Arafura Resources Limited (ASX: ARU) has confirmed an announcement made by GE Renewable Energy (GE) in relation to a non-binding memorandum of understanding (MoU) entered into with Arafura.
The MoU relates to collaboration in the establishment of a sustainable supply chain for Neodymium and Praseodymium (NdPr) for the manufacture of offshore wind turbines and energy transition. GE and Arafura have agreed to negotiation of a long-term sale and purchase agreement for GE to purchase NdPr from Arafura’s Nolans project.
The MoU also outlines a potential strategic investment by GE in Arafura to be negotiated in conjunction with the NdPr sale and purchase agreement.
Arafura told the ASX that the MoU is non-binding, Arafura and GE have not concluded any commercial terms in relation the sale and purchase of NdPr or any potential strategic investment.
“The company currently, has no certainty as to the timing and likelihood of binding agreements being entered into, these arrangements will be announced to the ASX if (and when) formal agreements are established.”
GE announced that rhe agreement was unveiled during the Sydney Energy Forum, a high-level summit hosted by the Australian Government and the International Energy Agency focused on securing clean energy supply for the Indo-Pacific. On the sidelines of the Forum, the Governments of Australia and the United States announced a separate government-to-government agreement to support new supply chains for clean energy technologies.
The Nolans Project in Australia’s Northern Territory is a globally significant resource for NdPr with the capacity to support a value chain supplying nearly five per cent of the global demand over a projected life of mine of 38 years with expansion potential.
With its ore to oxide business model that includes waste management certainty, it provides customers with a product supply chain that is both transparent and traceable.
Nolans has the potential to create significant employment opportunities and intergenerational change to the region, with projections of new jobs in Australia, including a construction workforce of 620 and 280 ongoing operational roles.
The MoU recognises the strategic nature of NdPr, a critical mineral required in the manufacture of high performance NdFeB permanent magnets and charts a path for GE and Arafura to jointly co- operate in the establishment of a diversified and sustainable supply chain. The engagement between GE and Arafura will help strengthen the supply of sustainable materials critical to the energy transition objectives of GE customers in the EU, US and Australia. Arafura is focused on establishing itself as GE’s preferred NdPr partner for renewables in the EU, US and other key markets.
Having GE as another foundational offtake partner will provide Arafura with product sales diversification both geographically and into new sectors like the offshore wine turbine market. Analysts are forecasting the volume of annual offshore wind installations to more than triple, from 6.1 GW in 2020 to 23.1 GW in 2025, bringing its share of global new installations from 6.5% to 20% by 2025. This exponential growth in demand is driven by the need for energy security and the role of renewable energy to meet the Paris carbon neutrality target by 2050.
The signing of this MoU to collaborate with a Tier 1 OEM is a terrific outcome. Long-term Nolans NdPr may be used in magnets critical for power generation from GE’s Haliade-x12MW, one of the most powerful offshore wind turbines on the market,” Arafura’s Managing Director and CEO, Gavin Lockyer, said.
“It is very gratifying that a new supply chain model, along with transparency of the value chain, will ensure we know exactly where our NdPr will be used, whether it is in a particular EV model or a series of wind turbine. The contribution of Nolans NdPr to enable clean energy technologies to decarbonise the world is becoming more and more apparent.”