The $200 million investment in ASX-listed Arafura Rare Earths is the single-largest NRFC investment to date, according to Industry and Science Minister Ed Husic.
The mine and processing plant will be the first of its kind in Australia, one of the largest in the world, and a game changer for the Northern Territory, he said in a statement.
The latest federal funding brings taxpayer support to more than $1 billion in less than a year for the Gina Rinehart-backed Nolans Project, located 135km north of Alice Springs.
Gina Rinehart's Hancock Prospecting owns 10 per cent of Arafura. (Richard Wainwright/AAP PHOTOS)
Demand for processed rare earths is expected to double by 2030 but the current market is dominated by a single supplier - China.
Meanwhile, Australia has some of the world's largest deposits of rare earths, which are essential for defence technologies and advanced communications as well as clean energy equipment including wind turbines and electric vehicles.
"We're backing our strength in mining, while helping lower emissions and bolstering our supply chains," Mr Husic said.
The mining and processing of vital minerals is a priority for the NT government, while a sovereign supply chain outside China is strategically important for Australia and its allies.
"This investment will create a sovereign supply of these critical minerals, mined and refined onshore, as well as new export opportunities," Mr Husic said.
"And it means hundreds of secure, well-paid jobs for central Australia, including significant economic opportunity for First Nations communities," he said.
The latest financing follows a 2024 federal package of $495 million from the critical minerals facility, $200 million in Northern Australia infrastructure funding, up to $115 million from Export Finance Australia and $30 million as a modern manufacturing grant.
Aiming to be Australia's first neodymium and praseodymium ore-to-oxide processing facility, the construction-ready and fully permitted project also has the support of international financiers.
The mine and processing plant is forecast to produce around 4440 tonnes per annum, which is expected to account for around four per cent of global demand from 2032.
Shares in Arafura, which is 10 per cent-owned by Ms Rinehart's Hancock Prospecting Pty Ltd, eased slightly to 11.5 cents at Tuesday's close.
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