By David Crowe
A mining company backed with $840 million in federal loans has admitted to breaking environmental law at its flagship project to export critical minerals, sparking new warnings about risks to local habitat.
Arafura Rare Earths, which counts mining billionaire Gina Rinehart’s company as a key investor, admitted to flouting the rules by going ahead with part of the project before it gained approval from the federal government.
Arafura Rare Earths aims to have its Nolans mine project in production before the end of 2025.
But the company has escaped serious legal sanctions over the breach after paying a fine of $16,500 and saying it had resolved “misunderstandings” with federal officials.
The company is developing the Nolans mine in the Northern Territory in the hope of exporting rare earths to customers such as Hyundai, Kia and Siemens for use in magnets and other technologies for renewable energy.
While the project has approval from the federal government under the Environment Protection and Biodiversity Conservation Act, it still requires clearance from Environment Minister Tanya Plibersek for each stage of construction.
But the company went ahead without clearance from Plibersek and broke condition 8 of the approval, according to an enforcement notice just days before the $840 million package was revealed.
Hancock Prospecting executive chair Gina Rinehart.Credit: Trevor Collens
Arafura head of corporate affairs Shaan Beccarelli confirmed the company paid a small fine to the Department of Climate Change, Energy, the Environment and Water (DCCEEW), but said this was only for a single contravention of the law.
“There was no environmental impact as a result of the contravention – it was a procedural error,” she said. “Arafura staff and DCCEEW officials worked closely to resolve misunderstandings in the lead up to issuance of the fine.”
The department said the company contravened a condition of the approval in February last year by starting work at the Nolans project, which is 135 kilometres north of Alice Springs, before meeting the requirements. The department did not elaborate on the work done or the impact on the environment. The infringement notice was sent last month and the fine was paid on March 1.
Arid Lands Environment Centre policy officer Alex Vaughan said it was essential to ensure threatened species in the area were protected and groundwater-dependent trees were maintained.
“It is concerning that Arafura has already breached approval conditions at such an early stage of their development,” Vaughan said.
“Nolans is a significant mine, which will use up to 4.8 billion litres of water at full production, extract 304 million tonnes of waste across the life of the mine, and result in the processing of radioactive material, including thorium and uranium found in the ore deposit.”
Arafura says the rocks at the mine are slightly radioactive. The company aims to extract the rare earth metals neodymium and praseodymium, which are used to create powerful magnets in electric vehicles.
The latest boost for the project came last week when Prime Minister Anthony Albanese unveiled taxpayer support to build a refinery at the site to make Australia a leader in critical minerals.
The Morrison government promised funding for Arafura in May 2021, when then-resources minister Keith Pitt announced a $200 million “letter of support” from Export Finance Australia.
This led to last week’s deal to offer the loan from the government’s Critical Minerals Facility, which is managed by Export Finance Australia, as well as a separate $150 million loan from the Northern Australia Infrastructure Facility.
The full commitment is greater, however, because the Commonwealth has also promised a “standby liquidity facility” worth up to $US200 million ($306 million) from Export Finance Australia, a conditional approval for another $US75 million ($114.7 million) and additional funding of $50 million from the Northern Australia Infrastructure Facility.
In addition to the loans, the Morrison government gave Arafura a grant of $30 million under the Modern Manufacturing Initiative in March 2022, just before the last election.
Rinehart’s company, Hancock Prospecting, bought 10 per cent of Arafura for $60 million in December 2022.
Arafura’s share price fell over the course of last year, then rose 73 per cent after the federal funding was announced on March 14.
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