Arafura signs offtake agreement with Siemens Gamesa Renewable Energy

The offtake agreement is for the supply of NdPr from the company’s Nolans Project to Siemens Gamesa over a five-year term (which may be extended for a further two years by mutual agreement). Contract volumes (per contract year) for NdPr Metal are 200 tpy commencing in 2026, increasing to 360 tpy in year two, and 400 tpy in years three to five to align with ramp up of the project.

The other key terms of the offtake agreement are set out below:

• Pricing (in US$) is contractual but broadly determined referencing the NdPr Ex Works China price per tonne.
• Commercial grade NdPr/Total Rare Earth (TREE) must be ≥99.0%.
• The offtake agreement is binding subject to certain conditions precedent being satisfied by no later than 30 September 2026, such as Arafura becoming eligible for Untied Loan Guarantee cover from UFKGuarantees of the Federal Republic of Germany for the financing of a raw material project, completion of construction and development of the project, commencement of commercial production and ramp up.

The NdPr from Nolans will be used in the manufacture of permanent magnets used in offshore wind turbines assembled at Siemens Gamesa’s Cuxhaven production facility in Germany, where all components for the hub, generator, and backend are assembled into the turbine and then shipped globally. This process aligns with Arafura’s offtake strategy to target original equipment manufacturers from geographic regions known to have supportive Export Credit Agencies (ECAs), and the recent appointment of KfW IPEX-Bank as an additional mandated lead arranger and ECA structuring bank for the project’s debt financing.

The offtake agreement will support ongoing discussions with German ECA Euler Hermes, which recently provided Arafura with a non-binding letter of in-principle support for an untied loan guarantee of up to US$600 million to support the Nolans Project. The untied loan guarantee of up to US$600 million is non-binding, indicative only and any final guarantee amount will be determined with reference to the offtake volume processed in Germany, final offtake structures with German companies and NdPr market conditions at the time.

Arafura currently anticipates first production of NdPr Oxide in 2025 with annual production expected to ramp up to 4440 tpy in 2028. These dates are dependent on a number of factors including securing remaining offtake agreements, securing funding on appropriate terms to develop the project and successful construction, commissioning, and ramp up of the project.

Commenting on the offtake agreement, Arafura 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.”

Read the article online at: https://www.globalminingreview.com/trade-transport/14042023/arafura-signs-offtake-agreement-with-siemens-gamesa-renewable-energy/