Australian developer VHM has signed a non-binding term sheet with Mitsui & Co. to supply up to 65,000 tonnes a year of heavy mineral concentrate from its Goschen project in Victoria. That is half of the project's planned production for an initial three years.
At a glance
- Pricing will follow a formula linked to zircon and titanium dioxide prices.
- The deal can be extended for a further three years.
- VHM is talking to Mitsui about taking up to 100% of Goschen's output.
Background
Heavy mineral concentrate from mineral sands contains zircon, used in ceramics, and titanium minerals, used to make titanium dioxide pigment. Goschen, in Victoria, is also known for rare earths. A term sheet sets out the main commercial terms before a binding contract is signed.
What happened
ASX-listed VHM has agreed a non-binding term sheet with Japanese trading house Mitsui & Co., Mining Technology and Grafa reported on October 12. VHM would supply up to 65,000 tonnes a year of heavy mineral concentrate from its Goschen Rare Earths and Mineral Sands Project in Victoria.
The volume covers 50% of Goschen's planned production for an initial three years, with an option to extend for three more. It builds on an earlier letter of interest.
The terms
Pricing will follow a market-linked formula tied to prevailing zircon and titanium dioxide prices, free on board at an Australian port. Both sides are working towards a binding offtake agreement.
Chief executive Andrew King called the term sheet "a significant milestone for VHM". He said it "provides validation of the scale and strategic importance of the Goschen Project".
What it means
VHM said it is still in talks with Mitsui about increasing volumes, with the aim of securing commitments for up to 100% of Goschen's production. Offtake agreements like this help developers raise money to build their projects.
Our read
Outlook: neutral. A non-binding agreement for a project not yet in production does not affect zircon or titanium prices.
What to watch
- Conversion of the term sheet into a binding offtake agreement.
- Any agreement covering more of Goschen's output.
- Zircon and titanium dioxide prices, which set the contract price.
For information only, not investment advice.
Detailed analysis
Timeline
- 2026-10-12: VHM and Mitsui sign a non-binding term sheet for Goschen concentrate.
Demand Drivers
Mitsui has committed in principle to half of the planned output.
Supply Drivers
Goschen would add zircon and titanium mineral supply from Victoria.
What could lift prices
- A major Japanese trading house is backing half of planned output.
- Talks could extend to all of Goschen's production.
What could weigh on prices
- The term sheet is non-binding.
Country impact
| Country | Impact | Reason |
|---|---|---|
| Australia | Low | A Victorian mineral sands project moves closer to a sales deal. |
| Japan | Low | Mitsui gains a potential source of zircon and titanium minerals. |
Industry impact
| Industry | Effect | Reason |
|---|---|---|
| Critical Minerals Mining | Positive | A mineral sands developer secures a potential buyer. |
Who gains, who loses
- VHM: A term sheet with Mitsui supports its financing.
Other ways this could play out
- If the term sheet becomes binding, VHM will have a secured buyer for half its output.
- If talks stall, VHM will need other buyers.
Price risks
- Zircon and titanium dioxide prices set the value of the contract.
- The project still has to be built.
Australia
Japan