‘Ex’ China Rare Earth Market Movement -Aussie Arafura Secures Strategic Offtake Agreement with Luxembourg-based Traxys

Highlights

• Arafura signs a binding 5-year offtake agreement with Traxys for 100-300 tonnes of NdPr Oxide annually from the Nolans Project.
• The deal represents a significant move to reduce rare earth supply chain dependence on China, targeting critical markets like electric vehicles and renewable energy.
• Arafura has now secured 66% of its planned 4,440 tpa NdPr production capacity.
• This positions Arafura as a major non-Chinese NdPr supplier.

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Arafura Rare Earths Limited (opens in a new tab) (ASX: ARU) has announced a binding offtake agreement with Traxys Europe SA (opens in a new tab), a major global metals trading and marketing firm, for the supply of NdPr Oxide (NdPr) from the Nolans Project in Australia (opens in a new tab). The agreement marks a critical step in diversifying the global rare earth supply chain away from China, reinforcing Western efforts to establish an independent rare earth ecosystem.

Key Details of the Agreement

So what does the deal look like?  The contract volume equals a minimum of 100 tonnes per annum (tpa) for five years, with Arafura having the option to supply up to 300 tpa.  What sorts of conditions precedent? The agreement is binding, subject to the completion of construction, development, and commercial production at Nolan’s by December 31, 2028.

Traxys in some ways is giving Arafura a lot in the deal. Why? Well it’s a strategic role for the metals trader, as Traxys will market Arafura’s NdPr to customers in the magnet supply chain, particularly those who are unable to commit to long-term contracts or do not meet Arafura’s lender requirements for project financing.

NdPr pricing will be pegged to the Ex Works China price, ensuring a competitive but independent market structure. Understand that this is one of the first market plays outside of China, and there is a significant interest in Rare Earth Exchanges, which is why the media platform was launched.

Significance for the Global Rare Earth Market

This agreement is a major development in the ongoing effort to de-risk rare earth supply chains from China’s dominance. Traxys, a firm with historical ties to Umicore (opens in a new tab) and a stake in MP Materials (opens in a new tab)(Molycorp), is deeply embedded in the U.S.-European metals sector. The deal indicates a growing alignment of Western interests in securing alternative NdPr supply sources, a key material for electric vehicle motors, wind turbines, and defense applications.

Arafura’s Positioning in the Market

Arafura is positioning itself as a major non-Chinese NdPr supplier, joining forces with diversified offtake partners such as Hyundai-Kia, Siemens Gamesa, and now Traxys. With this agreement, Arafura has secured 66% of its 4,440 tpa NdPr production capacity, and negotiations continue for the remaining 34%. The company is on track to achieve a Final Investment Decision (FID) by June 2025, aligning with its targeted operational commencement date.

Implications for U.S. and Western IndustrialPolicy

The deal underscores the urgent need for Western governments to accelerate rare earth independence through:

• Tariffs and trade incentives to protect domestic processing industries.
• Government-backed financing for emerging rare earth projects.
• Strategic stockpiling and grants to ensure stable supply chains.

Does this agreement solidify Arafura’s role as a critical supplier in the Western rare earth ecosystem? Will it pave the way for increased Western investment and policy support further to reduce reliance on China’s supply chain dominance? Only time will tell, but it’s a step in the right direction.