Rare earths group Arafura Rare Earths [ASX:ARU] has posted an update on its operations in the Northern Territory.
The group has signed a new offtake agreement with the global wind turbine manufacturers Siemens Gamesa Renewable Energy to supply neodymium and praseodymium (NdPr) to the group for up to five years.
Arafura is ambitious to transform its Nolans Project into Australia’s first vertically integrated rare earths project that includes an oxide mine and processing facility, setting it apart from its competitors.
ARU has slipped by 18% in share price over the last month. However, in the past 12 months, it has gained 37% in stock value and is almost 20% higher than the sector average:
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Arafura Resources’ offtake deal with Siemens
Up-and-coming rare earths miner Arafura Resources has announced signing a new offtake agreement with European company Siemens Gamesa Renewable Energy to supply NdPr (neodymium and praseodymium) from the Nolans Project in the Northern Territory.
The product supplied by Arafura will go towards Siemens’ manufacturing business, where they will be used in engineering and building powerful and reliable wind energy solutions as part of the group’s global wind turbines business.
Nolan’ NdPr will be used to manufacture permanent magnets to be used when assembling the wind turbines at the Siemens Gamesa’s Cuxhaven production facility in Germany before being shipped globally.
The agreement is made up of a five-year term with the option to extend the term for a further two years by mutual agreement.
Arafura says that to honour the contract, it will up the ante and push annual contract quantities of NdPr metal to begin in 2026. This will call for an increase to 400 tonnes per annum (tpa), an NdPr oxide equivalent of 520 tpa, for when the Nolans Project achieves nameplate production capacity.
Pricing will be determined by reference to NdPr Ex Works China tonne pricing, and the product must be 99.0% quality.
The offtake agreement is said to be a binding one, subject to certain conditions that will have to be satisfied by no later than 30 September 2026.
One such condition is for Arafura to earn Untied Loan Guarantee cover from UFK-Guarantees of the Federal Republic of Germany. The loan is for the financing of a raw material project, completion of construction and development to begin commercial production and ramp-up.
Commenting on the offtake agreement, Arafura’s Managing Director Gavin Lockyer said:
‘We are delighted to have concluded negotiations for our second offtake agreement. Siemens Gamesa is the world’s leading manufacturer of offshore wind turbines, and this agreement compliments our strategy to create supply diversification into the renewable & E-mobility sectors.’
Arafura aligns plans for Nolans
The offtake agreement will support ongoing discussions with German ECA Euler Hermes, which recently provided Arafura with a non-binding letter of in-principal support for an untied loan guarantee of up to US$600 million to support the Nolans Project.
The rare earths producer explained that this is the second offtake agreement that has been signed, and it now has around 53% of its targeted 85% annual production form Nolan spoken for, celebrating the security of long-term sale arrangements that have now been successfully contracted.
Provided all goes well, Arafura anticipates the first NdPr Oxide production in 2025, with annual production expected to ramp up to 4,440 tpa in 2028.
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