Special Report: Arafura’s advanced Nolans project in the NT can only benefit from the rising price of NdPr oxide in China.
Chinese neodymium-praseodymium (NdPr) oxide pricing has risen by more than 30 per cent since late October on increased adoption of electric vehicles (EVs) and wind power along with demand from electronics and other devices.
Neodymium iron boron (NdFeB) magnets are used in the motors of EVs and other high-tech applications that require the use of small yet powerful permanent magnets.
Exports to European end users surged in the third and fourth quarters on concerns about the Chinese Export Law that was introduced at the beginning of this month, which could signal a reduction in exports.
This was supported by BAIINFO Magnet export data showing strong demand from Europe and the US markets.
To top it off, areas of China’s Sichuan region – known for both very spicy food and rare earths production – have yet to recover fully from the “once-in-a-century” flooding that struck in August.
This has reduced supply across the chain from concentrate to metal, making it hard for smelters to purchase oxides due to low inventory.
Additionally, Chinese domestic rare earth inventory is low.
Little wonder then that NdPr oxide is now commanding a price of about $US65.30 ($88.05) per kg on the Shanghai Metals Market.
Supply chain resilience
The rising NdPr price, prospects of lower exports out of China and the impact of the COVID-19 pandemic has really turned the spotlight on supply chains.
This has been recognised by the US, which has declared a national rare earth supply chain emergency, while Japan has set aside $US2.2 billion to help Japanese companies move production back home.
Adding further pressure, multiple jurisdictions are committing to achieving net zero emissions within the next 20-30 years.
These factors have led to a global priority towards rebuilding and investing in mineral processing capabilities that allow a reduction in reliance on China.
Shovel ready NdPr project
This is all good news for Arafura Resources (ASX:ARU), currently wrapping up offtake and financing agreements for its flagship Nolans NdPr project near Alice Springs that it describes as being ‘shovel ready’.
Put simply, this means that the only thing required for the company to press the big green button is for customers to commit to buying its rare earth and phosphoric acid products and for financiers to whip out their chequebooks.
The list of achievements to position the project for ultimate success is certainly impressive.
A feasibility study with extensive flow sheet pilot testing is already in place for Nolans and potential customers have already qualified Arafura’s product range.
The project has secured all Northern Territory and Federal government environmental approvals.
The company has also reached a Native Title agreement with traditional owners and in July secured its minimum 25-year mining tenure from the NT government.
Nolans has a significant mining inventory capable of supporting 39 years of production.
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.