Strategic Pathways to Sovereign NdPr Oxide: ARU’s CentralRole in...

Strategic Pathways to Sovereign NdPr Oxide: ARU’s CentralRole in a Trans-Pacific Rare Earths Alliance

Disclaimer: This thought presents a perspective based oncurrent developments and should not be interpreted as factual or definitive. Itdoes not constitute financial advice; individuals are advised to seekindependent professional counsel.

Readers may consider substituting any of the mentionedcompanies with another major organisation within the Western world, noting thatsuch entities are typically strategic and high profile, contributingfundamentally to the broader Western supply chain context.

Please be aware that this analysis is entirely speculative,formulated solely by Birch because of extensive research with the detailsof this project at ARU and diligent research spanning over 5 years.

In the absence of news/communication from ARU I have done my best to understand, have a look, swap with other partners, but some detail may help you to then help me understand what is happening. My previous notice on here outlined how shareholders are being disadvantage to support and ex-China supply (and how we should be a private company not a publicly listed). This adds to that view, and takes a wild guess on how these JV's etc can play out. This is just an example

Summary

Arafura Rare Earths (ARU) is emerging as Australia’s sovereign hub for NdPr oxide — the critical input for permanent magnets used in EVs, wind turbines, and defence systems. This is one of the few majornon-China supplies in the West still available.

Through a phased development strategy, government-backed price floors, and a unified joint venture (JV) spanning both Phase 1 and Phase 2, ARU can scale production, minimise dilution, and enable broader industry access to downstream value.

With support from Gina Rinehart-Hancock, MP Materials (MP), Lynas (LYC), and the Australian government, ARU is positioned to anchor a resilient, ESG-aligned supply chain that benefits shareholders, industry, and national interests.

Phase 1: ARU as a Fully Integrated Producer

ARU’s Phase 1 development at Nolans positions it as a vertically integrated producer — mining, processing, and refining its own ore into NdPr oxide.

Financial Highlights

• Selling Price: US$160/kg (guaranteed by Australian government)
• Production Cost: US$28.40/kg (inclusive of tax credits and by-product revenue)
• Margin: US$131.60/kg
• Annual Output: 4,400 tonnes NdPr oxide
• Capex: US$1.86 billion (US$1.3B secured; ~US$560M remaining)

Strategic Implication

ARU/JV captures full margin and controls the entire value chain, but Phase 1 is capital-intensive. Contributions from JV partners — including MP (backed by the U.S. DoD), Lynas, Gina Rinehart, and the Australian government — can reduce Phase 1 dilution while securing strategic offtake and access to Phase 2 oxide.

Phase 2: ARU as Australia’s Toll Processor

Phase 2 allows ARU/JV to process third-party carbonate — skipping mining and early-stage processing. This modular, low-capex expansion cements ARU as the REO hub of Australia.

Financial Highlights

• Carbonate Cost: US$70/kg
• Conversion Cost: US$23/kg
• Total Cost: US$93/kg
• Selling Price: US$160/kg
• Margin: US$67/kg
• Capex: US$700 million

Strategic Implication

Phase 2 is funded by a coalition: Gina Rinehart, Lynas, MP (DoD-backed), the Australian government, and unused ARU debt capacity. This structure enables oxide scale-up with minimal dilution and supports the creation of a sovereign NdPr stockpile — which will serve as the basis for a new seaborne pricing index.

Unified JV Structure: Nolans Processing Partnership PtyLtd

To fund and operate both Phase 1 and Phase 2, a single JV entity is proposed — consolidating governance, infrastructure, and strategic alignment.

Any variation of the following; for example, Hancock at zerodue to their ownership in all companies and the perception that they mayreceive substantial public support. Various scenarios regarding equity stakesshould be considered.

	Party	Role	Equity Stake	Notes
1	Arafura (ARU)	Feedstock owner, site host	55%	Majority stake; contributes sunk capex and ore
2	Lynas (LYC)	Technical operator	30%	Brings SX expertise; cannot redirect Mt Weld feedstock due to JARE constraints
3	Hancock Prospecting	Strategic investor across all entities	0%	Capital injection; aligns ARU, LYC, and MP interests
4	Australian Gov’t	Infrastructure co-funder - second equity stake announced today	15%	Non-voting or preferred equity via NAIF or other concessional support

Governance Model

• Board Composition: 5 seats — ARU (2), Lynas (1), Hancock (1), Independent Chair (1)
• Voting Rights: 3/5 supermajority for major decisions
• JV Duration: 15 years with renewal and exit clauses

CEO Appointment: Strategic Neutrality – Potential reasonfor DC not being offered the LTI as yet?

