Viridis Mining and Minerals (ASX: VMM) has secured a binding long-term rare earths offtake agreement with European chemicals group Solvay, underpinning approximately $US915 million ($A1.3b) in minimum potential revenue and strengthening the financing prospects of its Colossus project in Brazil.
The agreement, signed with Solvay subsidiary Rhodia Operations SAS, covers approximately 70 per cent of forecast mixed rare earth carbonate (MREC) production from Colossus, providing a contracted route to European markets ahead of targeted first production in 2028.
Under the arrangement, material will be supplied to Solvay’s processing facility at La Rochelle in France, supporting the development of a rare earths supply chain outside China.
The agreement runs from first production until December 31, 2034, with binding take-or-pay commitments commencing on the earlier of commercial operations or January 1, 2029. It also includes provisions for a potential five-year extension.
Price protection strengthens financing case
A key feature of the agreement is the inclusion of contractual price floors for the four principal magnetic rare earths: neodymium, praseodymium, dysprosium and terbium.
Minimum contracted volumes for these elements represent approximately 64 per cent of forecast production over the six-year take-or-pay period from 2029 to 2034.
Based on these commitments and contractual price floors, Viridis estimates minimum revenue of approximately $US915 million, subject to delivering the contracted volumes.
The agreement also covers samarium, yttrium and gadolinium, although these elements are excluded from the minimum revenue calculation because they do not have contractual price floors.
Additional revenue could be generated through market-linked pricing above the agreed floors and purchases exceeding minimum commitments.
Solvay also holds a right of first offer over remaining planned MREC production through 2034, although it is not obliged to purchase those additional volumes.
The arrangement provides Viridis with greater revenue visibility as it progresses discussions on senior debt financing.
Viridis managing director Rafael Moreno said the agreement addressed a major commercial risk for the project.
“With very few established Western rare earth separation groups capable of providing a credible route to market, securing Solvay as our partner addresses a key commercial risk for Colossus while providing greater confidence in the project’s long-term economics,” Moreno said.
Building a Brazilian processing industry
Beyond offtake, the partnership could support greater downstream processing capability in Brazil.
The companies are contemplating a separate licensing and technical services agreement under which Solvay would provide technology and technical support to help Viridis produce higher-value refined MREC.
Such an arrangement would allow Viridis to capture more value domestically rather than relying solely on the export of less processed material.
“Importantly, this partnership extends well beyond offtake,” Moreno said.
“Solvay brings decades of rare earth separation expertise and technology, some of which we will work together to bring into Brazil, supporting our strategy to develop processing capability and capture more of the rare earth value chain domestically.”
With its definitive feasibility study completed and equity funding secured, Viridis is advancing project execution while pursuing debt financing.
The Solvay agreement provides a potentially important foundation for lenders assessing the project’s commercial viability, although debt funding has not yet been finalised.
The transaction highlights the growing importance of committed customers, price protection and established processing partnerships in financing new rare earths developments outside China.
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