Arafura Resources Ltd (ASX:ARU) has picked up $30 million under the Federal Government’s Modern Manufacturing Initiative and shares are trading higher.
The cash injection will support the rare earth elements-focused explorer and developer as it constructs the $90.8 million rare earth separation plant at its cornerstone Nolans Project in the Northern Territory.
Nolans is Australia’s only shovel-ready neodymium-praseodymium (NdPr) project — a globally significant development with the potential to supply around 5% of the world’s NdPr oxide demand.
Arafura is leveraging an ore-to-oxide business model that will see downstream processing established locally and enable Australia to play a leading role in the diversification of critical raw materials.
Broadly speaking, a vision for critical minerals underpins the government’s $1.3 billion Modern Manufacturing Initiative, an enterprise that forms part of the Resources Technology and Critical Minerals Processing Roadmap, which aims to develop Australia as an epicentre for resources tech and critical minerals over the decade.
Exponential growth in industry
“This grant is an exciting milestone for Arafura, recognising the strategic significance of the Nolans Project and its place in the future of critical minerals processing in Australia,” Arafura managing director Gavin Lockyer said.
“Rare earths are critical to the manufacture of electric vehicles and wind turbines, with demand growth forecast to be exponential in coming decades.
“Australia has a window of opportunity to invest in strategically important rare earths projects such as Nolans and maximise the local jobs and investment benefits of the clean energy revolution.”
Shares were as much as 23.1% higher intraday to A$0.24 with more than 32 million changing hands.
About Nolans
Nolans is 135 kilometres north of Alice Springs and is projected to employ around 280 workers in its operational crew.
The project’s separation plant will be the first of its kind in Australia and the second outside China, producing separated rare earth oxides and enabling the development of diversified rare earth supply chains.
Rare earth separation technology does not currently exist in Australia and Nolans presents an opportunity to develop a higher value product that leverages Australian mineral processing expertise.
Once the separation plant comes online, there’s potential to explore more avenues, like processing other rare earth-rich feedstock at Nolans.
Arafura is targeting a Final Investment Decision for Nolans in the second half 2022, with detailed front-end engineering and design (FEED), offtake and project funding activities underway.
Previous endorsements for Nolan
Today’s Modern Manufacturing Initiative grant builds on further broad Australian, Territory and export partner government support for Nolans. These include:
- Achieving Major Project Status from the Northern Territory Government in 2020;
- Securing nonbinding letters of support from Export Finance Australia and the Northern Australia Infrastructure Facility for $200 million and $100 million in debt facilities, respectively;
- Gaining written support from Minister for Trade, Tourism and Investment, Dan Tehan MP, and Minister for Resources, Water and Northern Australia, Keith Pitt MP, expressing the alignment of Nolans with the government’s Critical Minerals Policy objectives; and
- Signing a joint statement of cooperation with Korean Government agency KOMIR to facilitate Korean market access to Nolans product.