Energy Fuels secures Madagascar deal to advance Toliara critical minerals project

Energy Fuels Inc., a prominent U.S.-based producer of uranium and rare earth elements, has executed a Memorandum of Understanding (MOU) with the Madagascar Government, marking a significant advancement for its Toliara critical mineral project. The MOU outlines fiscal and operational terms crucial to developing the Toliara critical mineral initiative in southwestern Madagascar.

This collaboration follows the Madagascar Council of Ministers’ decision to lift a suspension on the Energy Fuels project, which had been in place since 2019. The resumption enables Energy Fuels to reinitiate development and community programs while progressing toward a final investment decision (FID), expected within 14 months.

Agreement details and implications

The MOU represents years of negotiation, underscoring the shared vision of Energy Fuels and the Malagasy Government to forge a long-term partnership. Key provisions include a 5% royalty on mining revenues and an $80 million commitment to community development funding, phased over project milestones. Initial payments include $30 million upon project certification and further contributions tied to FID achievements and operational timelines.

Energy Fuels will invest $1 million in community initiatives before FID and allocate $4 million annually from construction commencement. This agreement is contingent on the adoption of a “Stability Mechanism” to ensure financial and legal certainty, vital for large-scale critical mineral projects like Toliara.

Mark S. Chalmers, CEO of Energy Fuels, emphasized the project’s significance, calling it a “generational” endeavor with far-reaching benefits for Madagascar and the company. Chalmers highlighted the environmental, social, and economic advantages, envisioning the Toliara critical mineral project as a cornerstone of sustainable development in the Madagascar mining industry.

Government support and commitments

Under the MOU, the Malagasy Government has pledged active support, including facilitating necessary permits, maintaining legal stability, and ensuring that legislative amendments to mining laws meet the project’s needs. Notably, the Government will refrain from direct or indirect ownership stakes in the Toliara critical mineral project, reinforcing Energy Fuels’ operational autonomy.

The project, which aligns with Energy Fuels’ broader portfolio of critical mineral developments, is expected to create significant opportunities for the local community while bolstering the Madagascar mining industry. Additionally, Energy Fuels’ commitment to sustainable mining practices underscores its focus on long-term environmental and social responsibility.

Economic and operational outlook

Energy Fuels is updating its feasibility studies to reflect the project’s current economic landscape. The company owns the White Mesa Mill in Utah, the only fully licensed conventional uranium processing facility in the U.S., and operates heavy mineral sands projects globally, including the Kwale Project in Kenya. These initiatives further strengthen Energy Fuels’ standing in the rare earth supply chain and its contribution to the energy transition.

The successful implementation of the Energy Fuels project in Madagascar could position the company as a major player in the rare earth elements market, enhancing its role in the global energy transition. However, delays or changes to Malagasy laws could impact project timelines and outcomes, as the MOU’s provisions depend on legislative and administrative alignment.