Hyandai and Arafura sign MOU on Nolans project

ARAFURA Resources and South Korean-based Hyundai Motor Company plan to work together on the billion dollar Nolans Project.

ARAFURA Resources and South Korean-based Hyundai Motor Company have signed a non-binding memorandum of understanding to negotiate supply of up to 1500 tonnes a year of NdPr Oxide from the Nolans Project.

The MOU p­aves the way for negotiation of a binding agreement to supply the ­resource from 2025 for a seven-year term under a “cost, insurance and freight” ­arrangement. The agreement represents more than a third of Nolans’ estimated 4400 tonnes annual production capacity.

The MOU also includes:

PRICING for any sale to be determined quarterly using a formula-based mechanism referencing the NdPr oxide ex-works china price per tonne. An industry recognised customary discount in recognition of the long-term offtake agreement would also be applied;

COMMERCIAL grade NdPr Oxide is intended to be equal or greater than 99 per cent/TREO;

THE parties work collaboratively to engage with export credit agencies to access debt funding and guarantees linked with critical materials procurement for use in Korean-based manufacturing; and,

THE definitive and binding offtake agreement would be subject to certain customary conditions being satisfied, ­including Arafura securing project finance to develop the Nolans Project and completion of construction, development and commissioning of the Nolans Project.

The two companies will work towards finalising the binding offtake agreement by September.

Arafura’s managing director Gavin Lockyer welcomed the signing.

“The MOU represents a fantastic outcome and validates the Tier-1 credentials of the Nolans Project as one of the world’s premier next generation NdPr ore to oxide projects,” Mr Lockyer said.

“The Nolans project is strategically significant for Tier-1 customers as it offers scale and supply chain diversification and security that will underpin their EV ­technologies.”

The joint statement ­released by Arafura and ­Hyundai says the MOU follows the joint statement of cooperation signed by Arafura and Korea Mine Rehabilitation and Mineral Resources Corporation in February ­recognising the strategic ­importance of Australian critical minerals projects.

“Arafura’s offtake strategy for the Nolans Project has been to target automotive original equipment manufacturers from geographic ­regions with supportive ­export credit agencies, working with customers that are strategically aligned with the company’s value proposition of supply chain diversification, product traceability and security of supply with high ESG standards,” the statement said.

“Hyundai has demon­strated its global leadership and commitment towards an EV future by securing the critical minerals to de-risk its permanent magnet supply chain and Arafura welcomes Hyundai’s interest in potentially becoming a foundation customer.

“As detailed in the company’s project update ­released to ASX on May 11, 2021, and subject to project ­financing, completion of construction, development and commissioning of the Nolans Project, Arafura expects first production of NdPr Oxide in 2025 with annual production expected to ramp up to 4440 tpa in 2027. The front-end ­engineering design initiated in August 2021 remains on track, targeting tender for a fixed price construction contract which will be the basis of making a final investment decision, which is expected in the second half of this calendar year.”

Hyundai Motor Company was established in 1967.