Varun Energy Corporation, a group company of Varun Industries, plans to set up a plant of five lakh tonnes per annum to process the rare earth ore discovered at its Madagascar mines in Africa.

The company will invest Rs 300 crore and has proposed a technical tie-up with an international partner for the plant, which may come up in 8-10 months.

Varun has signed a supply pact with Department of Atomic Energy to sell the rare earth mineral concentrates processed in Africa. According to the agreement, the PSU will purchase the mineral concentrate for its local operations.

Varun Group had taken technical support from Indian Rare Earths for the mineralogical analysis on bulk composite samples from the permit areas. The study has proved world-class deposit as the low slime contents with THM (total heavy mineral) in the range of 20-30 per cent. THM is considered to be high grade mineral sand deposit. Further plant analysis and mineral composition characterisation are under progress at IREL Laboratories, Varun said.

Mr Kiran Mehta, Chairman and Managing Director, said Varun's growth strategy is to develop assets such as the rare earth element project and unlock value for stakeholders. The average cost of heavy minerals range between $400 and $500 a tonne.

Varun Group has 10 heavy mineral sand mining blocks covering 62.5 sq.km. in Ankilimitraha, Belay and Analapatsy in Madagascar. The THM resources in these permit areas are about 266.8 million tonnes.

Rare earth elements (a group of 17 metals) are critical in development of emerging green technologies and high-tech applications such as electric and hybrid vehicles, wind and hydro power turbines, energy efficient lighting, LCD screens, MRI, X-ray machine, mobile devices, titanium metal, ceramics, abrasives and other computing equipment.

The company's shares on BSE rose 6.80 per cent to hit a new high of Rs 262.45 on Friday.

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