Australia's richest person, Gina Rinehart, has poured more of her money into Arafura Rare Earths, a day after the Federal Government agreed to buy some of the company's future output in a landmark deal.
Perth-based Arafura on Friday launched a $350 million share placement and $25 million share purchase plan, both priced at 26 cents a share, to go towards the $1.9 billion build of its Nolans mine and refinery in the Northern Territory. Its shares last traded at 31 cents.
Arafura's largest shareholder — Gina Rinehart's Hancock Prospecting — is tipping $85 million into the placement, which will boost Hancock's holding from 15.5 per cent to 17.5 per cent.
Arafura will have about $911 million of cash in the bank following the capital raise and said the equity funding component needed to construct Nolans is now fully completed.
"Hancock Prospecting is pleased to support development in the NT, and support Arafura with additional investment to enable the start of construction of the Nolan's rare earths project, which will play a vital strategic role in the global critical minerals supply chain," Mrs Rinehart said.
The mining billionaire has built large stakes in numerous major rare earth players, including Lynas Rare Earths, Las Vegas-based MP Materials and Brazilian Rare Earths.
The West Australian on Thursday revealed that Nolans was the first project to be backed by the Federal Government's $1.2 billion critical minerals strategic reserve. The Government intends to buy 500 tonnes of rare earth oxides a year from the Nolans project.
Nolans, located 135 kilometres north of Alice Springs, was one of two developments to receive joint US and Australian funding after Prime Minister Anthony Albanese met Donald Trump in the White House last October. It is estimated that once fully operational — anticipated to be in 2029 — the integrated mine and refinery will supply 5 per cent of global demand for rare earths.
Resources Minister Madeleine King said the fact that the strategic reserve had been able to bring a major project to a final investment decision only weeks after it was legislated demonstrated its value.
"The Nolans project is a major step forward for Australia's rare earths industry," she said on Thursday. "It means construction jobs in the Northern Territory, ongoing regional employment and a stronger sovereign capability in minerals that are essential to clean energy, advanced manufacturing and defence."
Rare earths — which are used to make the very strong magnets used in military and renewables technology as well as everything from phones and scooters and small Bluetooth speakers — have become a key focus for countries keen to diversify their supply chains away from China's stranglehold. The Nolans project will produce neodymium-praseodymium oxide and make significant inroads into building this alternative supply chain.
Arafura has received about $140 million in equity from taxpayers under the Australia-US deal and has a $700 million debt agreement with the Federal Government, on top of the strategic reserve deal.
