Arafura Rare Earths Limited has signed an NdPr Offtake Agreement with Hyundai Motor Company.
Kia Corporation has the authority to place orders under the Offtake Agreement in its own right, according to Arafura.
In a statement, Arafura said the Offtake Agreements came after Arafura signed a non-binding Memorandum of Agreement (MoU) with Hyundai earlier this year.
The Offtake Agreement calls for the supply of NdPr from Arafura’s Nolans Project to Hyundai over seven years, which can be extended by mutual agreement for another five years.
The Buyer may select whether to be provided with NdPr Oxide or its equivalent in NdPr Metal under the terms of the Offtake Agreement. Contract quantities (per Contract Year) for NdPr Oxide are 600 tonnes per annum (tpa) in year one, growing to 1,500 tpa in years four through seven to correspond with project ramp-up.
Supply of NdPr is expected to begin in the calendar year 2025, subject to project financing, construction, development, and commissioning of the Project.
Arafura has also signed into a non-binding HoA with Hyundai. Under the terms of the agreement, Arafura will begin discussions with Hyundai and its affiliates for strategic investment. Any subscription money raised by Arafura will be utilised to fund a fraction of the equity component of the Project’s development funding. The prospective investment is still being negotiated between the parties.
Arafura’s offtake approach for the Project has been to target original equipment manufacturers (OEMs) from geographic regions with supporting Export Credit Agencies, and Arafura continues to get strong interest from various parties aligned with its offtake and investment strategy. Arafura intends to secure 85 per cent of its anticipated production as a binding offtake, with the other 60 per cent in discussion with a variety of multinational companies, including GE Renewable Energy, with whom a non-binding MoU for partnership was signed in July 2022.
As outlined in Arafura’s Project Update, Arafura estimates the first production of NdPr Oxide from the Project in 2025, with annual production ramping up to 4,440 tpa in 2027, subject to project funding, completion of construction, development, and commissioning of the Project. The front-end engineering design (FEED) project, which began in August 2021, is still on pace, including the tendering of the different key construction contracts that will inform the Final Investment Decision.
“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. This establishes the foundation for a long-term partnership, and we are proud to have committed to supplying NdPr to Hyundai, a respected global automotive leader,” Arafura Managing Director Gavin Lockyer said.
