Arafura Rare Earths, an Australian rare earths explorer, has secured up to $300 million in debt financing from Export Development Canada (EDC) for its Nolans Project located in the Northern Territory of Australia.
The funding comes after the Australian government earlier this year pledged up to A$840 million ($556.42 million) to diversify the global supply chain for rare earths. This move was prompted by COVID-19-related supply chain disruptions that highlighted the reliance on China, which produces more than 80% of the world’s rare earths.
Shares of Arafura Rare Earths climbed as much as 7.7% in early trading, outperforming the broader Australian benchmark index, which rose 0.6%.
The Nolans project is set to become Australia’s third rare earths processing plant, after Lynas Rare Earths’ Kalgoorlie operations and Iluka Resources’ Eneabba heavy rare earths plant, which is currently under development.
Arafura stated that it has received conditional approval for 68% of the targeted $775 million senior debt funding for the Nolans Project, bringing the company closer to a final investment decision. In its 2023 annual report, Arafura estimated the capital costs and contingency for the Nolans Project at around A$1.59 billion.
The company, whose largest shareholder is Australia’s richest person, Gina Rinehart, already has supply agreements with major companies such as Hyundai Motor, Kia Corp, and Siemens Gamesa Renewable Energy. It also has a provisional agreement with General Electric.
The funding arrangement between Arafura and EDC was facilitated by a unit of General Electric, according to the Australian company. Arafura is also working with a group of foreign and domestic commercial banks to secure the remaining financing for the project.