Arafura Rare Earths Limited has secured a non-binding letter of in-principle support for the Nolans Project from the German export credit agency (ECA) Euler Hermes Aktiengesellschaft (Euler Hermes) for US$600 million.
KFW IPEX- Bank (KfW) was recruited as an additional mandated lead arranger and ECA structuring bank in January 2023 to help Arafura in its engagement with Euler Hermes and ECAs with Nolans Project ties. Arafura said the Federal Ministry of Economic Affairs and Climate Action had verified the eligibility for a united loan guarantee.
Arafura’s US$600 million loan guarantee is non-binding and contingent on offtake agreements with German companies and the processing of neodymium praseodymium (NdPr) products into permanent magnets or powertrains. The final guarantee amount will be determined by offtake volume, final offtake arrangements, and market circumstances for NdPr.
To help Euler Hermes evaluate the Nolans Project, Arafura and KfW supplied an overview of offtake engagement in Germany, possible supply chains, and historical NdPr pricing data. Arafura must file a formal application with the German Government, including economic, technical, and legal information and environmental and social elements, to gain a final and binding financing decision. Arafura will provide additional market updates as it works to finalise its offtake arrangements and advance any official application.
Furthermore, the Northern Australia Infrastructure Facility (NAIF) has granted non-binding in principle support to enhance its project finance tranche from A$100 million to A$150 million. While the Nolans Project has completed the strategic assessment phase of the NAIF decision process, NAIF has said that a final investment decision may only be made after adequate due diligence and approval by the NAIF Board.
According to Arafura, if the NAIF and Euler Hermes facilities are formalised and implemented, they will be a significant component of the larger debt facilities being pursued concerning the project with Export Finance Australia (EFA), commercial banks, and other international ECAs.
“The Nolans Project closely aligns with global customers’ critical raw material diversification plans and their ESG priorities. Support from Australian and international export credit agencies is a direct reflection of the value this represents. We look forward to close ongoing relationships with Euler Hermes, EFA and NAIF as we continue to progress offtake negotiations and the project moves through its next critical phases toward full funding, construction and first production,” Arafura Managing Director Gavin Lockyer said.
