Top End mining business Arafura has signed a rare earth deal with Hyundai

A Northern Territory miner has signed a huge electric vehicle-related contract with the Hyundai motor company. Here’s what the deal means for the business and the Top End.

Prospective Central Australian miner Arafura Rare Earths Limited has inked a landmark offtake agreement with Korean car maker Hyundai to provide its products for use in electric vehicle manufacture.

The agreement is a huge boost for the company, which for the past 15 years, has been working towards a production timetable in the Territory.

It is Arafura’s first binding offtake agreement from its prospective Nolans site to supply a major EV manufacturer.

First production is expected to be delivered to Hyundai in late 2025.

The offtake agreement is for the supply of NdPr (neodymium and praseodymium) from Arafura’s Nolans Project to Hyundai over a seven-year period, with the option of an additional five years.

Hyundai’s Park Chan Young and Arafura’s Gavin Lockyer sign an NdPr offtake agreement at a ceremony in South Korea.

Under the agreement Kia Corporation, which is owned by Hyundai, can also access Arafura rare earths independent of the parent company.

In addition, Arafura has entered into a non-binding Heads of Agreement with Hyundai to commence discussions for strategic investment with Hyundai and its affiliated companies.

Arafura managing director Gavin Lockyer said the agreement was tied with Hyundai’s plans to expand its EV production capacity.

“They’ve got expansion plans globally that are quite extensive in order to secure rare earths needed for magnets to go into their motors and they have begun looking for sources outside their existing supply chains,” Mr Lockyer said.

“That’s us. There are very few potential short term producers that can fit into this market short term. The ESG (environmental, social and corporate governance) potential resulting from us doing everything at one site was attractive to Hyundai.

“We’re doing everything at one site including waste disposal and not taking materials around the world. Everything is being done at Nolan’s Bore.

“We made the decision to go through the environmental approvals process ahead of the engineering but we felt having environmental approval would be a big selling point.”

Mr Lockyer said NdPr production would commence with about 600 tonnes a year and ramp up to 1500 tonnes when in full swing by 2027. At current prices this will be worth US$150-$190 million a year.

The Arafura project first came to public notice in 2007 when a plan was released to develop the project at a site in Darwin Harbour.

The program has had a number of re-projections since then and will now be built at Nolans Bore, about 135km north of Alice Springs.

Mr Lockyer said changes to national and worldwide economic forecasts had prompted the company to conduct a project update to potentially be released by month’s end.

Final investment decision is expected by early next week and financial close, where the banks sign off, by the middle of 2023.

He indicated some works at Nolans including early earth works, road construction and development of bore fields could commence before FID.

Chief Minister Natasha Fyles welcomed the contract signing.

“Today’s announcement is another huge step forward for the Nolans Project in securing a Final Investment Decision, supporting our plan for the NT to become a globally-significant producing, processing and manufacturing centre for critical minerals,” she said.