Energy Fuels teams with Korea’s POSCO on rare earths

Energy Fuels (NYSE-A: UUUU; TSX: EFR) has partnered up with South Korea’s POSCO with a view of establishing a non-China rare earth elements (REE) supply chain for electric vehicles (EV) and hybrid EV drivetrains as early as this year.

Under a memorandum of understanding (MoU) signed on Monday, Energy Fuels is to supply a large sample of neodymium-praseodymium (NdPr) oxide to POSCO, which will then process it into metal, alloy and finished high-performance permanent REE magnets for use in its traction motor cores.

The deal brings the U.S. and an ally one step closer to making vehicles powered by American-made rare earth oxides with no ties to China. It also allows Energy Fuels, one of America’s largest uranium producers, to pivot more into other transition metals and make more use of its White Mesa mill in Utah, which achieved commercial production last year. The plant has the capacity to produce 850 to 1,000 tonnes of NdPr per year. 

The collaboration would unlock “a scalable, high-quality allied REE magnet processing and manufacturing route that does not currently exist in the U.S.,” Mark Chalmers, CEO of the Colorado-based company, said in a release. “Energy Fuels is moving aggressively to address a critical gap in the domestic market that is both competitive and shielded from geopolitical factors.”

POSCO, originally known as the Pohang Iron and Steel Co., has significantly diversified its operations beyond steel production to include substantial investments in mining and battery materials. It’s a leading supplier of traction motor cores, which are key components in EV and hybrid EV drivetrains, and a specialist in EV powertrain components. Its drivetrains have been approved by U.S., South Korean, European and Japanese automakers.

Shares in Energy Fuels gained 4.6% to close at $4.18 apiece in Toronto on Monday. They’ve ranged from $5.43 to $10.44 over the past 52 weeks and amount to a market value of $1.22 billion. 

Samples OK’d

Initial samples of the NdPr oxide have already met all of POSCO’s applicable specifications, Energy Fuels said. Further to supplying its NdPr oxides, the company is to receive final magnet and sintered block samples from POSCO to demonstrate successful production of high-performance magnets from its rare earth products.

Upon successful validation of the initial sample supply of NdPr oxide, the parties will discuss the potential delivery of additional mass production supply volumes of NdPr oxide later this year for permanent REE magnet production, which, according to Energy Fuels, will be enough to power 30,000+ EVs.

The parties have also indicated the possibility for Energy Fuels to supply REE oxides to POSCO on a long-term basis, while leaving significant volumes available for other customers, including commercial-scale REE metallization, alloying and magnet production initiatives, currently being constructed in the US.

“If a definitive agreement with POSCO is completed this year, we could see Energy Fuels’ American-made rare earths powering vehicles in the U.S. in 2025,” Chalmers said.