Arafura Rare Earths Clears Final Hurdle for A$1.23 Billion Nolans Project, Aiming to Chip Away at Chinese Dominance

Arafura Rare Earths begins construction of Australia's first integrated rare earths mine-to-processing plant, aiming to reduce China's domination in critical mineral supply for EVs and defence.

Construction of Australia’s first fully integrated rare earths mine-to-processing operation will begin in September 2026, after Arafura Rare Earths’ board gave the final investment decision on the Nolans project in mid-May. The move marks a concrete step in the West’s struggle to loosen China’s near-total grip on the refining of metals essential for electric vehicles, wind turbines and defence systems.

Peking controls roughly 90% of global rare earth refining capacity, and export restrictions imposed last year served as a stark reminder of the vulnerability that dependency creates. Arafura’s project, located 135 kilometres north of Alice Springs in the Northern Territory, is designed to offer an alternative by housing the entire processing chain — from raw ore to high-purity oxide — on a single site. Some 90% of the capital budget is earmarked for the chemical processing plants on location.

The company expects to produce 4,440 tonnes of neodymium-praseodymium oxide each year, equivalent to roughly 4% of current global supply. An additional 573 tonnes of heavy rare earth oxides will also be extracted annually, including about 25 tonnes of dysprosium and 8 tonnes of terbium. The mine has a projected life of 38 years, and commercial production is slated to begin before the end of 2029.

Arafura’s stock currently trades at €0.17, having gained about 68% over the past twelve months. The shares have, however, suffered a near-14% pullback over the last 30 days, reflecting the volatility that still surrounds the rare earths market and the heavy upfront costs of such capital-intensive ventures. The group’s market capitalisation stands at roughly €881 million.

The financial structure behind the A$1.23 billion project is already in place. Equity of A$887 million has been raised from a consortium that includes Hancock Prospecting, which holds a 17.5% stake, the German Raw Materials Fund, Export Finance Australia and the National Reconstruction Fund Corporation. Debt of about A$1.01 billion is being shared among nine lenders. The Australian government is also chipping in up to A$200 million for infrastructure and has committed to buying 500 tonnes of oxide each year for a strategic stockpile.

Arafura has locked in offtake agreements covering around 80% of planned NdPr output. Hyundai and Kia have signed up for 1,500 tonnes annually; Traxys will take 800 tonnes split between European and North American buyers; Australia’s Critical Mineral Strategic Reserve will absorb 500 tonnes; and Siemens Gamesa has committed to 520 tonnes per year. Discussions are under way with German customers for an additional 250 to 500 tonnes.

To insulate itself from price gyrations, the company uses non-Chinese price indices from Benchmark Minerals and Platts. The economics also benefit from a by-product: 144,000 tonnes of high-purity phosphoric acid will be co-produced each year, significantly lowering operating costs and placing Arafura in the first quartile of the global cost curve. The post-tax net present value is A$1.73 billion, with an internal rate of return of 17.2%.

The project has secured “Major Project” status from the Australian government, streamlining approval procedures. With the investment decision behind it and the first bulldozers due in three months, Arafura now faces the task of proving it can deliver on time and start making a real dent in China’s stranglehold on the rare earth supply chain.