The rare earths company that has won $1 billion in taxpayer funding is banking on foreign customers paying over the odds for Australian-refined critical minerals in the hope of loosening China’s stranglehold over the market, but analysts have raised doubts about the plan.

Arafura Rare Earths’ bid to build a $1.7 billion mine and refinery in the Northern Territory got a boost on Wednesday after it landed a $200 million equity investment from the Albanese government’s National Reconstruction Fund. The government had already extended $840 million in loans to help the Gina Rinehart-backed company develop its Nolans project outside Alice Springs.