Energy Fuels (EFR.TO) traded 1.2% higher at last look in NYSE American pre-market trading as the company signed a memorandum of understanding with South Korea-based POSCO International to establish a non-China rare earths supply chain for electric vehicles and hybrid EV drivetrains for U.S., E.U., Japanese and South Korean automakers.

Under the proposed terms, Energy Fuels will supply neodymium-praseodymium (NdPr) oxide from its White Mesa mill in Utah. The material will be processed into metal, alloy and finished high-performance permanent rare earth elements (REE) magnets for use in POSCO's traction motor core.

Energy Fuels will also receive final magnet and sintered block samples to demonstrate successful production of high-performance magnets from its NdPr oxide.

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

"Today's agreement between Energy Fuels and POSCO International brings the U.S. and our allies in Europe, South Korea and Japan one step closer to seeing vehicles powered by American-made rare earth oxides with no ties to China, unlocking a scalable, high-quality allied REE magnet processing and manufacturing route that does not currently exist in the U.S." Energy Fuels' President and CEO Mark Chalmers said. "Energy Fuels is moving aggressively to address a critical gap in the domestic market that is both competitive and shielded from geopolitical factors."

Both companies will also discuss the potential for Energy Fuels to supply U.S.-produced 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 U.S.