Siemens Gamesa Digs Down Under for Rare Earths Deal

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Written by Martin Lynch, European News Editor for Industrial Info (Galway, Ireland)--Australia's Arafura Rare Earths Ltd. (Perth) has signed a five-year offtake deal to supply wind turbine maker Siemens Gamesa (Zamudio, Spain) with thousands of tonnes of rare earth minerals.

The company will supply Neodymium and Praseodymium (NdPr) from the company's Nolans Project, located north of Alice Springs in the Northern Territory. It will be used for the manufacture of permanent magnets used in the production of offshore wind turbines at Siemens Gamesa's Cuxhaven facility in Germany, where all components for the hub, generator and backend are assembled into the turbine before global shipping. The deal calls for the supply of 200 tonnes of the rare earths per year beginning in 2026, increasing to 360 tonnes per year (TPY) in year two and 400 tonnes per year in years three to five. Arafura currently estimates first production of NdPr Oxide in 2025 with annual production expected to ramp up to 4,440 TPY in 2028.

This is the second offtake agreement secured by Arafura, following a similar deal late last year with South Korea's leading car manufacturers, Hyundai Motor Group (Seoul, South Korea) and Kia. Just over half of the project's targeted 85% annual production from Nolans has been secured under long-term sale arrangements. The Nolans Project is Australia's first vertically integrated rare earths operation, where its single-site mining and processing operations (including waste disposal) will "provide a secure and traceable supply chain to meet domestic and international economic and security interests", according to Arafura. It has received Major Project Status from the Northern Territory Government and additional support from Federal Ministers.

Arafura highlighted that rare earth supply is dominated by Chinese producers, which accounted for approximately 84% of global supply in 2022. This amounted to 161,000 tonnes of total rare earth oxide (TREO), equating to 40,000 tonnes of NdPr oxide--almost two-thirds of the total global supply, which stands at 65,000 tonnes. To meet projected demand in 2032, global supply for NdPr oxide needs to expand by 61,000 tonnes, with a growing proportion of that expected to come from countries including Australia, North America and Malaysia. The rapidly expanding electric vehicle (EV) sector is expected to account for a significant proportion of NdPr, which is used in Neodymium Iron Boron (NdFeB) magnets used in EV traction motors and wind turbines, among other products. Global consumption of sintered NdFeB magnets in 2022 was 184,000 tonnes, which is expected to jump to 322,000 tonnes in 2032. Use of NdFeB magnets in EVs is forecast to account for 32% of total demand by 2032.

The Siemens Gamesa offtake agreement will support ongoing discussions Arafura is having with Germany's export credit agency, Euler Hermes, which has agreed to a non-binding letter of financial support for Nolans to the tune of US$600 million. Securing the deal requires Arafura entering into offtake agreements with German-based companies, and the corresponding quantities of NdPr products ultimately being processed in Germany into permanent magnets or powertrains.

Industrial Info is tracking 10 projects associated with Nolans with a combined investment value of more than US$930 million. Subscribers to Industrial Info's Global Market Intelligence (GMI) Metals & Minerals Project Database can click here for the reports.

Industrial Info Resources (IIR) is the leading provider of industrial market intelligence. Since 1983, IIR has provided comprehensive research, news and analysis on the industrial process, manufacturing and energy related industries. IIR's Global Market Intelligence (GMI) helps companies identify and pursue trends across multiple markets with access to real, qualified and validated plant and project opportunities. Across the world, IIR is tracking over 200,000 current and future projects worth $17.8 Trillion (USD).