Arafura Rare Earths' final investment decision to build its Nolans Project - which will be Australia's first fully integrated ore-to-oxide rare earths operation - in the Northern Territory marks a major milestone as the West seeks to reduce its economic reliance on China.
Thursday's decision came after years of building offtake relationships with companies including Hyundai, Kia and Siemens and as the miner became the first company to secure support under a federal government plan to build a rare earths strategic reserve.
China mines more than half the world's rare earths but refines as much as 90 per cent of global production.
Rare earths contain essential elements and alloys that are key to modern technologies with applications in defence and renewable energy.
Government intervention was essential to get the project off the ground because the market was not functioning in its own right, Arafura managing director and chief executive Darryl Cuzzubbo said.
"It's obviously a very monumental milestone for the company as we go into construction, but I'd like to say it's a significant milestone for the Northern Territory, and indeed Australia," he told reporters in Perth.
The strategic importance of the project was evident in the level of financing being provided by Australia's Western allies, including the US, Germany and South Korea, Edith Cowan University senior geopolitics lecturer Naoise McDonagh said.
"It's a really important step in de-risking and diversifying from Chinese supply," he told AAP.
China has enjoyed a stranglehold on the supply of permanent magnets made from Neodymium-Praseodymium oxide, which the Nolans project would produce, he said.
"It's a big win, it's a very positive signal and I think the government will see it that way, and industry should see it that way as well," Dr McDonagh said.
The project's green-lighting showed how reforms to the Strategic Reserve and Export Finance Australia were translating policy into practical outcomes, Minerals Council chief executive Tania Constable said.
"Australia has globally significant critical mineral resources, but bringing projects online - particularly in rare earths - requires navigating opaque markets, long development timelines and concentrated supply chains," she said.
Arafura, in which Ms Rinehart's Hancock Prospecting holds a more than 15 per cent stake, has received roughly $1.2 billion in taxpayer support so far.
Treasurer Jim Chalmers said rare earths were essential to Australia's economic and national security.
Nolans is expected to create 600 jobs during construction and sustain 350 permanent positions during steady-state operations.
Arafura's share price was more than two per cent higher at 30c in afternoon trading.
