Element 25 has locked in a binding take-or-pay offtake agreement with OM Materials for 100% of manganese concentrate from its Butcherbird Expansion, underpinning project financing and targeting commissioning in early 2027.
- Binding take-or-pay offtake for 1.1Mtpa manganese concentrate
- Five-year initial term with option for five-year extension
- Market-linked pricing tied to global manganese benchmarks
- Supports Element 25’s HPMSM downstream battery materials ambitions
- Agreement subject to board approval and project financing
Long-Term Offtake Agreement Secures Sales Pathway for Butcherbird Expansion
Element 25 (ASX:E25) has clinched a binding, long-term offtake deal with OM Materials (S) Pte Ltd, a subsidiary of OM Holdings (ASX:OMH), for 100% of the manganese concentrate produced at its Butcherbird Mine in Western Australia. The agreement covers the expanded output from the Butcherbird Expansion Project (BBX), targeting 1.1 million tonnes per annum (Mtpa) of manganese concentrate.
This take-or-pay contract spans an initial five years from first shipment, with an option to extend for another five years. It provides Element 25 with a clear sales channel and revenue certainty critical for advancing BBX’s development and financing, including provisions for prepayment to support project cashflows.
Pricing and Contract Structure Aligned with Market Benchmarks
Pricing under the agreement is linked to internationally recognised manganese ore benchmarks, incorporating quality adjustments and freight normalization on a free on board (FOB) basis. Periodic pricing reviews ensure alignment with prevailing market conditions, enabling Element 25 to retain exposure to potential upside while securing stable revenue.
OM Materials gains exclusive global marketing rights for conforming manganese concentrate, with limited carve-outs allowing Element 25 to reserve material for its own downstream processing plans, notably its high purity manganese sulphate monohydrate (HPMSM) battery materials program.
Strategic Milestone Supports Project Financing and Future Growth
Element 25’s Managing Director Justin Brown emphasised the significance of the deal in de-risking BBX: "Securing a strong offtake partner represents a major step forward in de-risking the development pathway for our Butcherbird expansion, giving lenders and investors the confidence needed to support project financing." The agreement complements recent contracts with ReGroup Australia for mining and ore haulage services, further streamlining the project’s supply chain.
Mechanical completion and commissioning of the Butcherbird Expansion remain on track for the first quarter of calendar year 2027, with the company progressing toward finalising outstanding contracts and regulatory approvals. The agreement is subject to customary conditions precedent, including board approval and project financing becoming unconditional, notably involving the Northern Australia Infrastructure Facility (NAIF).
Supporting Element 25’s Battery Materials Ambitions
The offtake agreement preserves Element 25’s strategic flexibility to develop downstream processing capabilities, particularly its HPMSM refinery project in Louisiana, USA. This facility, supported by US$166 million in funding from the U.S. Department of Energy and partnerships with General Motors and Stellantis, aims to supply battery-grade manganese materials for the growing electric vehicle market.
With the global shift toward lithium manganese rich (LMR) battery chemistries, demand for high-purity manganese is expected to rise significantly, positioning Element 25 to capitalise on evolving EV battery technologies.
Bottom Line?
This offtake deal marks a pivotal step in securing financing and operational certainty for Butcherbird’s expansion, while maintaining Element 25’s strategic options in battery materials.
Questions in the middle?
- How swiftly will Element 25 secure final project financing and regulatory approvals to meet its Q1 2027 commissioning target?
- What impact will global manganese price fluctuations have on revenue under the market-linked pricing framework?
- How will Element 25 balance concentrate sales with its downstream HPMSM production ambitions amid evolving battery market demand?