Gina Rinehart’s Hancock Prospecting joins rare earth race through Arafura stake

Gina Rinehart’s Hancock Prospecting has joined the rare earth race, taking a $60m stake in Northern Territory hopeful Arafura.

Gina Rinehart’s Hancock Prospecting has become the latest mining major to join the queue in rare earths, taking a 10 per cent stake in Northern Territory hopeful Arafura Rare Earths.

Hancock has taken a cornerstone $60m stake in Arafura as part of a $121m placement at 37c, which will eventually give Mrs Rinehart’s family company a stake worth about 10 per cent of the rare earth project developer.

The deal comes amid strongly rising interest in rare earth plays, only weeks after Andrew Forrest told Fortescue Metals Group shareholders the Pilbara miner was also on the hunt for rare earth projects.

Arafura is still closing on the completion of the front end engineering and design (FEED) studies on the refinery for its Nolans rare earths project in the Northern Territory, but said in mid-November it expected the project to cost about $1.59bn to build, including contingencies.

The raising tops up Arafura’s bank balance as it looks to pre-order long lead items and kick off early works at Nolans in early 2023.

Arafura plans to produce about 4400 tonnes of rare earth oxides from Nolans when production begins in late 2025, according to the company’s current schedule.

Arafura was one of a suite of rare earth hopefuls that have held projects for more than a decade, but most recently has pitched itself as a solution to the desire of South Korean industrial majors to lock in security of supply of rare earth metals and other critical minerals.

In early November, the company locked in a binding sales deal with the South Korean carmakers Hyundai and Kia.

Arafura’s deal with Hyundai locks in the sale of about 40 per cent of its annual output for 7 years, or up to 1500 tonnes of neodymium and praseodymium oxide destined for use in Hyundai’s electric vehicles.

It has also been in talks with GE Renewable Energy since July over the terms of an offtake deal with the US energy major to supply rare earth oxides for use in GE’s offshore wind turbines.

Arafura has said it plans to launch talks with potential funders for the project early in the new year.

Arafura is also running a share purchase plan to allow existing holders to top up their positions, at the same price as the placement.

Its shares were down 5c to 39c in a higher market at lunchtime on Monday.