The United States supports rare earth projects in Australia and Brazil with funding of potentially up to $850 million

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Australian Strategic Materials announced that it has been issued a letter of interest (LoI) by the US Export-Import Bank (EXIM) for a debt funding package totaling up to $600 million. This financial support aims to facilitate the construction of its Dubbo rare earths project located northwest of Sydney.

Additionally, the bank has extended preliminary support of up to $250 million to Australian-listed Meteoric Resources, which is advancing its Caldeira Rare Earths Project in Brazil, as announced by Meteoric on Thursday.

Shares of ASM surged by as much as 39% to A$1.65 before retreating to $1.40, while Meteoric shares saw a 1% increase, reaching A$0.2425.

“When it comes to rare earths, there is a priority for critical minerals and the US supply chain being developed domestically using feedstock and raw materials supply from allied nations,” said Dylan Kelly of fund manager Terra Capital.

“They are putting their money where their mouth is and effectively backing high-probability projects,” he added.

Backing by a government authority is seen as key to attract commercial lenders and private investment to the sector given a recent drop in prices and complex, often costly production requirements.

ASM is set to reach a final investment decision on the Dubbo project by the end of the year, focusing on the production of both light and heavy rare earths oxides. The project has already secured A$200 million ($132.24 million) in initial support from the Australian government. Initially estimated at A$1.68 billion in December 2021, construction costs for the plant have risen significantly. Additionally, ASM operates a processing plant in South Korea.

Meteoric aims to finalize its investment decision for Caldeira by late next year. The project will specialize in producing light rare earths such as neodymium, and praseodymium (NdPr), as well as heavy rare earths like dysprosium and terbium.

“The LoI represents a material step in ASM’s project funding strategy and is recognition of the strong engagement the Company has experienced from government, investors, and industry groups in North America,” ASM said in an exchange filing.

The US has already offered support to Australia’s Lynas Rare Earths for its processing facilities in Texas that are under construction.

The US and Australia last year set up a critical minerals task force as Australia looks to drum up investment for minerals processing from allied nations as an alternative to top producer China, which accounts for more than 80% of global supply.

EXIM‘s backing for both endeavors hinges on the prospective inclusion of US content in equipment, goods, and services.

ASM finalized a deal last year to supply neodymium iron boron alloy from its South Korean metals facility to Noveon Magnetics Inc, a rare-earth magnet manufacturer based in the United States. The source material for this alloy is procured from Vietnam.

Recently, Australia pledged to allocate up to A$840 million ($550 million) to support a joint rare earths mine and refinery project situated in the Northern Territory. This initiative is owned by Arafura Rare Earths.


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