Special Report: Arafura is progressing development of Nolans neodymium-praseodymium (NdPr) project as China’s magnet manufacturing sector resumes operations.

Following an internal risk assessment, the company’s staff in Perth are working from home to comply with government directions related to the COVID-19 outbreak while staff in Darwin continue to operate from that office.

Arafura Resources (ASX:ARU) noted that while the pandemic had resulted in the cancellation of planned marketing trips to Asia, it still managed a marketing trip to Europe in March and was advancing offtake discussions with several end users and supply chain partners.

Communications have started with existing Chinese magnet manufacturing partners JingCi Material Science and Baotou Tianhe Magnetics, and a Japanese magnet manufacturer, to deliver samples of high purity NdPr oxide product from its recently completed rare earth separation pilot plant for pre-qualification and verification.

The company is also working towards negotiating and executing a formal toll conversion agreement with a Chinese downstream rare earth metal processor at its operations in Thailand and Vietnam in response to requests by European end users for the delivery of NdPr metal through a non-Chinese supply chain.

This supply chain partner already offers toll processing of non-Chinese rare earth feedstock and is a reputable toll manufacturer that delivers metal products to Japanese clients.

Ongoing activity

Arafura has secured in-principle agreement for an Indigenous Land Use Agreement (ILUA) and is completing related tenure grant prerequisites such as surveying to shorten the mining tenure grant time frame once the agreements are executed by all parties.

Preparation of a detailed mining management plan (MMP) covering the construction and initial operation of the project is also ongoing with 17 specific management plans written and under review, while the remaining aspects are being completed in close consultation with the Northern Territory’s Department of Primary Industry and Resources.

Securing the project’s mining tenure and authorisation for the MMP will allow the company to proceed with construction and initial operations.

Metallurgical test work is continuing, with precipitation of rare earths to produce high-purity NdPr oxide and mixed middle-heavy rare earths (SEG/HRE) carbonate products underway at ANSTO.

Batch testing has been completed and continuous testing using process liquors from the recently completed solvent extraction pilot programs are planned for the near future.

Arafura is also progressing pre-front end engineering and design activities with Hatch Pty Ltd to finalise the basis of design, design specifications and philosophies. This work is anticipated to be completed in the current quarter.

Rare earths market

Arafura noted that following a nationwide shutdown in late January, China’s industry restarted in March with many manufacturing facilities operating at between 50 per cent and 80 per cent capacity.

Notably, much of the rare earth industry and downstream neodymium-iron-boron (NdFeB) magnet producers – particularly in northern China – are now operating to fill a backlog of offshore and domestic orders while the automotive industry is ramping back up.

While China sources NdPr and other rare earths from offshore jurisdictions like Malaysia, Africa, Myanmar, Australia and the US to help meet domestic and global demand, some of this supply has temporarily shut due to the impact of COVID-19.

Any extended operational shutdowns will tighten supply further and some supply chains like Japan could be affected.

Arafura said the COVID-19 pandemic was a “stark reminder of the fragility of supply chains” and was a prime motivator for direct investment being considered by governments and downstream customers in the sector.



This story was developed in collaboration with Arafura Resources, a Stockhead advertiser at the time of publishing.
This story does not constitute financial product advice. You should consider obtaining independent advice before making any financial decisions.