South Korea's state-run Korea Resources Corporation (KORES) has reached a definitive agreement to take part in a large-scale rare earth element development project in South Africa owned by Frontier Rare Earths Ltd.
Under the agreement, signed with the Toronto, Ontario-based miner in Johannesburg on Thursday, KORES said it would secure a 10 percent interest in the Zandkopsdrift rare earth element mining project in South Africa's western Namaqualand region.
China accounts for more than 95 percent of the world's output of the 17 rare earth metals, which are crucial for global electronic gadget production and the defence and renewable-energy industries.
The hunt for rare earths hit a high point at the end of last year when China threatened to reduce its yearly export quota.
As prices for the rare earth elements started to rise, so did interest in reviving mines outside of China that closed years ago when they no longer were cost-effective to operate.
The KORES statement said the agreement included an optional condition allowing KORES to acquire a stake of up to 30 percent in the Zandkopsdrift project once production starts as scheduled in 2016.
KORES expects an annual production of 20,000 tonnes of rare earth materials from the mine. Commercial reserves in the mine were estimated at about 39 million tonnes, according to KORES.
"The agreement has now wrapped up a long-discussed deal on the Zandkopsdrift project," a KORES spokesman said. He declined to give further details, including financial details.
In July, KORES and Frontier signed a non-binding agreement on the Korean party's participation in the South African project. KORES also said it had signed a memorandum of understanding with five other domestic companies - Hyundai Motor Co, Samsung C&T Corp, GS Caltex Corp, Daewoo Shipbuilding & Marine Engineering Co Ltd and Aju Corp - to take part in the project.
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