Arafura powers development in Top End rare earths hunt

Arafura has also secured critical investment interest with a provisional untied loan guarantee of up to US$600m (AU$898) from major German export credit agency, Euler Hermes Aktiengesellschaft.

Additionally, the company has received in-principle support from the Northern Australia Infrastructure Facility (NAIF) to increase its project finance from $100 million up to $150 million. In 2021, NAIF provided an initial letter of support to provide up to $100 million for a 15-year term.

Nolans boasts a resource estimate of 56 million tonnes at an average 2.6 per cent rare earth oxides and 11 per cent phosphate. A significant component of the project will be downstream processing, with Arafura signalling its clear intent for a beneficiation, extraction and separation plant.

The company argues its project is one of the only advanced ore-to-oxide projects of scale in the western world.

An update of the project’s definitive feasibility study late last year saw a 68 per cent increase in the net present value (NPV) of the now $2.4 billion project.

In a base-case scenario, the updated study stamps Nolans with an internal rate of return of 19.3 per cent and an average EBITDA of $573m over a mine life of 38 years. If prices for NdPr oxide are favourable, the NPV of the project could blow out to as high as $4.2 billion.

The fastest-growing market for NdPr oxide is in neodymium-iron-boron (NdFeB) magnets. These cutting-edge batteries offer the highest energy product of any material today, making everyday items smaller, lighter, mobile, more efficient and more affordable.

With the global push towards net zero by 2050, NdFeB batteries are finding increasing use in wind turbines and drivetrain automotives and are expected to reach 55 per cent of magnet demand by 2035.

According to energy research and consultancy Wood Mackenzie, by 2030 the forecast supply gap is predicted to reach 45 kilotonnes - or more than 10 times Nolans’ annual name-plate production.

Arafura has already signed offtake agreements to supply NdPr oxide to major motor vehicle manufacturers Hyundai and Kia, along with American giant GeneralElectric to produce wind turbines.

As the dozers roll in on early construction works at the Nolans project, with a 2025 supply start date firmly in site, the budding rare earths producer looks to be well-placed to play a role in helping to meet the increasing global demand.