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  • Move to expand critical minerals supply chain away from China
  • Offer conditional on company obtaining environmental approvals

A US-backed lender has offered an Australian miner $600 million in loans to develop a rare earths project, the latest move to expand the critical minerals supply chain outside of China.

The Export-Import Bank of the US sent a non-binding letter of interest to Australian Strategic Materials Ltd. for financing to develop its Dubbo project in New South Wales state, the Perth-based company said in a statement Thursday. Shares of the miner have risen more than 40% since Tuesday’s close.

The funding offer comes amid a growing push from Western governments and their partners to bolster self reliance and lessen China’s control of vital supply chains of rare earth elements, used in electric vehicles, wind turbines, and everyday electronics. Those ambitions have been boosted by US President Joe Biden’s Inflation Reduction Act in 2022, which offers tax credits on electric vehicles that are built with materials produced by free-trade partners such as Australia.

“The Dubbo project is a globally significant rare earths and critical minerals asset, well-positioned to support the joint objective of Australia and the US to develop and expand reliable, responsible and secure global access to critical minerals,” Australian Strategic Metal Managing Director Rowena Smith said in the statement.

The offer of financial support from the export credit agency is linked to potential US content such as equipment, goods and services being supplied during the project’s construction phase, Australian Strategic Materials said. Final approval of the loans is subject to due diligence and environmental approvals, it added.

Export Finance Australia is also offering A$200 million ($132 million) in loans to the project.

There has been a flurry of financing arrangements across the Australian critical minerals sector in recent weeks, with Arafura Rare Earths Ltd. receiving a A$840 million in government loans for its Nolans rare earths project, and Liontown Resources Ltd. receiving A$550 million to ensure its Kathleen Valley lithium mine reaches production.

Written by: @Bloomberg

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