InvestorIntel Publisher Tracy Weslosky speaks with Gavin Lockyer, Managing Director for Arafura Resources Ltd. (ASX: ARU) on being a key magnet producer for the future with their competitive neodymium supply and the numerous offtake agreements that Arafura has in place. Starting with an update on the rare earth market, they discuss Molycorp, Lynas, and the role of capital markets in the development of larger global scale projects like Arafura.

Tracy Weslosky: Of course, you’re one of the leading large-scale global rare earth projects. I want to ask you what you think has happened with Molycorp and Lynas? What are you hearing out there in Australia?

Gavin Lockyer: I guess the two key issues are probably no surprise to anybody and that sits around technical and financial risks associated with any rare earth project. I guess their production numbers being put out there are less than anticipated in forecast, which is understandable given commissioning issues that many plants have, but also the financial situation that many of us find ourselves in, us to a lesser extent because we’re not at project finance yet. Obviously the issues surrounding the type of financing structures that they have in place are obviously plaguing them at the moment. We’re working hard to try to avoid making those types of mistakes.

Tracy Weslosky: Do you think one of the advantages you’re currently experiencing with Arafura are all your many offtake relationships that you currently have?

Gavin Lockyer: Well, they’re part of it I think. It goes a long way to derisk the project if you obviously have a big brother sitting in the background helping you out. To that extent, our largest shareholder in ACE has been extremely useful both being a long and patient shareholder for us. They injected $30 million dollars when the company needed it most so we’re forever grateful for that. Also, importantly they’re also providing us with introductions to a range of technical experts within China who are assisting us in reducing our technical risk. Those have certainly gone a long way to helping us avoid some of the issues that some of the others may be experiencing.

Tracy Weslosky: Of course, one of those challenges are environmental permitting. Can you tell us a little bit about where you’re at with this presently?

Gavin Lockyer: Sure. Like most rare earth organizations, we have some radioactivity associated with the ore body so it does create some, I guess, a more onerous social responsibility on all of us. We’ve submitted our environmental impact assessment to the Department of Environment in the Northern Territory of Australia. We’ve received feedback in public comments and we’re now amending our current process so that we can submit our final license to operate next year. We think that that is a very important matter for potential customers and potential financiers.

Tracy Weslosky: You know, you’re considered one of the leaders in the rare earth industry, you speak around the world and you’re in Asia frequently. Can you tell us if you can confirm some of the rumors we’re hearing that the Chinese are applying downward pressure on rare earth prices…to access the rest of this interview