Rainbow Rare Earths Ltd (LSE:RBW, OTC:RBWRF) has signed a strategic supply agreement with UK-based Less Common Metals (LCM) to source and supply critical magnet minerals.
In particular, Rainbow will supply the magnet-separated rare earth oxides neodymium and praseodymium (NdPr), dysprosium and terbium all of which are used to make permanent magnets for electric vehicles, wind turbines, and other tech products.
The UK has designated these elements as critical metals for security given that the primary source of supply is China.
LCM’s Ellesmere Port plant is the only rare earth metal and alloy manufacturing facility in the UK and one of only a few facilities in the West, Rainbow said in a statement.
Oxides supplied by Rainbow will be converted into metals by LCM and supplied to manufacturers of permanent magnets in the EU and the US.
Next steps are for Rainbow and LCM to negotiate a binding offtake agreement for the separated rare earth oxides produced at Phalaborwa.
Any surplus production from Phalaborwa not required for LCM's facilities will be sold on the open market to third parties, the statement added.
Rainbow estimates its Phalaborwa project (in South Africa) will have the lowest costs of any Western producer, as involves the processing of tailings from gypsum waste residue stacks with no mining involved.
Chief executive George Bennett said: "Securing a buyer of our separated rare earth oxides that shares our values and aspirations was of strategic importance to Rainbow.
"LCM is a fantastic partner for Rainbow. Using its expertise to expand in the USA and the EU, LCM will be instrumental in meeting the huge and growing demand for permanent magnets."
Albert Slot, LCM’s managing director, added: "LCM occupies a unique position in the rare earth pipeline as it is the only company in the Western world commercially producing both the highly specialised strip-cast alloys and all of the required rare earth metals needed for the production of the highest-performance neodymium iron boron magnets.
“Furthermore, LCM's expertise in the commercial production of neodymium metal and neodymium praseodymium alloy is unique in the Western world”.