Arafura Rare Earths Ties Nolans to US Supply Chain with Heavy Rare Earths Offtake as Funding Vote Looms

Binding agreement with Traxys North America secures dysprosium and terbium supply from Nolans project, key for Western EV and defense magnets.

A rare earths producer aiming to break China’s stranglehold on critical magnet materials has secured a supply deal that goes well beyond standard neodymium-praseodymium contracts. For the first time, Arafura Rare Earths is also locking in significant volumes of dysprosium and terbium—two heavy rare earth elements that western defence and electric-vehicle supply chains find hardest to source outside China.

The binding framework agreement with Traxys North America, signed in May 2026, commits the trader to take up to 500 tonnes of NdPr oxide and 7.5 tonnes of dysprosium-terbium oxide annually from Arafura’s Nolans project in Australia. The contract runs for five years with a two-year extension option. Pricing follows international benchmarks such as those from Benchmark Minerals Intelligence and S&P Platts North America, with payments in US dollars—adding a currency-risk dimension to earnings that will eventually be reported in Australian dollars.

The heavy rare earths component is the strategic standout. Dysprosium and terbium are essential for high-performance permanent magnets used in EV drivetrains and military hardware. China currently controls roughly 92% of refined NdPr production, and its grip on dysprosium and terbium is even tighter. By attaching these elements to a US-facing offtake, Arafura is positioning Nolans as a linchpin in Washington’s push to secure its own processing and magnet-making capacity.

That push has already produced big deals elsewhere. In July 2025, MP Materials struck a $500 million partnership with Apple to supply rare earths and expand magnet production. The US Department of Defence subsequently invested $400 million in MP Materials as part of a multi-billion-dollar effort to build a domestic supply chain. On the geopolitical front, Ukraine’s parliament ratified a minerals and economic agreement with the US in May 2025, creating a joint investment fund fed by revenue from Ukrainian resource extraction.

Existing offtake and the widening gap

The new Traxys North America agreement adds to a prior contract with Traxys Europe, announced in March 2025, for up to 300 tonnes of NdPr oxide per year. Combined, the two Traxys lines cover around 800 tonnes annually. Including deals with Hyundai, Kia and Siemens Gamesa, Arafura now has binding offtake for 66% of Nolans’ planned annual output of roughly 4,440 tonnes of NdPr oxide.

That’s short of the 80% coverage typically demanded by project lenders. The remaining gap is about 1,200 tonnes a year. Management is in talks with European buyers for roughly 500 tonnes of that shortfall, but no new agreements have been announced.

Equally unresolved is the financing for the development itself. Arafura is asking shareholders to approve a A$230 million capital raise at the annual general meeting on 10 June 2026. The package is backed by Germany’s KfW and Export Finance Australia; under its terms, KfW would take a board seat and secure veto rights over future project milestones, with conditions that must be met by 1 December 2026.

Market response and the rocky road since

Shares initially jumped on the Traxys news. On 13 May 2026, the stock hit A$0.36 on the ASX, a gain of 9.09% on the session. The rally soon faded, with the stock last changing hands at A$0.34.

The price action in the weeks since has been more mixed. Over a more recent Friday session on Tradegate, the stock closed at €0.1975, down 5% on the day and roughly 8% over the month. The longer view tells a different story: the year-to-date advance still stands above 41%. Analyst Maximilian Berger has described that as evidence of structural demand for rare earths assets, even when short-term sentiment wobbles.

Volatility is not unique to Arafura. Sector peer USA Rare Earth saw profit-taking after its latest quarterly results, underscoring how easily the narrative can shift in a development-stage subsector that depends on both commodity prices and project milestones.

Raw material headwinds

The pricing backdrop has also turned choppy. NdPr oxide fell 21% in April to US$99.61 per kilogram, pulling back from a strong earlier run. The next major signal will come from China’s production quotas, which are typically updated in June and provide a guide to supply for the second half of the year.

For Arafura, the immediate inflection point is the AGM vote. If the capital raise passes, it will clear one of the final hurdles before a full investment decision on Nolans, which the company aims to reach before the end of June 2026. The Traxys deal, by locking in a US-facing customer for both light and heavy rare earths, has strengthened the project’s geopolitical credentials—but the financing gap remains wide enough to demand attention.