en.Wedoany.com Reported - Arafura Rare Earths, leveraging its recently secured AUD 350 million (USD 246 million) in financing, plans to commence construction of the Nolans rare earth mine in Australia's Northern Territory in September, which will become the country's first vertically integrated rare earth complex. The project's capital expenditure stands at USD 1.23 billion.

When the company made the project start decision in May, total equity financing had reached USD 887 million, and it had already achieved 80% of its offtake target. Arafura raised approximately USD 1 billion in debt from nine domestic and international lending institutions. Recently, the company signed offtake agreements for 500 tonnes per year each with Australia's Critical Minerals Strategic Reserve and Traxys North America.

Arafura Rare Earths Managing Director and CEO Darryl Cuzzubbo stated that the company pursues an "ore-to-oxide" model as a differentiator, aligning with the context of Western countries accelerating the construction of independent rare earth supply chains. Currently, only a few projects globally, such as MP Materials' Mountain Pass mine in California and Lynas Rare Earths' Mount Weld in Western Australia, can produce oxides, but Lynas' rare earths are processed and separated at its Malaysian plant. Nolans plans to retain processing at the mine site to address the challenge of radioactive waste disposal.

According to project economic data updated in July 2024, the mine is expected to commence production in 2029, with an after-tax net present value of USD 1.73 billion and an internal rate of return of 17.2%. The mine has a design life of 38 years and can produce 4,440 tonnes of neodymium-praseodymium oxide annually, accounting for approximately 4% of global production, along with heavy rare earths and phosphoric acid.

Cuzzubbo noted that processing facilities and related infrastructure account for 90% of the total project cost, reflecting the high chemical processing cost characteristic of rare earth projects. The project has received support from the Australian government due to its inclusion of on-site downstream processing and benefits from the "Major Projects" framework, which can expedite approval processes.

In terms of offtake, the company has signed agreements for 1,500 tonnes per year of neodymium-praseodymium oxide with Hyundai and Kia, 520 tonnes per year with Siemens Gamesa, and 300 tonnes and 500 tonnes per year with Traxys' European and North American operations, respectively. Cuzzubbo stated that the company is in final negotiations with a German offtaker for 250 to 500 tonnes per year, with contracted volumes potentially increasing to 3,820 tonnes per year. Regarding pricing mechanisms, contracts do not include price floors but are linked to rare earth indices outside China, such as S&P Global Platts North American index, as part of Arafura's strategy to promote transparent market pricing.

The phosphoric acid by-product plays a significant role in cost control. The company targets an annual production of 144,000 tonnes of fertilizer-grade phosphoric acid, which has a purity higher than fertilizer grade but insufficient for direct use in lithium iron phosphate batteries. Cuzzubbo said the company is engaging with battery manufacturers to explore the possibility of additional processing by buyers for use in LFP batteries.

In heavy rare earths, Nolans plans to produce 573 tonnes per year of samarium-europium-gadolinium/heavy rare earth oxides, including approximately 25 tonnes of dysprosium oxide and 8 tonnes of terbium oxide. Due to different magnet manufacturing technologies outside China requiring more heavy rare earths, this project is significant. The company has received a non-binding letter of intent for up to USD 300 million in financing from the U.S. Export-Import Bank for a heavy rare earth separation project.

Arafura's final investment decision also paves the way for a second-phase expansion, targeting a doubling of neodymium-praseodymium oxide annual production to 10,000 tonnes. A pre-feasibility study is expected to be completed early next year. Australian mining magnate Gina Rinehart's Hancock Prospecting is the company's largest shareholder, holding a 17.5% stake.

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