ED HUSIC, MINISTER FOR INDUSTRY AND SCIENCE: Okay, thanks, everyone, for coming along. Joining me today is Martijn Wilder, who’s the Chairman of the National Reconstruction Fund Corporation. And it’s also a pleasure to welcome Darryl Cuzzubbo, who’s the CEO of Arafura Rare Earths. Thanks for your time today, Darryl.

We’re here to announce another important investment from the National Reconstruction Fund. In just eight weeks the National Reconstruction Fund has announced close to $400 million in investments to support the ambitions of Australian industry, investments into building Australia’s future, helping us stand on our own two feet, developing stronger sovereign supply chains and boosting industrial capability. And as a result of all that, we want to be able to create secure, well-paying jobs in thriving new industries.

The investment that we’re announcing today is $200 million in Arafura Rare Earths, specifically an investment that will mean that Arafura Rare Earths can get on with building its Nolans Project just outside of Alice Springs.

This is a project that's been championed by my colleagues Marion Scrymgour and Luke Gosling for quite some time. They realised the important economic contribution this will make to Central Australia. It’s got huge economic importance – 600 jobs will be created just in the construction phase and another 350 ongoing jobs for local workers.

The flow-on benefits to local businesses in Alice Springs and other parts of the Northern Territory cannot be understated. And I know Arafura has got a target, too – and this is important to note – of 20 per cent of First Nations workers in its workforce across the lifetime of its project.

Besides the impact to Central Australia, this has got major national importance as well because rare earth minerals are going to be critical to the making of modern magnets that are, in turn, integral in the products we take for granted every day but also a lot of other others – mobile phones, communication devices, wind turbines, electric vehicles, defence componentry. The global market for rare earth minerals, is highly concentrated, dominated by one global supplier, and it’s really important for us to dilute our dependency on just one supplier.

We’ve got one of the largest endowments of rare earths on the planet, and the global market is expected to double over the next decade. Whoever masters the processing of these minerals, they will unlock huge economic and commercial potential for themselves. And that’s why it’s important that we be able to invest in projects like this creating Australia’s first ore to iron processing plant for rare earths. The investment is timely and important to our economic and national security.

Now, it’s also anticipated the mine alone could produce around 4 per cent of global demand by 2032. That’s huge. And just as importantly, we’ll have a sovereign supply of critical minerals helping us mobilise industry to move to net zero, earning valuable export dollars, giving defence contractors access to the things that they need.

It’s what responsible governments do – invest in the national interest for the long-term future of the country and backing our strengths like mining, renewables, technology, heavy industry. Building Australia’s future.

Now, before I take questions I wanted to invite, if I may, the NRF Chair Martijn Wilder to make a contribution along with Darryl Cuzzubbo from Arafura Rare Earths. Over to you, Martijn.

MARTIJN WILDER: Thank you very much, Minister Husic, and welcome, Darryl, as well. Great to have you here. This is a really exciting day for NRF, and just welcome members of the NRF team who are here as well, and Mary, our Chief Investment Officer.

Arafura’s Nolans Project represents a really exciting milestone for the NRF as our largest target investment to date as well as for the Australian resources sector as the nation’s first, as the Minister said, ore to oxide rare earths processing operation.

The investment is exactly the type of investment the NRF is interested in. It’s a transformational project of national significance and has enormous benefits to Australia and the global supply chain for a critical resource.

And I think two important points are that one, this goes beyond what we traditionally do, which is just mining. It’s actually processing, and it’s a very, very important part of expanding our economy and value add, which is what the NRF is set up to do. But, secondly, it’s the second investment in the mining sector. So, our first investment in Russell Minerals was about equipment in the mining sector. This is actually about processing minerals. And one of the objectives of the NRF is not just to do ad hoc investments in an industry – sorry, in one of our priority areas, but to look at how we go across that priority area. So, we’re really delighted to be able to double down in the minerals sector and to go more broad across that sector.

As the Minister said, this has an expected 38-year lifespan with room for expansion. And it will produce 4,440 tonnes per annum of rare earths minerals, which will account for around 4 per cent of world demand from 2032. It’s a very important contribution to global supply, but it also is important for making Australia a key player in this sector.

As the Minister also said, this is about a project that will process critical minerals for industrial magnets in electric vehicles and wind turbines, which is another one of the mandates of the NRF – to look at decarbonisation – components for consumer products, optics, super allies, advanced ceramics and, over time – and I’m sure that Darryl will talk about this – the minerals found here will over time play a key role in going into robotics and AI in the future.

