China investment in rare earths explorer Arafura approved
Rebecca Le May
AAP Financial News
China is set to tighten its grip on the global rare earths market, after Australian regulators approved plans by a Jiangsu-based company to take a 25 per cent stake in Arafura Resources Ltd.
Jiangsu Eastern China Non-Ferrous Metals Investment Holding Company Ltd (JEC) will pay $24 million for the stake in Arafura, which hopes to start production at its Nolans rare earths, uranium and phosphate project in the Northern Territory in 2010.
Perth-based Arafura said on Friday that Australia's Foreign Investment Review Board had approved the sale to JEC of 60 million Arafura shares at up to 40 cents each in two placements.
This follows state-owned China Non-Ferrous Metal Mining Co Ltd taking a controlling stake in Lynas Corporation Ltd - the only other company planning a rare earths project in Australia - early this month.
China has a stranglehold on the global rare earths market - it domestically produces almost all of the world's supply and tries to keep most of the resource within its borders by deterring exports through taxes.
Arafura managing director Alistair Stephens said in a statement on Friday that JEC's capital injection would ensure the company has the funds to progress an engineering feasibility study for the Nolans project.
Mr Stephens said JEC would then assist with financing for mining and processing at Nolans.
He said JEC was "a highly strategic and influential partner".
JEC is an associated entity of the East China Exploration & Mineral Development Bureau, which Arafura described as "one of the few state-authorised organisations focused on engaging in mineral and energy exploration".
"The skills and expertise that JEC brings to Arafura are substantial," Mr Stephens said.
He said the parties had "agreed to undertake a philosophy to limit dilution of the company shareholdings, fund projects (and) grow our project profile".
Arafura and JEC have agreed to enter into a series of joint ventures to explore Arafura's other tenements in the NT.
The parties have also agreed that if Arafura acquires additional exploration licences or mineral projects, then they will negotiate "in good faith" to develop them jointly.
NT resources minister Kon Vatskalis said in February that the JEC deal was the fifth significant investment by Chinese companies in the state's minerals sector in the past two years.
Arafura shares inched one cent higher to 70 cents on Friday.
Jiangsu Eastern China Non-Ferrous Metals Investment Holding Company Ltd (JEC) will pay $24 million for the stake in Arafura, which hopes to start production at its Nolans rare earths, uranium and phosphate project in the Northern Territory in 2010.
Perth-based Arafura said on Friday that Australia's Foreign Investment Review Board had approved the sale to JEC of 60 million Arafura shares at up to 40 cents each in two placements.
This follows state-owned China Non-Ferrous Metal Mining Co Ltd taking a controlling stake in Lynas Corporation Ltd - the only other company planning a rare earths project in Australia - early this month.
China has a stranglehold on the global rare earths market - it domestically produces almost all of the world's supply and tries to keep most of the resource within its borders by deterring exports through taxes.
Arafura managing director Alistair Stephens said in a statement on Friday that JEC's capital injection would ensure the company has the funds to progress an engineering feasibility study for the Nolans project.
Mr Stephens said JEC would then assist with financing for mining and processing at Nolans.
He said JEC was "a highly strategic and influential partner".
JEC is an associated entity of the East China Exploration & Mineral Development Bureau, which Arafura described as "one of the few state-authorised organisations focused on engaging in mineral and energy exploration".
"The skills and expertise that JEC brings to Arafura are substantial," Mr Stephens said.
He said the parties had "agreed to undertake a philosophy to limit dilution of the company shareholdings, fund projects (and) grow our project profile".
Arafura and JEC have agreed to enter into a series of joint ventures to explore Arafura's other tenements in the NT.
The parties have also agreed that if Arafura acquires additional exploration licences or mineral projects, then they will negotiate "in good faith" to develop them jointly.
NT resources minister Kon Vatskalis said in February that the JEC deal was the fifth significant investment by Chinese companies in the state's minerals sector in the past two years.
Arafura shares inched one cent higher to 70 cents on Friday.