Investing.com-- Australian rare earth miner Arafura Resources Ltd (ASX:ARU) rallied on Wednesday after the firm won an A$200 million ($123.72 million) government investment for a mining and processing project in the Northern Territory.
Arafura jumped over 17% to A$0.135, having risen more than 20% earlier in the session.
The company said it had signed a binding term sheet with the National Reconstruction Fund Corporation for an A$200 million grant to support the development of its Nolans Project, which is located near Alice Springs in the Northern Territory.
Arafura said the A$200 million- which will be invested through unsecured convertible notes- is expected to be a catalyst for more equity funding in Nolans, and could also attract additional investors in the project, which it expects to be Australia’s first ore-to-oxide rare earths processing operation.
Rare earth producers outside China have garnered increased interest in recent months, as Western nations move to secure supply chains of the materials in the face of potential export restrictions in China.
Rare earths are used in a variety of major applications, ranging from electronics manufacturing to defense applications. China is currently the world’s biggest producer of the materials, but is expected to tighten their supplies as retaliation for trade restrictions and tariffs imposed by the U.S.