021

  Export permission suspended

  [1]Rainbow Mining Burundien.wikipedia.org

  The Burundian government temporarily suspended permission to export Rainbow’s concentrate while reviewing the project’s contractual and revenue-sharing arrangements.

• 2018

  Mining expands and Kabezi plant operates

  [1]Rainbow Mining Burundien.wikipedia.org

  Mining began at Murambi during the third quarter, while a crushing and gravity-separation plant near Kabezi supported production of rare-earth concentrate.

• 2018

  Offtake and distribution agreement begins

  [1]Rainbow Mining Burundien.wikipedia.org

  Thyssenkrupp Materials Trading began a 10-year distribution and offtake arrangement covering up to 10,000 tonnes of concentrate.

• 2017

  Open-pit mining begins at Gasagwe

  [1]Rainbow Mining Burundien.wikipedia.org

  Open-pit bench mining commenced at the Gasagwe deposit in September.

• 2015

  Exploitation agreement issued

  [1]Rainbow Mining Burundien.wikipedia.org

  Rainbow International Resources received a 25-year exploitation permit and mining agreement covering approximately 39 square kilometres.

• 2011

  Exploration permit granted

  [1]Rainbow Mining Burundien.wikipedia.org

  Rainbow received permission to explore for rare earths and associated minerals around the Gakara area in Bujumbura Province.

A specialist upstream rare-earth mining venture focused on high-grade bastnäsite- and monazite-bearing ore, particularly magnet rare earths such as neodymium and praseodymium.

• Rare-earth mining and mineral processing · 2018

  Gakara rare-earth concentrate

  Rainbow Mining Burundi’s principal commercial product was a high-grade rare-earth mineral concentrate produced from ore at the Gakara project. The Kabezi facility used crushing and gravity separation rather than full chemical separation, producing concentrate reported to average approximately 58.3% total rare-earth oxides. The feedstock was associated mainly with bastnäsite and also contained monazite. Its economic interest centered on magnet rare earths, especially neodymium and praseodymium, which are used in permanent magnets for motors, generators, wind turbines and electric vehicles. The concentrate was exported for further processing outside Burundi.

• 2023

  Cease further investment in GakaraStrategy

  Background

  Rainbow Rare Earths assessed the Gakara project as offering a lower return than its other development opportunities after operations had been suspended.

  Action taken

  The group made no further investment in Gakara and fully impaired the project’s net assets.

  Aftermath

  The project’s carrying value was reduced to nil in the parent company’s accounts for the year ended 30 June 2023. The available material does not establish whether the Burundi subsidiary was formally dissolved.

  Gakara project net asset carrying value. nil (Year ended 30 June 2023)

  Source

• 2021

  Continue limited technical activity during export suspensionStrategy

  Background

  Burundi temporarily suspended permission to export the company’s concentrate while the government reviewed the mining agreement and the value-sharing mechanism.

  Action taken

  Rainbow stated that it would continue exploration, trial mining and processing while the dispute was being resolved.

  Aftermath

  The wider suspension of foreign mining activity in July 2021 was followed by the placement of almost all staff on suspension and the cessation of further investment in the project.

  Source

1. 1Rainbow Mining Burundien.wikipedia.org