Arafura Rare Earths gives green light to $1.6 billion Nolans project in the Northern Territory
"This is the starting line." – Arafura Managing Director Darryl Cuzzubbo
Arafura Rare Earths has reached a final investment decision for the Nolans Rare Earths project, located 135 kilometers north of Alice Springs in the Northern Territory. The project, valued at $1.6 billion, has received multiple sources of government funding and is designated as a priority under a US-Australia critical minerals agreement. Multi-billionaire Gina Rinehart is a key investor in the company.
Project Details and Timeline
The Nolans project will produce Neodymium-Praseodymium (NdPr) oxide, a mineral used in electric vehicle motors, wind turbines, defense technology, and advanced manufacturing. It is expected to be Australia's first ore-to-oxide rare earths facility, incorporating a sulphuric acid plant for processing. At full capacity, the site is projected to supply approximately 4-5% of global demand for NdPr oxide.
Arafura Managing Director Darryl Cuzzubbo stated that production is still several years away and described the announcement as "the starting line." The project has been in development for 20 years.
Funding and Investment
Total government support for the project is approximately $1.2 billion. This includes:
- $200 million from the National Reconstruction Fund Corporation
- $840 million in loans
- $84 million from the German state-owned bank KfW
- $146 million equity investment via Export Finance Australia
The Australian government has committed to purchasing up to 500 tonnes of NdPr oxide per year through its $1.2 billion Critical Minerals Strategic Reserve. This is the first use of the reserve. Other major customers include:
- Hyundai and Kia: 1,500 tonnes of NdPr per year
- Siemens Gamesa: 520 tonnes of NdPr per year
- Traxys (commodity trader): 800 tonnes
These contracts represent 57% of the planned output.
Delays and Financing Concerns
The project has experienced multiple delays in securing its final investment decision. Arafura’s most recent quarterly report did not specify an exact timeline, though the company previously aimed for a decision in early 2025. The company now targets the first half of calendar year 2026, pending confirmation of further investment from the German government.
Cuzzubbo stated at an investor meeting that 90% of the project’s funding is either committed or subject to final approval. He emphasized the company’s focus on securing terms it considers favorable for shareholders, prioritizing certainty over speed.
Northern Territory Mining Minister Gerard Maley described the complexities of financing large-scale projects as commercial matters for Arafura. Ian Satchwell, a senior fellow at the Australian Strategic Policy Institute, expressed confidence in the project’s eventual progression, citing its strategic importance.
Background and Industry Context
The Nolans deposit was first identified decades ago. The final investment decision occurred after a lengthy development period due to the complexities of building a processing facility in a market currently dominated by China. According to Satchwell, who is also a sustainable minerals expert at the University of Queensland, China currently produces over 80% of global light and heavy rare earths.
"The strategic importance of this project cannot be overstated." – Ian Satchwell
Gina Rinehart, Australia’s wealthiest person, holds a 15% stake in Arafura Rare Earths. Rinehart has publicly criticized renewable energy technologies and net zero policies, labeling wind turbines and solar panels as "eyesores." She supports political organizations that oppose net zero and renewables.
The Nolans project initially planned to use fossil gas for power but has since included a hybrid renewable power station in its plans, though specific details have not been released. Rinehart’s other mining interests, including Liontown Resources and Lynas Rare Earths, have incorporated renewable energy into their operations.