The CEO of Nolans Processing Partnership Pty Ltd must balance technical credibility with governance neutrality.

Preferred Model

• Independent CEO appointed by the JV board
• Backed by ARU CPO and LYC Technical Director
• Reports to the board, not to any single shareholder

This structure ensures:

• ARU retains strategic direction
• Lynas contributes operational depth
• Gina Rinehart’s cross-holdings support cohesion
• Government and retail stakeholders trust the leadership

Trans-PacificOfftake: Selling Oxide to the U.S.

All Phase 2 oxide is sold to MP Materials or the U.S. government.

Pricing Structure

• MP Pays: US$110/kg (U.S. floor price)
• ARU Receives: US$160/kg (Australian government tops up US$50/kg)

Strategic Implication

• MP secures supply at a strategic price
• ARU receives full value
• Gina Rinehart’s stake in MP aligns incentives across the supply chain
• Governments support Western supply chain resilience and ESG traceability

Strategic & ESG Alignment

	Objective	JV Outcome
1	Sovereign oxide supply	✓ First Australian oxide by 2029
2	Public capital efficiency	✓ Up to A$800M saved in duplicative capex + gains additional benefit of Ex-China Sea Borne Pricing index – derived via the national stockpile
3	Mining capex efficiency	✓ US$150–250M saved via feedstock deferral
4	Oxide delivery acceleration	✓ Up to 12 months gained via SX readiness
5	ESG credibility	✓ Lower land disturbance on site by becoming national REO hub, improved traceability
6	Western supply chain resilience	✓ Enabled via U.S.–AU alliance, Australian govt pricing access, coupled with DoD pricing floor.
7	Seaborne pricing index	✓ Australian stockpile becomes benchmark for global oxide pricing

Scale: ARU

	Company	NdPr Oxide Capacity	Dy/Tb Capacity	Status
1	ARU Phase 1	4,440 tpa	~150 tpa (via Nolans)	Validated, delivery by 2029
2	ARU Phase 2	Up to 11,100 tpa	Optional depending on feedstock supplier	Scoping underway, modular design

Investor Communication Strategy: Control, Scale, andStrategic Alignment

“This isn’t just a JV for Phase 2 — it’s a strategic partnership for the entire Nolans processing footprint. ARU retains control, gains scale, and protects shareholder value.”

• ARU remains in control: 55% equity, 2 board seats, feedstock ownership
• Lynas accelerates commissioning: Proven expertise, reduced risk
• Rinehart aligns all parties: Stakes in ARU, LYC, and MP create strategic cohesion
• Government support is real: Over A$1B committed; JV unlocks more without dilution
• Shareholder value is maximised: Full margin, reduced capex, strategic independence

Signals from Industry: Tone Shifts and StrategicConvergence

Recent developments suggest growing alignment across key players — both in tone and strategic posture:

• Lynas’s tone shift: Media comments and Diggers & Dealers discussions show openness to shared processing infrastructure and strategic cooperation — a marked change from prior siloed positioning.
• Embrace of national stockpile: Lynas has now publicly supported the Australian strategic stockpile initiative, signalling alignment with sovereign oxide goals and ARU’s processing role.
• JARE constraints clarified: Mt Weld feedstock is contractually committed to JARE — Lynas cannot redirect it. Any future tolling through ARU would involve feedstock from Australian rare earth startups, not Lynas’s own mine.
• Darryl Cuzzubbo’s Sincerity: In the Rare Earth Exchange interview, DC’s heartfelt thanks to Amanda signal genuine collaboration and respect — not just transactional alignment.
• Gina Rinehart’s influence: Her cross-holdings in ARU, LYC, and MP position her as the strategic glue — enabling cooperation across mining, processing, and magnet manufacturing.
• ARU remuneration: ARU didn’t hire a COO (replacement), and nor continued with a LTI scheme for senior management.

Final Outcome — Everyone Wins

	Company	Role	Outcome
1	MP Materials	Buys oxide, makes magnets	Secures supply at strategic price
2	Lynas (LYC)	Supplies connections, and complex knowledge, joins JV	Gains subsidy access at higher price point, and production tax credits via ARU partnership, expansion.
3	Hancock Prospecting	Strategic investor	Unlocks scale, aligns ARU, MP, and LYC interests
4	ARU	Converts feedstock to oxide	Captures upside, retains control, minimises dilution
5	Australian Gov’t	Subsidy provider	Delivers sovereign supply, ESG wins, capital efficiency, Global RE hub-New pricing index and RE stockpile. Employment etc.