Arafura signs Korea agreement

Rare earths company Arafura Resources has progressed negotiations for the formation of a joint venture which will build a separation plant in South Korea.

Arafura has signed a memorandum of understanding with South Korea-based OCI Company, which specialises in chemical manufacturing but has pursued a strategy to expand its operations to become a green energy and chemical company.

The two companies previously entered into a letter of intent over the joint venture formation in June last year.

The two companies will negotiate proposals on the establishment of a joint venture for a rare earth separation plant in South Korea.

Under the terms of the MOU, OCI will supply reagents to Arafura for its Nolans project in the Northern Territory, and will provide assistance to Arafura to access infrastructure and services for the operation of the separation plant.

The two companies will also negotiate investment opportunities in Arafura by OCI.

“The company has previously stated its intention to develop a RE separation plant within an established offshore chemical precinct,” Arafura said in a statement.

“Arafura has identified and shortlisted a number of sites with suitable road, rail, port and related infrastructure.

“Significant drivers for this strategy include access to raw materials, in particular hydrochloric acid, which obviates the need to construct a dedicated chlor-alkali facility, and leveraging existing infrastructure in an established chemical and manufacturing precinct, thereby reducing the overall capital expenditure of the Nolans project.”

Arafura managing director Gavin Lockyer said the company was pleased to have OCI as a potential joint venture partner in the separation plant.

Arafura shares closed 9.8 per cent higher to 6.7 cents each.