ARAFURA Resources yesterday announced it was seeking mining approval for its Nolans rare earth deposit about 135km north of Alice Springs.

The company said it had lodged a notice of intent with the Northern Territory Government to develop the deposit and was seeking mining approval.

The mine would produce rare earths and by-products of phosphoric acid, calcium chloride and small amounts of  uranium, the company said.

"A mine life of about 20 years is estimated based on rare earths production of 20,000 tonnes a year, although the project may be extended over time as additional drilling results are assessed,'' it said.

Managing director Alistair Stephens said the demand for rare earths was strong. 

"The biggest growth market for rare earths is hybrid cars, a major user of rare earths for rechargeable batteries and high strength magnets for electric motors,'' he said.

"World demand for rare earths is about 110,000 tonnes a year, with 98 per cent produced by China.

"But the Chinese market can no longer meet the demand.''