Hastings Technology Metals (Hastings) signed a Memorandum of Understanding (MoU) for an offtake agreement with Chinese based rare earth processor Qiandong Rare Earth Group (QREG) on the 13th September, the third offtake agreement MoU signed by Hastings since August 2017.
The MoU signed with QREG amounts to the supply of 1,500tpy mixed rare earths carbonate (REMC) for a three-year period, with the option to extend for a further two years. The previous two offtake agreements, the first with Baotou Sky Rock Rare Earth New Material for 2,500tpy REMC and the second with China Rare Earth Holdings for 2,000tpy REMC, bring the total volume of offtake MoUs to 6,000tpy REMC, representing 40% of Hastings scheduled production capacity at Yangibana.
Roskill view: Though the three offtake agreement MoUs are non-binding, the move by Chinese processing companies to secure raw materials from non-Chinese sources is an indication that Chinese domestic raw material availability is tightening, particularly for companies outside the six state-owned enterprises. The on-going consolidation in the rare earth industry, the crack-down on illegal and over-production and supply disruptions caused by environmental inspection are all expected to have impacted supply availability, which along with increased trader activity has caused rapid price increases for many rare earth products in 2017. Increasingly tight supply, particularly for neodymium and didymium products in China, is driven by strong demand for rare earth permanent magnet material and is expected to result in further offtake agreements between Chinese processors and non-Chinese rare earth projects. This will be music to the ears of many rare earth developers who have endured years of low rare earth prices.