Siemens Gamesa taps Australian mine for rare earths critical to offshore wind boom

Spanish renewables giant Siemens Gamesa has signed a major deal with Australian miner Arafura Resources for the supply of highly sought after rare earth materials critical to the mass production of offshore wind turbines.

ASX-listed Arafurs said on Tuesday that it has signed an offtake agreement for the supply of neodymium and praseodymium (NdPr) to Siemens Gamesa over a five-year term, with a possible two-year extension.

The deal will see Arafura supply 200 tonnes of the rare earths per year beginning in 2026, increasing to 360 tonnes per year in year two and 400 tonnes per year in years three to five.

Supply will come from Arafura’s Nolans Project in the Northern Territory, Australia’s first vertically integrated rare earths operation.

A single site mining and processing operation, the Nolans Project will provide a secure and traceable supply chain to meet domestic and international demand.

The NdPr from Nolans will be used in the manufacturing of permanent magnets used in the production of offshore wind turbines at Siemens Gamesa’s Cuxhaven facility in Germany. The same magnets are also used in electric vehicle motors.

This is the second offtake agreement Arafura has signed, after an agreement signed in late-2022 with South Korean automakers Hyundai and Kia. This marks 53% of the targeted 85% annual production from Nolans as already secured under long-term offtake agreements.

“We are delighted to have concluded negotiations for our second offtake agreement,” said Gavin Lockyer, Arafura managing director.

“Siemens Gamesa is the world’s leading manufacturer of offshore wind turbines, and this agreement compliments our strategy to create supply diversification into the renewable & E-mobility sectors.”

This latest offtake agreement will also support ongoing discussions with German ECA Euler Hermes which has already provided a non-binding letter of in-principle support for a loan guarantee of up to $US600 million to support the Nolans Project.

And fellow wind power giant, GE Renewable Energy was last year also reported to be looking to strike a a binding long term off-take agreement with Arafura, as well as potentially taking equity in the Nolans project.

First production from the Nolans Project is expected for some time in 2025, with annual production expected to ramp up to 4,440 tonnes per year in 2028.