NT mining: Arafura Rare Earths Nolans project’s $840m lifeline to build national resilience

A 15-year-old resources project has been thrown an almost billion-dollar lifeline by the Commonwealth. Read what it means.

Arafura Rare Earths Nolans project March 2024

The federal government has defended pumping almost a billion dollars into an embattled Territory resources project, saying the benefits far outweigh the risk.

Federal Resources Minister Madeleine King and Trade Minister Don Farrell stood alongside NT politicians at Parliament House on Thursday morning to announce an $840m federal government contribution to Arafura Rare Earth’s Nolan’s project.

Ms King said the investment would help deliver Australia’s first combined rare earths mine and refinery, and diversify rare earths supply chains.

She said the Commonwealth contributions were loans and bridled when the $840m was described as corporate welfare.

Chief Executive Officer Darryl Cuzzubbo. Picture: Pema Tamang Pakhrin

“Rare earths are really hard to mine and produce,” Ms King said.

“It’s a thin market so they’re subject to manipulation from elsewhere. What we’re trying to do here is build a national capacity under repayable loans that go back to the government and in the meantime act in the national interest, but also create jobs and create further capacity.

“Without the project Arafura are developing, we won’t have the capacity to make more magnets here, we won’t have the capacity to go to our international partners and ask them to set up shop on further advanced manufacturing in this country.

Arafura Rare Earths Nolans project from the air.

“This is a really critical step along the way to making sure we can build more things here, which is a really important part of a national capacity in rare earths and critical minerals so we can decarbonise not just Australia, but the world.”

Arafura Rare Earths had been sweating on a $200m loan from the Northern Australia Infrastructure Facility, but the Commonwealth’s announcement was far larger than analysts had anticipated.

In February, it replaced long-time chief executive Gavin Lockyer with former BHP director Darryl Cuzzubbo.

Madeleine King Federal Minister for Resources at NT Parliament in Darwin. Picture: Pema Tamang Pakhrin

As well as $200m from NAIF, $495m came from the Commonwealth’s critical minerals facility, $115m from Export Finance Australia and $30m in government grants.

Underpinning the Nolans project is one of the world’s largest undeveloped neodymium and praseodymium (NdPr) reserves, located about 130km north of Alice Springs.

Previously listed as Arafura Resources, Arafura Rare Earths has been trying to prove the project over more than 15 years with several deadlines for Final Investment Decision coming and going.

Mr Cuzzubbo acknowledged the Commonwealth money did not guarantee the project but would help finalise debt and allow the company to “reach out to investors”.

Arafura Rare Earths Nolans project site.

He said the company has already spent $100m at Nolans on-camp facilities, roads and services.

“As soon as we’ve got financing, we’ll start construction,” he said.

Association of Mining and Exploration Companies NT director Neil van Drunen welcomed the Commonwealth “putting their money where there mouth is”.

“Establishing our own supply chain for rare earths is a no-brainer,” he said.

“The financial backing will provide infrastructure support to ensure Arafura can establish a sustainable base in the Northern Territory for years to come.”

“With this funding and being in the NT, Arafura can realise export opportunities with a global market for rare earths.”

Unlike his predecessors at Arafura, he would not put a date on final investment decision.