Arafura Rare Earths Limited has received a Letter of Interest (LOI) from Canadian export credit agency Export Development Canada (EDC) for the availability of up to $300 million in possible financing for the Nolans Project.
According to Arafura, the EDC funding is tied to a strategic agreement between EDC and General Electric Company (GE) to accelerate the energy transition. Arafura’s participation with EDC has been enabled by GE, allowing access to funding through EDC based on GE’s sponsorship of the Nolans Project.
In 2022, Arafura and GE inked a Memorandum of Understanding (MOU) for the delivery of NdPr from Nolans to manufacture permanent magnets used in GE’s offshore wind turbines. Arafura and GE are now discussing a long-term sales arrangement.
GE is also collaborating with Arafura to deliver cogeneration power plant technologies to Nolans’ independent power provider, including the LM2500 gas turbine. Arafura plans to cut emissions by 50% by 2030 using a combination of renewable technologies, including wind power. GE’s efficient cogeneration system cuts carbon emissions from electricity and steam generation by 29%, setting the stage for future renewable integration to further reduce emissions.
Accordion to Arafura, the indicative support provided by EDC is not a commitment, and its participation is conditioned upon the completion of its standard due diligence processes, which may include but are not limited to financial, legal, technical, environmental and social, financing structure, tax, corporate reputation, anti-corruption, third party due diligence, business ethics, compliance, and corporate governance related policies and practises.
The indicative from EDC is consistent with Arafura’s debt-led finance plan for Nolans. It comes on the heels of the Company receiving in-principle letters of support from Germany’s Euler Hermes for up to US$600 million in untied loan guarantees related to offtake by German companies, as well as up to A$350 million from Export Finance Australia and the Northern Australia Infrastructure Facility.
The potential EDC investment will likely lower the proposed US$510 million debt financing facility sought by the Mandated Lead Arrangers and Bookrunners (MLAs).
Arafura further informs that the Company and National Australian Bank (NAB) have mutually decided to discontinue NAB’s function as MLA under the mandate letter. Société Generale and KfW- IPEX Bank will continue as MLAs.
“We are delighted to receive indicative support from Export Development Canada for the Nolans Project. This is further demonstration of the strategic significance that international governments place on the project and its capacity to provide a sustainable supply of critical NdPr to meet the needs of major businesses in key global jurisdictions. We are proud to include GE among the tier-one OEMs associated with offtake from Nolans, and welcome GE’s provision of its Aero power generation technology for the Project,” Arafura Managing Director Gavin Lockyer said.
