From little things: Demand for the rare, rare earths is growing and Arafura is all set to meet it
Rare earths, it turns out, include rarer earths – particularly those with magnetic properties which brings us straight to NdPr oxide – an even more valuable, valuable commodity – and one which Arafura Resources is steadily bringing to market.
As Stockhead noted in November, the strong demand growth has sent prices of rare earths particularly neodymium and praseodymium soaring as their use in high-tech applications such as electric vehicles, wind turbines and electronics continues to expand.
Much of this demand growth stems from all the recent EV excitement, which has put a run on permanent magnets that have rare earths – particularly NdPr – key components in the same way lithium is a key part of lithium-ion batteries.
“Compounding supply and demand issues, we have seen huge price spikes in NdPr oxide. Latest estimates put the oxide at US$130/kg,” Arafura Resources (ASX:ARU) managing director Gavin Lockyer told Stockhead.
It should come as no surprise then there’s strong interest in developing new rare earths projects such as Arafura’s Nolans NdPr project, which has been steadily ticking the boxes towards a development decision.
2021 has seen the company secure $300m in conditional letters of support from the Northern Australian Infrastructure Facility and Export Finance Australia.
The two takeaways from this are that Australia is taking the development of new critical minerals projects very seriously and the other is the official growing confidence in the Nolans project, a shovel-ready, fully-permitted project that can meet more than 5% of the world’s demand for NdPr oxide.
Arafura has also hosted high profile visits to the Nolans site by cabinet members from both the Northern Territory and federal governments, which lend further credence to the interest and confidence in the project.
In November, the company launched the Sustainability Report that outlined key targets in the areas of environmental protection, water management and engagement with local indigenous landowners as part of the company’s commitment to ESG principles.
Arafura has also appointed experienced global consultancy Hatch for the front-end engineering and design work that will allow a fixed price for the final tender to be decided upon in the second half of 2022.
Nolans has an ore reserve of 29.5 million tonnes grading 2.9 per cent total rare earth oxides with high-value NdPr making up 26.4 per cent of the rare earths content.
Net present value and internal rate of return, both measures of profitability, have been estimated at $1.4bn and 18.1% respectively.
With most of the ground work already in place, Arafura is confident the Nolans NdPr project is ready for launch in 2022 once the FEED work is completed by Hatch.
Approving the project for development will not only help Australia capitalise on the electric vehicle boom, it will also mark the first critical minerals project to get off the ground since Lynas in 2009.
“All the signs are there for a strong NdPr price into the future because there is simply no supply coming online,” Lockyer said. “Except for us.”
“We’re negotiating offtake agreements and further funding arrangements, now is the time to get in, because once these are announced, you will regret saying no.”
This article was developed in collaboration with Arafura Resources, a Stockhead advertiser at the time of publishing.
This article does not constitute financial product advice. You should consider obtaining independent advice before making any financial decisions.