Canadian miner Aclara Resources, traded on the Toronto Stock Exchange as ARA, has signed a joint venture agreement with JOGMEC, the Japan Organization for Metals and Energy Security, a Japanese government agency, to explore and develop heavy rare earth deposits hosted in ionic clays in Brazil. Folha de S.Paulo reported the deal on Monday (7), citing Reuters; the company's official statement was released in Toronto on Tuesday (8).
How the deal works
Under the terms announced, JOGMEC will single-handedly fund up to US$3 million (about R$15.35 million, according to Folha's conversion) in exploration spending over a three-year earn-in period. Subject to certain conditions, the agency may contribute another US$1.5 million (about R$7.6 million) and extend the period by one year. Once the funding is complete, JOGMEC will have the option to acquire a 30% stake in one of Aclara's exploration projects in Brazil, with the partners then funding the venture in proportion to their stakes. Aclara will run operations during the initial period, through an unincorporated joint venture set up with a new Brazilian subsidiary of the company.
JOGMEC will also have the right to purchase output equivalent to its stake, plus an extra 10% of the project's future production. Combined, the purchase rights could cover 40% of future output, on arm's-length commercial terms. The agency may also assign its stake and rights to Japanese companies or consortia. The Carina project, in the state of Goiás, stays outside the deal and remains 100% owned by Aclara.
Aclara CEO Ramón Barúa said in a statement that the partnership "is in a privileged position to identify and develop new high-quality rare earth opportunities in Brazil".
"The agreement also creates a natural path for future sales to Japan through JOGMEC's preferential rights, aligning exploration success with one of the most strategic rare earth markets in the world," Barúa said.
JOGMEC is the arm of the Japanese government responsible for securing long-term supplies of strategically important natural resources and energy. According to Aclara, it has financed and provided technical support to mineral projects in multiple countries for decades, under a risk-sharing model, and Japan has sought to diversify its sources of rare earths, minerals used in advanced manufacturing and clean energy technologies.
What it means for the supply chain
The deal splits the roles between producer and buyer. Aclara brings its ionic clay expertise in South America and the field operation; JOGMEC puts up the early money, up to US$4.5 million in total if the one-year extension is triggered. For Brazil's mining sector, exploration advances with no immediate outlay from the company, and if the project succeeds it starts life with a guaranteed buyer in Japan. On the other side of the chain, Japanese industry gains a preferential supply channel for heavy rare earths sourced from Brazil.