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Highlights:
- On Tuesday, Arafura Rare Earths Limited (ASX:ARU) notified, inking an offtake agreement with Siemens Gamesa.
- The company inked an offtake agreement for the supply of NdPr from ARU’s Nolans project to Siemens Gamesa.
- This offtake deal is binding, conditional on precedent to be fulfilled by no later than 30 September 2026.
On Tuesday, 11 April 2023, the mineral exploration company Arafura Rare Earths Limited (ASX: ARU) was trading up by 7.812% at 11:46 am AEST after it notified inking an offtake agreement with Siemens Gamesa Renewable Energy.
Let’s get acquainted with ARU’s latest deal with Siemens Gamesa.
On Tuesday, Arafura inked an offtake agreement with Siemens Gamesa Renewable Energy for the supply of NdPr from ARU’s Nolans project to Siemens Gamesa across the upcoming five-years’ time, which can be extended for another two years mutually.
For the last four decades, Siemens Gamesa Renewable Energy has been a leader and pioneer in the wind industry. An international business with local effect, it has installed 130 GW. It has also delivered access to clean and sustainable energy.
Contract volumes that are contract each year for NdPr metal is 200 tpa to begin from 2026. It will by further grow to 360 tpa in the second year. In three to five years’ time, it will rise to 400tpa to align as the project picks speed.
ARU would be inking the offtake deal for the second time, with nearly 53% of the aimed 85% yearly production from the Nolans project gained under long-duration sale arrangements presently contracted.
The NdPr from the project will be utilised in the manufacture of permanent magnets utilised in offshore wind turbines assembled at Siemens Gamesa’s Cuxhaven production facility in Germany. There, all parts for the hub, generator and backend are assembled into the turbine. They are then shipped internationally.
As notified on 29 March this year, this offtake deal will back ongoing discussions with German ECA Euler Hermes, which has lately given ARU a non-binding letter of in-principle to aid for an untied loan guarantee of up to US$600 million to back the project.
Terms and conditions of ARU’s deal with Siemens Gamesa
Other important terms and conditions of ARU’s deal with Siemens Gamesa are as follows: firstly, the pricing (in USD) is contractual but widely established, referencing the NdPr Ex Works China price a tonne.
Secondly, commercial grade NdPr/Total Rare Earth must be greater than or equal to 99%. Lastly, this offtake deal is binding, conditional on precedent to be fulfilled by no later than 30 September 2026, such as ARU turning eligible for United Loan Guarantee cover from UFK Guarantees of the Federal Republic of Germany. It will fund the raw material project, along with the construction and advancement of the Nolans project, the beginning of commercial production, etc.
