Australia backs Arafura's rare earths refinery with A$840 million finance deal

Australia aims to become a global leader in "ethical and sustainable manufacturing" of rare earths minerals by backing Arafura Rare Earths Ltd.'s rare earths mine and refinery in the Northern Territory, the Albanese government said March 14.

The A$840 million package will support the Nolans project, Australia's first ore-to-oxide rare earths processing facility, the company said separately. The rare earths-phosphate-uranium-thorium deposit supplies neodymium and praseodymium products, according to S&P Global Market Intelligence data.

Rare earth minerals play a key role in the energy transition as they are important ingredients in the magnets used in both wind turbines and electric vehicle motors. Rare earths mining and processing is heavily concentrated in China, leading governments involved in the Minerals Security Partnership to work to build their own supply chains.

"The government's contribution will unlock further investment from international financiers and commercial banks, highlighting the value placed on this important investment," the Albanese government said in a March 14 statement.

The financing package will come from several government initiatives, including the A$4 billion Critical Minerals Facility and the Northern Australia Infrastructure Facility.

The funding "will help Australia build downstream industries and support our goal to become a renewable energy superpower by 2030," Minister for Resources Madeleine King said in a statement. "To meet our net-zero targets we will need more mining, not less, to build the solar panels, batteries and wind farms we need to reduce emissions."

Arafura's biggest shareholder is Gina Rinehart, Australia's richest person, who increased her exposure to rare earths in 2023 and is working to reshape the country's lithium sector.

Australian miner Lynas Rare Earths Ltd. and US-based MP Materials Corp. currently account for about 20% of the global rare earths market, according to MP Materials CEO and President James Litinsky. Both companies are grappling with a sharp drop in prices brought on by weak Chinese demand, executives said in recent earnings calls.