The Makuutu heavy rare earth project in Uganda has received a major boost as the Ugandan government has granted it the first large-scale mining license under the new Mining Act of 2022. The project, owned by Rwenzori Rare Metals, is one of the world’s largest and most advanced development-ready heavy rare earth element assets, with the potential to supply critical materials for the energy transition, advanced manufacturing, and defense sectors.
The large-scale mining license (LML) 00334 was officially signed on January 17 at a ceremony in Kampala, by the Ugandan Minister of Energy and Mineral Development (MEMD) Dr Ruth Nankabirwa Ssentamu. The license covers the central Makuutu tenement, where the majority of the project’s resources are located. The license has a term of 25 years and is renewable for another 25 years, subject to meeting the license conditions and obligations.
The award of the license is a significant milestone for the project and its majority shareholder, ASX-listed Ionic Rare Earths (IonicRE), which announced an agreement in December 2023 to increase its stake in Rwenzori and the Makuutu project from 60% to 94%. IonicRE is also in discussions with partners on acquiring the remaining 6% ownership.
IonicRE MD Tim Harrison said the formal mining license award was a testament to the strong support received from the Ugandan government and the local communities for the development of the project towards operations. He said the license would enable discussions with potential strategic and supply chain partners to progress to the next stage and bring Makuutu and a new supply of magnet and heavy rare earths to market.
“With this award, and discussions underway with potential partners, the project is aiming for a final investment decision later this year, and the first product to customers in early 2026,” Harrison said.
He added that progress continued to be made at Makuutu’s demonstration plant, which was critical in de-risking the commercialization of the project through the production of value-added, mixed rare earth carbonate for the company’s partners to qualify and validate.
The Makuutu project has a mineral resource estimate of 315 million tonnes at 650 parts per million total rare earth oxides (TREO), of which 48% are heavy rare earth oxides (HREO). The project also has a high proportion of neodymium and praseodymium (NdPr), which are essential for the production of permanent magnets used in electric vehicles, wind turbines, and other high-tech applications.
The project is expected to produce about 4 800 t/y of TREO, of which 1 600 t/y are HREO and 600 t/y are NdPr, over a mine life of 31 years. The project has a pre-tax net present value of $ 1.4 billion and an internal rate of return of 35%, based on a pre-production capital expenditure of $ 377 million.
The Makuutu project is one of several rare earth projects in Africa that are attracting global attention as the demand for these strategic minerals grows amid the transition to a low-carbon economy. According to the International Energy Agency, the global demand for rare earths could increase by more than seven times by 2040 under a scenario consistent with the Paris Agreement goals.
Other African countries that are developing rare earth projects include Malawi, Tanzania, Angola, and Namibia. The continent is seen as a potential alternative source of rare earths to China, which currently dominates the global supply and consumption of these critical minerals.
The Ugandan government has recognized the importance of developing its mineral sector as a key driver of economic growth and diversification. The Mining Act of 2022 was enacted to provide a conducive legal and regulatory framework for the exploration and exploitation of the country’s mineral resources, as well as to attract local and foreign investment in the sector.
The award of the first large-scale mining license to the Makuutu project is a clear indication of the government’s commitment to support flagship projects that can generate revenue, create jobs, and foster social and environmental benefits for the country and its people.
Source: Mining Weekly
