By Melanie Burton
Global Rare Earths Supply Chain Dynamics
CANBERRA, March 25 (Reuters) – The United States and Japan are quickly locking up rare earths supply, leaving industrial powerhouses Germany and South Korea exposed, said the CEO of Australia’s Arafura Rare Earths, which is negotiating final supply agreements.
China’s Export Restrictions and Western Response
Since the world’s top rare earths producer China placed export restrictions on some of the minerals last year, roiling the automotive and defence industries, the U.S. has led a push to diversify global supply chains and secure new supply sources.
Key Western Producers
Of that non-Chinese supply, there are only two Western companies producing at scale, Australia’s Lynas Rare Earths and MP Materials of the U.S., with its Mountain Pass deposit.
U.S. Secures Mountain Pass Supply
The U.S. government secured Mountain Pass supply as part of a deal with MP Materials last year.
“(That) doesn’t meet all their needs, but meets a fair chunk of it,” Arafura CEO Darryl Cuzzubbo said.
Japan Secures Long-Term Supply
Meanwhile, Lynas Rare Earths this month agreed a long-term supply deal with Japan Australia Rare Earths through 2038 and a smaller, shorter-term deal with the Pentagon.
“So the EU and in particular, Germany, and Korea are quite exposed, right? Where are they going to get their supply from?” Cuzzubbo said.
Since Lynas’ supply was locked up, Arafura has noticed more urgency from potential buyers, he added.
Arafura’s Nolans Project and Supply Agreements
Nolans Project Supply Details
NOLANS PROJECT SUPPLY
Arafura plans to supply from its Nolans Project in the Northern Territory 4,440 metric tons a year of neodymium-praseodymium (NdPr) oxide, a key rare‑earth magnet material from the second half of 2029, representing around 4% of global supply.
Current and Prospective Supply Agreements
It already has supply agreements with automakers Hyundai Motor and Kia as well as Siemens Gamesa Renewable Energy and commodity trader Traxys.
Arafura is seeking to place another 1,200 tons of NdPr oxide to bring secured supply to 80% of planned output as a condition required by its lenders, he said. Once that is achieved, Arafura will be able to make a final investment decision and begin constructing the project.
“We haven’t put all of our eggs into one basket, so we’re negotiating with multiple parties, and the one that gets there first on the right sort of pricing regime is the one we’re going to go with,” he said.
Pricing and Market Comparisons
Arafura was looking for terms closer to those achieved by Lynas, he said.
In both deals, Lynas locked in a price of $110 per kilogram for NdPr, with additional terms around payments for higher prices. China-based prices are currently around $103 a kg.
(Reporting by Melanie Burton; Editing by Jamie Freed)