American company searching for rare-earth elements and rare metals in Kazakhstan reports hopeful results

Cove Capital, an American company searching for rare-earth elements and rare metals in Kazakhstan, has decided to expand its drilling program in the East Kazakhstan region due to the first promising results, according to Managing Partner Pini Althaus.

KAZ Critical Minerals, a subsidiary of American KAZ Resources (controlled by Cove Capital), has been exploring rare metals at the Gremyachinsky field in the Ulan district of the East Kazakhstan region. Even though Kazakhstani geologists reviewed the field in 2001-2003 to update the national geological map, they didn’t conduct a detailed geological exploration at the time.

«We have 11 concessions in this area in East Kazakhstan. They contain a number of critical minerals including lithium, beryllium, tantalum, rhodium, cesium, rubidium and tin. These are not just materials that you use for the green revolution, as we call it, or electric vehicles, but these are very strategic materials used for defense, advanced manufacturing, etc.,» Althaus explained.

As he noted, the company has access to a massive amount of old Soviet geological data about the field. It is mostly «correct and credible,» Althaus pointed out.

«In fact, at times we see that we can actually have bigger discoveries because of newer technology and newer ways of going about exploration. We can get higher recovery rates in production. So we’re essentially taking the historical reports and doing a lot of validation work to ensure that what is reported is there and to bring it into modern-day compliance standards as well, because we cannot use historical resources in modern-day compliance for reporting purposes, investment purposes, etc.,» Althaus underlined.

According to the Cove Capital representative, the company has been drilling in the field since late May and has already completed work on six wells. He highlighted that the results of the drilling are extremely promising. He also expressed hope that the remaining five concessions would report the same results.

«In the next couple of weeks, we’ll sign a new drilling contract and start working on other parts of more of the concessions, the other five concessions within those 11 concessions. We also did expand the drilling program on the initial concession given the first two holes we drilled showed excellent results, so we figured we’d expand the drilling program on this first concession base,» Althaus said.

This is not the only project Cove Capital is implementing in Kazakhstan. In early April, the press service of Samruk-Kazyna reported that the American company and the National Mining Company Tau-Ken Samruk (a subsidiary of Samruk-Kazyna) plan to collaborate on their search for rare-earth elements and rare metals in the Akbulak field in the Kostanay region, not far from the town of Arkalyk. The two sides signed a corresponding agreement on April 8, 2024.

As CEO of Tau-Ken Samruk Bakhyt Chirchikbayev told Kursiv.media, under the agreement, Cove Capital will be responsible for financing geological exploration until discovered reserves are properly booked. The two sides are expected to establish a joint venture, Kazgeology, with a 25% stake for Tau-Ken Samruk and the American investor controlling 75% of the new company.

«If the initial due diligence and the initial phase of work prove that the project is economically viable and should be taken to the next stage, that’s when they [Tau-Ken Samruk] come in with joint funding on a pro-rata basis in phase two. This is how both parties saw this as a commercially, let’s say, viable structure,» Althaus explained.

Cove Capital will search for four rare-earth elements and rare metals in that field – neodymium, praseodymium, dysprosium and terbium – which are used for permanent magnet production. The project is currently at its initial stage, while the field is estimated to contain about 380,000 tons of rare-earth metals.

«It has a lot of other rare earths in there, so we have to make sure that the processing and the mineralogy work where we can extract the high-valued materials and suppress the lower-value materials. Therefore, we can’t speak to profitability today. It looks like a very promising project, which is why we’re involved in this and why we’ll start exploring it. Hopefully, this does become a very big rare earth project,» Althaus emphasized.

He also revealed that there is a lot of rare-earth yttrium in the field, which is not used for permanent magnet production. Now, the company wants to analyze the market for this material to assess its capacity, measure supply and demand, and better understand how much yttrium the company can sell in the future. According to Althaus, it will take years before the company understands how profitable yttrium production on the field will be. However, American investors are quite positive about the project.

In 2023, Kazakhstani authorities announced that Cove Capital had a plan to launch the production of rare-earth elements and rare metals in Kazakhstan. The construction of a facility like this would cost about $500 million, Althaus said, noting that this is a long-term plan for the company.

«We have discussed with the government of Kazakhstan the potential to build a centralized processing facility that would be a hub, if you will, to send materials by default to China, keeping more of the materials in the country because Kazakhstan would like to establish a vertically integrated supply chain. We have a team of processing experts who know how to do this, but I’d say this is something that is a little bit longer term,» Althaus explained.