- Take-or-pay magnet rare earths MoU.
- Commencing in 2028 for an initial term of four years.
- Offtake volumes in line with the commissioning numbers.
Iluka Resources (ASX:ILU) has concluded a binding, multi-year agreement for the supply of magnet rare earth oxides (neodymium, praseodymium, dysprosium and terbium) to a global automotive company.
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The offtake agreement commences in CY28 for an initial term of four years and represents approximately 10% of Iluka’s planned production over that period, being 1,200 tonnes of magnet rare earth oxides (Nd, Pr, Dy and Tb).
Offtake volumes are in line with the commissioning (CY27) and ramp-up timeline for the Eneabba refinery in WA, which is now over 50% complete.
Iluka managing director Tom O’Leary said the agreement sets pricing at the higher of minimum and market-linked prices for each product to balance the dual risks of downside price volatility and security of supply.
Iluka’s minimum revenue over the contract period is US$155 million, and assuming industry-forecast pricing, it would be US$172 million.
“Iluka’s offtake agreement marks a particularly important milestone in the development of our rare earths business,” Mr O’Leary said.
“Our first rare earths customer is a globally recognised automotive company and I am delighted that Iluka has been entrusted to deliver refined critical minerals as part of its supply chain. We look forward to a collaborative and successful partnership.
“Beyond being Iluka’s first, the agreement is significant in that it encompasses the full suite of light and heavy magnet rare earth oxides and contains minimum prices agreed between commercial parties that are independent of those backed by governments.
“One year out from commissioning, Iluka’s rare earth oxides have been procured by an end-use customer in a likeminded nation.
“This demonstrates increasing recognition of Iluka’s position as a credible, vertically integrated supplier, with diverse feedstock sources spanning internal operations and third parties. Discussions with other prospective customers are ongoing.”
The company also announced other matters regarding its rare earths business. Notably, Export Finance Australia (EFA) has confirmed Iluka’s access to the full $1.65 billion non-recourse loan provided by the Australian Government to construct the Eneabba rare earths refinery.
The company also confirmed Civmec has been awarded the contract for structural, mechanical, piping, electrical and instrumentation (SMPEI) works to complete the Eneabba refinery’s construction.
ILU closed down -10.9%, at $7.25. Mkt cap $3.13B.
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