National reconstruction fund to buy stake in Arafura Rare Earth’s planned facility 135km north of Alice Springs
The federal government will pour another $200m into the Gina Rinehart-backed Arafura Rare Earths, taking the total volume of taxpayer support for the critical minerals venture beyond $1bn.
The industry and science minister, Ed Husic, will on Wednesday announce that the commonwealth’s national reconstruction fund will take an equity stake in Arafura’s planned mining and processing facility 135km north of Alice Springs.
The investment comes on top of up to $840m worth of commonwealth loans and grants announced for the project in March. Shares in Arafura soared in value after the March announcement, although the price has since declined.
The new $200m investment is conditional on Arafura raising the remaining private funds it needs to construct the Nolans facility, which the government projects will produce about 4,400 tonnes annually of neodymium and praseodymium over its proposed 38-year lifespan.
The rare earths are used to manufacture magnets in mobile phones, wind turbines, electric vehicles and defence equipment.
Rinehart’s Hancock Prospecting is Arafura’s largest shareholder with a 10% stake, according to the company’s latest annual report.
The federal government also last year announced a $230m loan for lithium developer Liontown Resources, which is partly owned by Rinehart.
The federal government wants the mine to get off the ground to create jobs and economic activity in Alice Springs, with estimates it will support 600 positions during construction and 350 once it is up and running.
It also wants to encourage more processing of rare earths to help protect Australia from China’s dominance of global supply chains in clean energy and defence technologies.
The government says the rare earths produced at Nolans will account for roughly 4% of global demand from 2032.
The $200m injection into Arafura is the $15bn national reconstruction fund’s largest investment since it began in November 2023.
The fund’s independent board makes investment decisions at arm’s length from the government.
“This investment will create a sovereign supply of these critical minerals, mined and refined onshore, as well as new export opportunities,” Husic said.
“And it means hundreds of secure, well-paid jobs for central Australia, including significant economic opportunity for First Nations communities.
“We’re backing in our strength in mining, while helping lower emissions and bolstering our supply chains.”
Arafura’s managing director and chief executive officer, Darryl Cuzzubbo, said the investment showed the importance of the Nolans project to Australia’s “rare earths downstream processing capabilities and building resilience in a global supply chain”.
The national reconstruction fund’s chair, Martijn Wilder, said rare earths were strategically important resources that were critical to the net zero transition.
“Arafura’s Nolans Project demonstrates the enormous contribution that Australia can make to the global supply of rare earth minerals and the considerable opportunities for Australia to add value to the raw materials that it mines.”
