ECA funding for critical mineral and rare earth projects

(Lexology, London, 15 March 2021) As demand for critical minerals and rare earths soars due to their importance to future facing technologies and 2050 net zero pledges, 2021 is poised to be a breakout year for critical mineral and rare earth projects in Australia, provided project proponents can source funding and navigate the key bankability issues. Unique to critical mineral projects are the sector’s geopolitical issues and an emerging focus on securing supply chain resilience as a matter of national sovereignty, particularly in the technology, healthcare and defence-related equipment manufacturing sectors. In Australia, the government has mandated Export Finance Australia (EFA), its export credit agency, to support critical mineral projects. For example, EFA’s support to a greenfield critical minerals project in New South Wales last year enabled the project proponents to escalate engagement with prospective strategic investors. Funding may also be available from foreign governments as demonstrated by Lynas Rare Earth Limited’s announcement on 22 January 2021 that it had entered into a co-funding agreement with the United States Department of Defense to build a commercial light rare earths separation plant in Texas, United States. The US funding is derived from the Department of Defense’s Title III, Defense Production Art program.