Arafura Rare Earths has announced conditional approval for a substantial debt financing package of $150m (A$225.66m) from the Export-Import Bank of Korea (KEXIM).

This move marks a significant step towards funding the Nolans rare earths project located around 135km from Alice Springs in Australia’s Northern Territory (NT).

Arafura stated that its project is expected to help in diversifying the global supply chain for neodymium-praseodymium (NdPr) oxide.

The financing package from KEXIM includes a direct loan facility of up to $75.1m and a loan guarantee for up to $74.9m, both with a tenure of up to ten years.

Arafura said the financial support is instrumental in advancing its goal to secure the $775m in senior debt funding needed for the development of the Nolans project.

KEXIM's conditional approval follows a letter of interest issued in December 2023.

Arafura has already secured cornerstone binding offtake agreements with Hyundai Motor Company and Kia.

These agreements ensure the supply of up to 1,500 tonnes per annum of NdPr oxide once the Nolans project reaches its full production capacity.

Arafura managing director Darryl Cuzzubbo said: “Hyundai and Kia are Arafura’s cornerstone customers and our strategic alliance with Korea has been fortified by KEXIM’s $150m in financing support for the Nolans Project.

“Together, KEXIM and Arafura are embarking on the development of a diversified global NdPr supply chain to achieve a lower-carbon future.”

Arafura is actively engaging with commercial lenders, including KEXIM Global in Singapore, to secure credit approval for participation under the Export Credit Agency-covered tranches and other senior debt facilities.  

The funds will go towards Arafura’s flagship Nolans rare earths project in the NT, which is set to become a major supplier of NdPr to South Korea’s automotive manufacturing sector.

The Nolans project will include a mine and a processing plant comprising beneficiation, extraction and separation plants as well as related infrastructure.