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Rare earths developer Arafura has announced a nonbinding letter of interest (LoI) from the Korea export-import bank (KEXIM) for the provision of up to $150-million in debt funding for the Nolans project, in Australia’s Northern Territory.

The $150-million will consist of two tranches – an amount equal to or more than $75-million as a direct loan, and an additional amount equal to or less than $75-million as a debt guarantee.

The in-principle support from KEXIM is linked to the strategic nature of neodymium/praseodymium (NdPr) supply and its critical role in the electrification of Korea’s automotive manufacturing sector.

The LOI from KEXIM is linked to the binding offtake arrangement in place between Arafura and Hyundai Motor Company and Kia Corporation for the supply of up to 1 500 t/y of NdPr oxide, representing about 40% of the 85% yearly production from Nolans available to be secured under long term sales arrangements under Arafura’s offtake strategy.

“We are very pleased to welcome KEXIM’s LoI to provide debt financing support for the Nolans project. Arafura’s foundation offtake agreement with Hyundai and Kia was the beginning of ameaningful relationship with Korea, and our engagement with KEXIM further strengthens that relationship,” commented Arafura MD Gavin Lockyer.

KEXIM’s support aligns with Arafura’s debt-led funding strategy for Nolans and follows the company’s receipt of a LOI from Canadian export credit agency Export Development Canada (EDC) for up to $300-million, in-principle letters of support from Germany’s Euler Hermes for up to $600-million in untied loan guarantees in relation to offtake by German companies and up to a combined A$350-million in indicative support from Export Finance Australiaand the Northern Australia Infrastructure Facility.