Image shows research equipment at Arafura’s pilot facility in central Australia.

Research underway at Arafura’s pilot facility in central Australia.

If we hadn't secured the R&D rebate we wouldn't have been able to sustain development of the project. We lived off the R&D rebate from around 2012 until 2017.
— Peter Sherrington, CFO, Arafura Rare Earths

Company profile

Company: Arafura Rare Earths Ltd

Sector: Resources

Location: Perth, Western Australia

Profile: Arafura Rare Earths is a resources company developing a groundbreaking rare earths mine and processing facility in the Northern Territory, 135km north of Alice Springs.

Why R&D is needed

Rare earths are a collection of chemical elements used in a variety of applications. Two of the rare earths, neodymium and praseodymium, are the raw materials in ultra-strong permanent magnets – essential to the modern electronics and automotive industries. With permanent magnet motors allowing electric vehicles and wind turbines to operate more efficiently, rare earths play an important role in reducing greenhouse gas emissions.

Peter Sherrington, chief financial officer and company secretary for Arafura Rare Earths, explains that the company’s R&D has enabled them to extract and produce neodymium and praseodymium oxide from minerals at its Nolans site in the Northern Territory. Long term, he believes this work could pave the way for Australia to challenge China’s dominance of the global rare earths market.

Our company is creating sophisticated processing technology and doing research for an industry that doesn't even really exist in Australia.
— Peter Sherrington, CFO, Arafura Rare Earths

Arafura started as an exploration company for a range of commodities but, after recognising the importance of rare earths for emerging technologies, switched its focus to project development at the Nolans site.

The company has invested in R&D over the past 10 years and, according to Mr Sherrington, the R&DTI has allowed them to scale up its R&D activities. “We never undertake our work on the basis that we will get an R&D rebate,” he says. “But it does mean that we can finish the work and, before we get back out to equity markets to raise more money, we can raise a lesser amount because the R&D rebate is coming in.”

How the R&DTI helps

Mr Sherrington believes the investment market tends to hesitate when it comes to financing projects like Nolans because the rare earths industry is different to traditional resources industries. He credits the R&DTI with enabling Arafura to continue with focused R&D during times when resources were not seen as a desirable investment opportunity.

Arafura’s research has funded laboratory and large-scale pilot plants. These not only help progress the company’s projects but enable laboratories, research facilities and external consultants around the country to generate knowledge and expertise. This newly created knowledge will help other companies to start further along in the development process.

The Nolans project is currently in the feasibility stage. When in production, Arafura Rare Earths predicts the project will have a tremendous impact on the local economy and community – creating employment and career development opportunities in a region which has had little economic activity.

In addition, as clean energy applications from the permanent magnet industry continue to grow, the extracted neodymium and praseodymium resources from Nolans can help support better environmental outcomes.

Arafura has stated its processing of rare earths will meet waste management regulations and provide traceability from mine to final products – standards which may not apply to overseas companies. And, in time, the company believes the project will allow Australia to compete as an international producer of these important resources.