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Special report: Arafura Resources is listening to its future customers and has decided that refining its rare earths in the same spot as its mine and processing plant in the Northern Territory is a much better option than doing it offshore.

“Our engagement with customers indicates a growing focus on the provenance of rare earth supply being sustainable and managed in an environmentally and socially responsible manner,” managing director Gavin Lockyer said.

“Doing all our processing and refining at the project site in the Territory allows us to tick those boxes.”

Arafura’s Nolans neodymium-praseodymium (NdPr) project will produce 3600 tonnes each year of NdPr oxide, which is enough material for the rare earth magnets in 2 million electric vehicles for over 30 years.

NdPr is used to make ultra-strong rare earth permanent magnets for micro-motors in the electric components of cars, such as seats, mirrors, wipers, steering and braking.

The origin of metals and minerals used in products like electric cars and phones is becoming a big consumer issue.

Most rare earths are sourced from China where there is a legacy and ongoing issues associated with of unsafe, unethical and polluting work practices.

NdPr magnets, Arafura Resources
NdFeB permanent magnets are used in the automotive, clean energy and personal electronics sectors, and in industrial automation. Pic: Getty

The refinery – or separation plant – which hosts the final stages of rare earth processing, takes a mixed rare earth concentrate and refines it into high-value NdPr oxide and other rare earth products.

The process of selecting a site for the plant, which will cost $US80m ($110.4m) to build, involved a detailed assessment that considered environmental, economic and operational factors and options in South Korea and the Northern Territory.

By doing all processing and refining for the Nolans project at the mine site, Arafura is ensuring any mine and process waste material remains in the same area it came from rather than ending up in another country.

The decision for the separation plant to be built at the Nolans site, 135km north of Alice Springs, mitigates operational and sovereign risk, meaning the funding deals are likely to flow much more freely.

“When we’re trying to raise project finance, financiers will look at it and say it’s in Australia, it’s in a jurisdiction that’s got strong and proven environmental controls,” Mr Lockyer said.

It also means Arafura is doing more “value-adding” in Australia – something Mr Lockyer says the mining industry needs to do more of.

Northern Territory Chief Minister Michael Gunner said the complete Nolans project will create around 500 construction jobs, with 350 to 370 jobs during operations.

“This is a game-changer for the Territory as it positions Central Australia as a leader in clean energy supply chains, plus it represents the first time industry will now have the capacity to value add processing to mineral resources,” he said.

Chinese demand just keeps growing

In October, Arafura inked a long-term deal to supply a top Chinese magnet manufacturer with 900 tonnes of NdPr oxide — a quarter of its forecast output — each year.

The non-binding, long term agreement is with JingCi Material Science, a Beijing-headquartered Tier 1 Chinese manufacturer which produces Neodymium Iron Boron (NdFeB) permanent magnets for global automotive, wind energy, consumer electronics, and industrial motor companies.

The agreement also contains provisions whereby JingCi could help Arafura in project financing — potentially through the introduction of its customers to the process.

China is already the world’s dominant NdFeB magnet producer, and demand for NdPr is expected to grow at 8 per cent each year to 2025 from the current global consumption of 33,340 tonnes.

Prices have been rising since mid-2016 as China began consolidating its industry but longer term they’re expected to keep ticking up on demand from electric vehicles, clean energy applications, and in industrial automation.

While traditional petrol or diesel internal combustion engine cars each use about 700 grams of NdPr, electric or hybrid vehicles require an extra kilo.

NdPr is also a key component of the large permanent magnets in wind turbine generators, where up to 150 kilograms of NdPr is used per megawatt of installed capacity.

 

Arafura Resources is a Stockhead advertiser. 

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