The Federal Government’s $15 billion National Reconstruction Fund (NRF) has taken a $200 million equity stake in the Gina Rinehart-backed Arafura Rare Earths (ASX: ARU) planned facility at Nolans 135km north of Alice Springs.
The new $200m investment is subject to Arafura raising the remaining private funds necessary to construct the Nolans facility.
Based on government projections, the Nolans facility – which will account for roughly 4% of global demand from 2032 - will produce around 4,400 tonnes annually of neodymium and praseodymium over its proposed 38-year lifespan.
The industry and science minister, Ed Husic expects this investment to create a sovereign supply of these critical minerals, mined and refined onshore, plus new export opportunities.
Initial estimates suggest the Nolan project will support 600 positions during construction and 350 once it is established and running.
Arafura’s CEO, Darryl Cuzzubbo, believes the government’s investment decision demonstrates the importance of the Nolans project to Australia’s “rare earths downstream processing capabilities and building resilience in a global supply chain”.
Arafura’s share price soared following an announcement last March that the commonwealth had tipped in $840 million worth of loans and granted to help get the project started.
The funding included around $495 million in loans from the Critical Minerals Facility, $200 million from the revamped Northern Australia Infrastructure Facility, and up to $115 million in federal export financing.
However, since then Arafura’s share price has pulled back significantly.
It is understood that Rinehart’s Hancock Prospecting is Arafura’s largest shareholder with an 8.6% stake.
Today’s announcement follows the Federal Government’s decision last year to lend $230 million to lithium developer Liontown Resources, which is also partly owned by Rinehart.
Later today, Arafura is expected to announce to the ASX that it has executed a binding term sheet of $200 million of unsecured convertible notes with the NRF. This will have a tenure of 15 years and a conversion period of seven years. A convertible note is a loan that can be converted into shares.
Today’s announcement takes the total volume of taxpayer support for the critical minerals venture beyond $1 billion.
