Australian Rare Earths Company Receives up to $840 Million in Taxpayer Funds

Wind turbines generate electricity in Runcorn, England, on Sept. 21, 2023. Christopher Furlong/Getty Images

Australian rare earths miner Arafura Rare Earths will received up to $840 million (US$556 million) from the Albanese Labor government to help develop a rare earths project in the Northern Territory.

The federal government will deliver the funding to create “Australia’s first” combined rare earth mine and refinery.

Arafura, backed by Gina Rinehart, is developing the Nolans Rare Earths Project, 125 kilometres north of Alice Springs.

The project will produce rare earths known as Neodymium and Praseodymium (NdPr), used in magnets for electric vehicles, wind turbines and electronics.

The government said its contribution will unlock more investment from international financiers and commercial banks.

CEO Darryl Cuzzubbo said securing the support is a critical achievement for the Nolans project and signifies its economic importance in Australia.

“Gaining this level of support from the Commonwealth government is a critical milestone in becoming a globally significant producer of NdPr, a product essential for electric vehicle and wind turbine manufacturers to achieve future growth targets as part of the energy transition,” he said (pdf).

Arafura highlighted the support from the government would be in the form of a debt finance package, subject to several conditions including due diligence.

Prime Minister Anthony Albanese said the project would create local jobs and economic opportunities. More than 300 new jobs in the Northern Territory will be delivered at the refinery.

“My government is focussed on a future made in Australia, and this project is an important part of that plan,” Prime Minister Albanese said.

“We will deliver critical jobs and economic development in the heart of the Territory and the north.

He said the project is a major vote of confidence in the Northern Territory, which continues to punch above its weight in global trade.

The shares of Arafura Rare Earths (ASX: ARU) were placed in a trading halt on March 13 pending the release of the announcement.

Arafura appointed Mr. Cuzzubbo as CEO and managing director on Feb. 5 to lead the next phase of development, including the construction and delivery of the Nolans Project.

At the time, Arafura Chairman Mark Southey said, “This transition reflects the Board’s absolute focus on delivering and commissioning the Nolans Project, as the company’s efforts to secure key off-take agreements and debt financing head towards a conclusion.”

Early Works on Project Complete

In the December quarter, the company completed early works on the Nolans NdPr project including the commissioning of more than 250 permanent camp rooms.

“In anticipation of securing financing for Nolans in the first quarter of 2024, the company believes it is appropriate to boost operational readiness capabilities and is reviewing the project’s organisational structure in preparation for the next phase of its development,” Arafura said in January.

Northern Territory Chief Minister Eva Lawler said, “Arafura’s project is an example of how this government is attracting investment into our critical minerals sector that will significantly contribute to the Territory’s role in energy transition and reducing greenhouse gas emissions.

“Backed by record levels of investment into exploration, the mining and processing of critical minerals is a priority opportunity for the Territory to create more work opportunities for Territorians.”