Rainbow’s Neo Deal Sets Phalaborwa Offtake Terms Ahead of Feasibility Study

Rainbow Rare Earths has brought an experienced rare-earth separator into the design of its Phalaborwa project in South Africa, agreeing a proposed offtake and technical partnership with Neo Performance Materials. The arrangement addresses a specific processing challenge: turning rare-earth material recovered from legacy fertilizer waste into products that can be separated to commercial specifications. It does not yet commit Neo to a binding purchase contract or provide construction finance.

Under the memorandum announced September 24, Neo would receive offtake rights to 40% of Phalaborwa's annual production of separated neodymium-praseodymium (NdPr) oxide, at greater than 99% purity, and 65% of its mixed samarium-europium-gadolinium and heavy rare-earth carbonate, known as SEG+. The latter includes dysprosium and terbium, used in high-performance permanent magnets. Rainbow said pricing would be negotiated on arm's-length commercial terms referenced to relevant rare-earth indices. 12

The structure matters because the two products require different downstream capabilities. Rainbow intends to produce separated NdPr oxide at Phalaborwa, but its mixed SEG+ stream still requires further separation to isolate individual elements. Neo already operates rare-earth separation facilities in Estonia and has a European magnet-manufacturing business. The companies will also consider toll processing the remaining 35% of SEG+ at Neo's facilities, potentially returning separated dysprosium, terbium and yttrium to Rainbow for sale. That option is under consideration, not an executed processing agreement. 1

Neo will provide design input and technical support for Phalaborwa's final solvent-extraction circuit. Test work using Rainbow's rare-earth solution is underway in Estonia, to be followed by a confirmatory integrated pilot-scale separation campaign in Johannesburg. Those steps are commercially important: solvent extraction must achieve the required purity, recovery and separation selectivity at scale, while keeping reagent consumption and operating costs within the assumptions used in the project economics. Successful laboratory work alone does not demonstrate continuous commercial performance. 12

Phalaborwa's proposed feedstock is phosphogypsum held in surface stacks from historic fertilizer production rather than freshly mined hard-rock ore. Avoiding new mining and primary comminution could remove some conventional mine-development costs, but the project still needs reliable leaching, impurity management, separation, residue handling and environmental compliance. Rainbow holds an 85% interest in the project, with an option relating to the remaining stake. 3

For investors, the immediate significance is a more defined technical partner and potential customer for both planned product streams. It is not yet evidence of a financed or commissioned plant. Rainbow plans a prefeasibility study in the fourth quarter of 2026, incorporating initial separation test work, followed by a definitive feasibility study in the first half of 2027. The December 2024 interim study's estimated upfront capital expenditure was $326.1 million; updated economics remain to be published. Financing, permitting, pilot results and definitive offtake documentation are therefore the next measurable milestones. 23

The agreement is distinct from Rainbow's earlier engineering work to simplify Phalaborwa's separation flowsheet. That work reduced process complexity; the Neo memorandum now proposes who will help complete the separation design and take specified shares of the output. Whether the arrangement materially improves project bankability will depend on binding terms, verified recoveries and updated capital and operating costs, rather than the headline offtake percentages alone. 23