Australian Strategic Materials Ltd (ASX:ASM) has inked a five-year binding sales and tolling framework agreement with USA Rare Earth, LLC (USARE).
The agreement was made through ASM's wholly owned subsidiary, ASM Korea Co., Ltd, and is set to strengthen ASM's strategic supply relationships with the US magnet production industry.
Strategic mineral supply chain
Under the agreement, ASM's Korean Metals Plant (KMP) will supply neodymium iron boron (NdFeB) alloy to support USARE's production ramp-up of high-performance rare earth magnets.
This move comes as global demand for NdFeB magnets is projected to increase at a compound annual growth rate (CAGR) of 7.5% from 2023 through 2040, driven by the electric vehicle and wind power sectors, according to research from Adamas Intelligence.
The magnets contain critical rare earth elements like neodymium, dysprosium and terbium.
Growing demand, positive trajectory
ASM managing director Rowena Smith said: “USA Rare Earth’s magnet manufacturing capability and approach to market makes them a perfect customer and partner for ASM.
“As we continue to increase our metal production output from our Korean Metals Plant, this long-term supply agreement demonstrates the growing demand and positive trajectory of the US rare earth magnet market.”
USA Rare Earth CEO Tom Schneberger added: “Having a supply agreement in place with ASM plays a critical role in delivering on our vision of achieving magnet production in 2024.
“ASM provides us with predictable access to a non-Chinese supply of rare earth metals, which allows us to ramp up our initial production and accelerate our goal of generating revenue, while we continue to construct our own mine.
“We are very impressed with the metal-making capability that ASM established in Korea and look forward to a long-term partnership as we diversify the rare earth magnet supply chain.”
Shares higher
Investors have reacted positively to the agreement with ASM shares as much as 12.35% higher intraday to A$1.82.
The company's market capitalisation is approximately A$281.73 million.