Special report: Increasing demand for rare earths, particularly high-value minerals such as neodymium and praseodymium, has put pressure on downstream consumers to secure supplies.

It should come as no surprise that this desire to secure supplies has led Baotou Tianhe Magnetics Technology Co. Ltd (Tianhe Magnetics), one of China’s leading manufacturers of neodymium iron boron (NdFeB) permanent magnets, to make a beeline straight to Arafura Resources’ (ASX:ARU) door.

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Arafura has signed a second memorandum of understanding (MoU) to supply rare earths products from its Nolans neodymium-praseodymium (NdPr) project in the Northern Territory to Tianhe Magnetics.

The non-binding agreement allows for the long-term sale of up to 900 tonnes of NdPr oxide per annum from the project, which is projected to produce 4,357 tonnes of NdPr oxide per annum for the expected 23-year mine life.

Tianhe Magnetics has been operating for more than 30 years and is capable of producing 10,000 tonnes of NdFeB magnets per annum from its facility in Baotou, Inner Magnolia.

Both companies could also collaborate on further opportunities for longer-term offtake of NdPr oxide or metal with third party end users, potentially from amongst Tianhe’s Western world customers in the automotive and clean energy sectors.

Arafura secured its first non-binding MoU for the supply of up to 900 tonnes of NdPr oxide per annum from Nolans to  JingCi Material Science Co., Ltd. in October last year.

While NdPr oxide makes up about 26.4 per cent of the total rare earths present at Nolans, the compound is expected to produce 85 per cent of the project’s revenues.

NdPr is used to make ultra-strong permanent magnets for micro-motors and the drivetrains of electric vehicles, which are becoming increasing popular.

Earlier this month, Shanghai Metals Market flagged that the recovery of magnet manufacturers and potential supply tightness on capacity closure could support prices of light rare earth oxides, including NdPr oxide, for the rest of the year.

Read more: Rare earths prices rise as demand runs ahead of supply

 

This story was developed in collaboration with Arafura Resources, a Stockhead advertiser at the time of publishing.
This story does not constitute financial product advice. You should consider obtaining independent advice before making any financial decisions.

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