$200m equity payment tipped to get Arafura project over the line
The Commonwealth’s Arafura investment could be a game changer. Read what it means.
Northern Territory
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The $200m Commonwealth Government equity investment into Arafura Rare Earth’s Nolans’ project will provide the cornerstone funding to get the project across the line.
The 15-year convertible note announced by Federal Industry Minister Ed Husic on Wednesday is the first cornerstone investor on board with the project.
Arafura Rare Earth’s managing director Darryl Cuzzubbo said the Commonwealth’s $200m equity injection into the project demonstrated the importance of the Nolans development to the Northern Territory and the nation.
Mr Cuzzubbo said the $200m injection from the National Reconstruction Fund Corporation was the first of a number of cornerstone investments which would steer the project toward final investment decision.
He said it was a substantial contribution to the fundraising to secure the US$793m equity required for the project.
He said the NRFC investment sends a strong signal to investors that the project is heavily backed.
The project is supported with Korean, Canadian and German investor interest.
“We want to get 50 per cent or more of the equity with cornerstone investors and we’re already in discussions with multiple parties that gets us to more than 50 per cent of the equity with cornerstone investors,” Mr Cuzzubbo said.
“Once we’ve secured the cornerstone investors we will then go to the public market to the general financial institutions and investors, at which point they will know the project’s heavily backed by large cornerstone investors, of which the NRFC is the first.
“Investors see the Australian Government is backing the project and they look at the terms and importantly, this is a 15 year tenure, which is a long-term commitment.
“Investors see a material investment from the Australian Government and that it is serious, they know we will be well and truly paying off other debt and other dividends before this convertible note needs to be replenished.”
Mr Cuzzubbo on Wednesday restated his belief that the Arafura Rare Earths project would go ahead.
“We’re still targeting the middle of this year for a final investment decision,” he said.
“I know we will get the money. The world needs this NdPr (neodymium and praseodymium) and there is a lot at stake given that China today controls nearly 90 per cent of the supply.
“I know we’ll get it, but we are working to other large organisations’ timelines and processes, so the middle of the year is my estimation, but Arafura is not in control of that timeline.”
Northern Territory Minerals’ Council executive director Cathryn Tilmouth welcomed the Commonwealth’s contribution.
“This is another important step towards a final investment decision for a vital project,” she said.
“Getting a project of this magnitude across the line will have flow on benefits for the local community with jobs and infrastructure, will boost confidence in investment in the Territory, and bring much-needed revenue to the NT economy.”
The Commonwealth previously invested $840m in the project’s debt side from the northern Australia Infrastructure Facility, the Critical Minerals Facility and Export Finance Australia.
Nationals Leader David Littleproud said a Coalition government would support the funding.
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