ASX-listed Arafura Rare Earths has signed binding subscription agreements with Germany’s State-owned development bank Kreditanstalt für Wiederaufbau (KfW) and export credit agency Export Finance Australia (EFA) that will see the company secure equity subscriptions of A$230-million.

The equity subscriptions comprise A$84-million from KfW on behalf of the German Raw Materials Fund and A$146-million from EFA.

Combined with a binding A$200-million convertible notes commitment from the National Reconstruction Fund Corporation and a A$481-million equity raising having been completed late last year, Arafura has significantly derisked the equity funding required for developing the Nolans rare earth project, in Australia.

The deposit is expected to produce 4 440 t/y of neodymium and praseodymium oxide, which comprises 4% of global demand. The project has a planned 38-year mine life, with plans for an on-site, fully integrated ore-to-oxide processing plant.

“The execution of these binding cornerstone agreements is consistent with Arafura’s previously announced equity funding strategy, which targets cornerstone investment from government-seeded critical minerals funds, customers and other strategic investors,” Arafura MD Darryl Cuzzubbo states.

The latest transactions enforce the strong support from government agencies that Nolans has received and underscore its strategic importance in diversifying global rare earth supply chains.

Cuzzubbo adds that Arafura is now firmly positioned to finalise the equity funding package for Nolans and deliver Australia’s first fully integrated ore-to-oxide rare earths operation.

For the German government, the Nolans project aligns with objectives to secure rare earths supply to be used in the manufacturing of permanent magnets for offshore wind turbines assembled at Siemens Gamesa Renewable Energy’s Cuxhaven facility, in Germany.

At completion of its subscription, KfW will have the right to nominate one director to the Arafura board.

In turn, EFA’s subscription falls under the Australian government’s $5-billion Critical Minerals Facility. EFA expects the Nolans project to help develop Australia’s critical minerals sector.

The subscription agreements are still subject to some regulatory processes as well as Arafura shareholder approval, which will be determined during a general meeting in due course.