- Vital Metals’ (VML) Norway-based offtake partner REEtec signs a purchase deal with German auto parts supplier Schaeffler
- From 2024, REEtec will supply rare earth metals to Schaeffler which reduces the market risk and secures revenue for Vital from a share of the product margin
- Vital and REEtec entered an offtake partnership last year for Vital to sell 2000 tonnes of rare earth carbonate per year from its Saskatoon extraction facility
- The company says the Schaeffler deal validates the quality of its product and demonstrates the need for EV makers to access a “transparent rare earth supply chain”
- Vital Metals shares are up 3.73 per cent and trading at 7 cents
Vital Metals’ (VML) Norway-based offtake partner REEtec has signed a purchase deal with German auto parts supplier Schaeffler.
The five-year agreement involves REEtec supplying rare earth metals to Schaeffler from 2024. The rare earths for magnets will be used to manufacture electric vehicles (EVs) which are experiencing an ongoing demand around the world.
According to the companies, this agreement is the first reported deal by a European auto sector supplier or automaker to source rare earths within the region.
Importantly, the new agreement amends Vital and REEtec’s existing offtake partnership which was officially signed in February 2021.
Under the offtake deal, Vital will sell REEtec 2000 tonnes of rare earth carbonate per year, containing at least 750 tonnes of neodymium/praseodymium (NdPr). The deal includes a share of product margin.
The rare earth carbonate will come from Vital’s Saskatoon extraction facility, with production expected to commence in June using material mined at its Nechalacho rare earth project in Canada.
The deal between REEtec and Schaeffler reportedly reduces the market risk and secures revenue for Vital from a share of the margin. The arrangement also confirms REEtec’s viability as an offtake partner, with a condition of the offtake deal being commissioning of REEtec’s commercial plant.
Further, REEtec’s agreement with Schaeffler will allow it to build a commercial separation facility.
“REEtec’s agreement with Schaeffler has validated the quality of Vital’s product and demonstrated the need for EV makers and parts suppliers to have access to a transparent rare earth supply chain that a company such as Vital could provide,” Vital Managing Director Geoff Atkins said.
“With the commencement of rare earth carbonate production at Saskatoon very shortly, this is an exciting development and we look forward to working with REEtec through our agreement.”
Vital Metals shares were up 3.73 per cent to trade at 7 cents at 10:44 am AEST.