Perth-based conglomerate Wesfarmers made headlines in late-March with a $1.5 billion bid for Australia’s largest rare earths producer, Lynas Corp (ASX:LYC).
The bid was swiftly rejected by Lynas and the failed takeover attempt has been viewed by many as a vote of confidence in the rare earths sector, peaking interest in Australia’s other rare earth developers.
In the event of a successful second bid, the takeover of Lynas would pull rare earth companies further into the mainstream of resource investment alongside the battery metals.
Arafura next in line for the NdPr throne
Amongst the emerging Australian rare earth producers that would benefit from the acquisition of Lynas, Arafura Resources (ASX:ARU) stands out.
The company owns the Nolans neodymium-praseodymium (NdPr) rare earths project in the Northern Territory, one of the largest and most advanced NdPr projects in the world.
Released in February, the Nolans DFS (definitive feasibility study) shows the project to be an ultra-low-cost, long-life operation capable of producing up to 4,357 tonnes of NdPr oxide per annum, or around 10 percent of current global demand.
NdPr is the key raw material input to NdFeB permanent magnets, used in the production of electric vehicles (EV), wind turbines, mobile phones and robotics.
Should Lynas be acquired by Wesfarmers, Arafura would emerge as the largest listed, non-Chinese developer of NdPr in the world, offering significant upside for investors with a keen eye for value.
Demand for NdPr is forecast to grow by 6 percent year-on-year until 2030, with NdFeB use in EV drivetrains predicted to increase by 24 percent over the same period, according to leading industry analyst Roskill.
Nolans’ other key differentiator is its status as a 100 percent Australian-domiciled project that has secured all its environmental approvals, giving it a clear edge on producers like Lynas that are subject to the whims of foreign governments, in their case Malaysia.
This, in combination with its low cost and world-leading output potential, makes Arafura an even more appealing prospect for investors.
This content is produced by Star Investing in commercial partnership with Arafura Resource. This content does not constitute financial product advice. You should consider obtaining independent advice before making any financial decisions.
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