Arafura Rare Earths has signed a binding offtake agreement to supply neodymium and praseodymium, or “NdPr” from its Nolans project in the Northern Territory to major motor vehicle manufacturers Hyundai and Kia.
The Hyundai deal will see the rare earths company supply up to 1500 tonnes of NdPr oxide, or its equivalent in NdPr metal over a seven-year term once production at the Nolans project reaches nameplate capacity.
Arafura will supply Hyundai with 600 tonnes of NdPr oxide in the first year of the contract before increasing to 1500 tonnes in years four to seven of the agreement. As part of the deal with its parent company Hyundai, Kia can make orders for the supply of NdPr under the offtake agreement.
Supply from Nolans is expected to begin in 2025, subject to project financing, completion of the project and commissioning. The commercial grade of the NdPr oxide supplied to Hyundai must be greater than 99 per cent.
The offtake agreement follows the signing of a memorandum of understanding between Arafura and Hyundai in May. The supply commitment represents almost half of the 85 per cent of annual production that Arafura has made available to be secured under long term sale arrangements.
The rare earths company has also entered into a non-binding Heads of Agreement to discuss potential strategic investment in Arafura by Hyundai and its affiliates.
Arafura Rare Earths Managing Director, Gavin Lockyer, says: “We are delighted to have concluded negotiations to execute our first binding offtake agreement which includes the exercise of the option provided in the MoU to take the full offtake volume of 1,500 tpa in relation to the Nolans Project.“
The company recently made headlines after announcing a deal with American giant General Electric to supply neodymium and praseodymium to produce wind turbines. In addition to being seen as a key ingredient for electric vehicles, the two elements are also essential components in the manufacture of permanent magnets for wind turbines.
Arafura says its Nolans project near Alice Springs contains a massive 29.5 million tonnes reserve at 2.9 per cent total rare earths oxides, with transport and operational infrastructure nearby.
Just last month the company made its rare earth intentions clear after changing its name from Arafura Resources to Arafura Rare Earths. In August the company raised $41.5 million to fund front-end engineering design, including tendering of major construction contracts ahead of a final investment decision at Nolans.
Whilst production is yet to begin at Nolans, Arafura looks to be ticking all the boxes when it comes to securing customers for its potential offtake and appears to be setting itself up to be a long-term supplier of NdPr into the future.