Aclara Resources Inc (TSX:ARA, OTC:ARAAF) said it has signed a non-binding agreement with a manufacturer of magnetic alloys to jointly approach potential clients to offer permanent magnets for electric vehicles and wind turbines.
A memorandum of understanding has been signed with Germany's Vacuumschmelze GmbH (VAC) to address a major market opportunity driven by the increasing demand for clean technologies, the Toronto-listed company said.
Aclara is developing ionic clay projects in Chile and Brazil to produce high-purity heavy rare earth carbonates, essential for permanent magnets.
VAC, the largest producer of rare earth magnets outside Asia, is expanding with a new plant in South Carolina, USA, where it recently won a contract with GM to supply permanent magnets by building a new magnets' plant in the State of South Carolina, United States.
Aclara and VAC said they believe that there is a significant market opportunity driven by the rising demand for EVs, wind turbines and other clean technologies that require rare earth permanent magnets produced pursuant to ever-increasing ESG standards. These permanent magnets require significant quantities of both light and heavy rare earth minerals, much of which is concentrated among a few suppliers based in Asia.
Ramon Barua, CEO of Aclara, said: "This strategic alliance is expected to offer great synergies to both Aclara and VAC as it combines a clean source of heavy rare earths with the technology needed to convert those resources into actual products.
"It is the first step towards solving a real need in the market, as the transition to electric vehicles requires new rare earths supply chains, which are currently not being addressed in a comprehensive manner.
"This strategic alliance will create value for VAC, Aclara, OEMs and for our planet, as we will be closer to achieving our climate change goals in a sustainable manner."
VAC boss Erik Eschen said the collaboration is aimed at streamlining the supply chain for rare earth elements, specifically dysprosium and terbium.
Aclara pointed out that it is one of very few potential suppliers of dysprosium and terbium, which are highly coveted heavy rare earth minerals key in the production of permanent magnets and not easily available outside of Asia.
It is developing processing technology through its US-based subsidiary to be able to receive carbonate from Chile and Brazil and produce magnetic alloys, which are a key input required by VAC to produce permanent magnets.