RareX sows the path to rare earths after signing phosphate pre-strip offtake MoU with one of world’s largest fertiliser distributors
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Special Report: Confidence in the Cummins Range phosphate-REE project is clearly building with RareX signing an offtake MoU with global fertiliser distributor Nitron Group for both Stage 1 DSO phosphate and Stage 2 mineral concentrate.
It follows the company signing an infrastructure terms sheet with KMG Logistics earlier this week for use of at least 600,000tpa of capacity at the latter’s existing bulk loading facility at Wyndham Port.
This agreement de-risked a key component of the bulk handling supply chain for RareX’s (ASX:REE) Cummins Range project, which is envisioned as a bulk tonnage phosphate project first (for the overburden) with rare earth elements to follow in subsequent stages.
Cummins Range is the largest undeveloped rare earths (REE) project in Australia with 24Mt of contained phosphate and 1.6Mt TREO, which will be developed in a low risk way by initially monetising the phosphate dominant overburden material, before moving into the rare earth rich minerals.
The planned, low-cost Stage 1 pre-strip development will see the production of an initial 300,000tpa of direct shipping ore phosphate.
This will support the Stage 2 beneficiation operation, which will produce 550,000tpa of higher value phosphate-rare earth dual mineral concentrate, containing about 169,000t of phosphate and 12,000t of TREO, enough for 2.5 million lithium-ferro-phosphate (LFP) electric vehicles annually.
Rare earths and in particular, NdPr, are core enablers of decarbonisation and electrification. NdPr supports high strength magnets which enables low carbon technologies, especially in the electric mobility sector, robotics solutions and renewable energy, particularly wind turbines.
Phosphate, whilst traditionally fertiliser, is the feedstock for the emerging dominant battery technology; LFP.
The global LFP battery market is projected to grow from $10 billion in 2021 to $50 billion by 2028 as more EVs adopt the safer and longer life technology and grid stabilization batteries expand to balance intermittent renewable generation.
Fertiliser and battery pre-cursor acids are usually made in the same phosphoric acid plant with the latter requiring a higher purity mineral feed stock such as that from Cummins Range.
The memorandum of understanding (MoU) with Nitron – a US-headquartered global company that is the second largest distributor of fertilisers in the world – covers potential offtake of 250,000tpa of DSO phosphate under Stage 1 from 2025 and 250,000tpa of high-grade phosphate concentrate under Stage 2 from 2028.
Notably, the Stage 2 offtake could be produced from low grade rare earths blocks within the project, potentially expanding the volume of mineable ore from Cummins Range.
Having a major distributor such as Nitron, which had revenue of more than US$3bn in 2021 and provides a wide range of logistical and financial services to its clients, as a potential offtake partner is a strong show of confidence in RareX and the Cummins Range project.
It clearly highlights that the project has attracted the interest of big players, which is a huge positive, a belief that investors clearly share with REE up 13.33% to 3.4c this morning.
The MoU provides a pathway to a binding offtake agreement with non-executive director Danny Goeman – a marketing and shipping executive – leading the process on REE’s part.
Price and payment terms will be based on comparable international benchmarks with Index Mundi reporting current phosphate prices as US$345/t for 32% P2O5.
“This MOU marks another material step towards de-risking our product and project development strategy and we are very pleased to have Nitron on-board as a potential future offtake partner for our product sales,” chief executive officer James Durrant said.
“The ability to sell some of the pre-strip material as a standalone product means we have a low-risk start-up pathway for the project and the supply chain before we lead into the full rare earth project with the installation of a beneficiation plant.
“The benefits of this low-risk development pathway to deliver a critical minerals rare earth project should not be understated. It makes Cummins Range fundable, executable and operable and, once the beneficiation plant is installed, we’ll be in a position to produce more rare earths for less capital expenditure than any of our peers.”
This article was developed in collaboration with RareX, a Stockhead advertiser at the time of publishing.
This article does not constitute financial product advice. You should consider obtaining independent advice before making any financial decisions.