Aclara Resources Inc (TSX:ARA, OTC:ARAAF) has signed a Memorandum of Understanding (MOU) with German magnet producer Vacuumschmelze GmbH (Vacuum) to jointly produce and offer permanent magnets for electric vehicles and wind turbines for potential customers.
CEO Ramón Barúa joined Proactive to discuss the milestone, which brings synergies that could optimize processes and reduce costs, resulting in the production of low-cost, high quality magnets.
He highlighted that the partnership positions Aclara to approach automakers with a comprehensive “mine to magnet” solution, addressing a supply chain gap.
Proactive: Exciting news for the company that you've signed an MOU with, I'll just call them Vacuum because they've got a long name, and I'll let you say because you've been dealing with them a lot, but this is a pretty significant one for the company.
Ramón Barúa: Thank you. Absolutely, Steve. Their name is Vacuum, which made it easy. This is a very relevant company for us because they are a German producer of magnets. They have been in business for more than 100 years and they already have important contracts with OEMs that are the top OEMs in the world. For example, they have a contract with General Motors. They are building a plant in South Carolina to supply them with the very important permanent magnets that their electric vehicles require. So joining forces with them, this is a starting point. Clearly it's non-exclusive for both parties. But it's crucial to us.
I would like to distinguish three important things. The first one is that it would allow us to access the technical information of the raw materials that they require in order to produce the magnets so that we can focus our vertical integration efforts to comply with those technical requirements. Second, we believe that by joining forces, we can find lots of synergies. This is a market that will require the production of low-cost magnets, of course under the highest environmental quality possible. So working together allows us to find places where we can certainly optimize our processes and ultimately reduce costs.
And finally, very importantly, it will allow us also to go together to the OEMs. Imagine us approaching the top automakers, electric vehicle makers in the world and having a solution that goes from mine to magnet. It will solve a problem that currently exists because currently automakers need to figure out the whole supply chain. This is a skill that they don't necessarily have. They didn't use it before. There was no need to have it before electric vehicles were here. And it's not easy. It requires operational knowledge in different technologies in different jurisdictions. And having a party like ours that is a one-stop shop from mine to magnet, I believe it's going to be incredibly valuable to them.
Obviously you have projects in Chile and Brazil, but you also have entities in the United States. And with their location in Germany, they also have some significance in the United States as well. This really pulls together the two companies, really seeing the benefit of having that North American connection as well.
That's correct. Look, they're already a very important player in Europe. Now they're becoming also a very important player in the US. So we're going to be covering the two most important markets for magnets. That's significant because obviously the United States is really pushing towards having a supply chain that they want to know exactly where everything's coming from.
You've talked about this in the past, that ESG is very important to your company and what you're doing. And it sounds like Vacuum spells the same situation. And that's a big bonus when you're trying to move things in the United States.
Totally. This is an idea perfectly designed to solve a problem that has emerged in the US, notably since they started this commercial conflict with China. I think the US is fully committing to onshoring industries that are critical, that are important, that are strategic. Resources is certainly one of them. And the strategy that we're developing together here at Aclara, together with Vacuum, is perfectly designed to fit within what the US and also the European Union desire in terms of diversifying the supply chains of critical materials.
Are the next steps just sort of work through the deal and see where everything's at until you come up with a binding contract?
Look, there's no binding contract in sight. I think what we want to do right now is work together, see where this takes us, and see if there's traction with the automakers. We strongly believe that this is something that they're going to highly value. And if that's the case, we're going to be ready to move to the next steps.
Quotes have been edited for clarity and style