Australian Strategic Materials signs five-year sales framework agreement with USA Rare Earth

ASM Korea Co, a subsidiary of Australian Strategic Materials (ASX:ASM), has signed a five-year binding sales and tolling framework agreement with USA Rare Earth for the supply of neodymium iron boron alloy.

The agreement enhances ASM’s growing customer portfolio and strengthens its strategic supply relationships with the US magnet production industry, via its Korean Metals Plant.

The Korean Metals Plant will supply neodymium iron boron alloy to support USA Rare Earth’s production ramp-up of high-performance rare earth magnets.

USA Rare Earth is poised to become the leading domestic supplier of rare earth magnets and heavy rare earth elements required for the electric vehicle, green energy, consumer electronics and defence industries.

It owns a magnet production facility in Stillwater, Oklahoma and the Round Top heavy rare earth and critical minerals deposit in Hudspeth County, West Texas.

The agreement provides the supply of 60% of USA Rare Earth’s neodymium iron boron alloy demand for Stillwater. The supply will be for product at agreed specifications with the periodic quantities to be agreed on a rolling periodic basis.

USA Rare Earth has the option to have an agreed percentage of the total indicative quantity to be supplied as tolled product using feedstock supplied by USA Rare Earth.

Pricing will be calculated using a formula-based mechanism referencing existing pricing indices.

USA Rare Earth chief executive Tom Schneberger commented on the agreement.

“Having a supply agreement in place with ASM plays a critical role in delivering on our vision of achieving magnet production in 2024,” he said.

“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.”

The supply of the neodymium iron boron alloy is expected to begin in 2024.