So many of the investments the NRF is starting to do actually go across the multiple sectors that we have. So, you might think we’re investing in mining, but actually mining investment that we do has a critical role in AI or other areas as well. So, we’re really proud to be able to look at how an investment in one sector can go into other priority areas.

As the Minister said, the project will provide many jobs in the local Alice Springs area and with Indigenous communities, which is another priority of the NRF. It will also deliver significant economic benefits to Alice Springs, which will go across the businesses in Alice Springs. And our $200 million commitment in the equity raise is really important because it anchors that equity raise.

So, again, one of the priorities of the NRF is to crowd in private sector finance, and we are putting this $200 million in first so that others will follow. And that will be international investors and domestic investors, and that’s a key role that we want to do. And I hope – I really hope – that Australian super funds and other Australian investors will back that and come behind that. Because the whole point of this is to really crowd in that equity and to be a key player.

And then finally, I just want to say that this is for me personally and NRF and I know the minister, this is a really exciting nation-building project. It is enormous and it’s going to play a key role in the future of building out Australian industry, Australian manufacturing and we’re very, very proud to do it today. And it is our largest investment to date. And on that note, I just want to say how thankful I am to Darryl and the team for everything that they’ve done, and we look forward – we very much look forward – to supporting your business as it goes forward. Thank you.

ED HUSIC: Darryl, do you want to –

DARRYL CUZZUBBO: Yeah, thank you, Minister. Thank you, Martijn. Look, today is a fantastic announcement. I just want to publicly thank the Australian government for their support through the National Reconstruction Fund.

Today is significant for two reasons: so, firstly, it puts action to words. It demonstrates Australian government support to building Australia’s first ore to oxide refinery for rare earths in Australia. This will not only bring high-skilled jobs into Australia and the Northern Territory, but it will elevate Australia’s role in the global energy transition.

Phase 1 will produce about 4 per cent. Phase 2 will be more than double that. As Martijn alluded to, you need these rare earths for electric vehicles and wind turbines. But ultimately the biggest demand will come from AI and robotics. So, this places Australia very well.

The second reason today’s announcement is so significant, from an Arafura perspective it demonstrates that we are successfully executing on our funding strategy. In July of last year, we announced that we’d secured over 1 billion US dollars of debt from nine lenders across five countries, and off the back of that we’re now chasing the equity. And it pleases me that today we can announce our first cornerstone investor, being the National Reconstruction Fund with support from the Australian government. So, I just want to again publicly thank you both for that support.

ED HUSIC: Good on you, Darryl. Okay, questions?

JOURNALIST: A question to – two questions, one to Mr Cuzzubbo and one to the Minister. Mr Cuzzubbo, given that the Australian government gave Arafura about $840 million last year, why was it necessary for there to be another $200 million from the NRF?

And to the Minister: given the fact that rare earth prices have fallen in recent years, I mean, should we expect more money being needed to boost these industries before they’re commercially long-term viable?

ED HUSIC: Okay, you first, Darryl.

DARRYL CUZZUBBO: So let me answer your first question. So, firstly, this is highly downstream processing centric, and hence it’s capital intensive. The – and we need about 50 per cent debt and 50 per cent equity. So, what was announced last year was really the debt component. But I do want to point out that whilst the Australian government is playing a leadership, supportive role, it is one of a number of institutions across the globe that’s participating in the funding. And both the debt and the convertible note that we’re talking about today is being done on commercial terms. So, the Australian government benefits from investing in our project.

ED HUSIC: And to answer your question, obviously markets and prices will behave in different ways – good days and probably some cloudy ones along the way. But I think it inescapable, I think you would agree, that these will be things that are needed, particularly – I know people – I don’t imagine it floats their boat talking about magnets, but the reality is they’re important in so many industrial processes.

And particularly as we look to the transition to net zero in electric vehicles, they play an important part, people may not be aware, in terms of the motors and the brakes and in wind turbines helping them operate in the generation of electricity. And so not relying on just one supplier, being able to diversify, dilute that supply, is really important.

So, yeah, you’re absolutely right – at this point in time prices aren’t anything to brag about. If they change, then this is something that puts us in a position to meet global demand. Four per cent may not sound like much but that transforms into a big deal for this country and for longer-term economic and employment opportunity. This is something that’s fundamental, I think, for the long-term good of the country.

JOURNALIST: You mentioned –

ED HUSIC: We’ll go one – sorry – one, two, three.

JOURNALIST: You mentioned the 4 per cent figure there. What’s the aim? Is there a broader target in terms of boosting global supply coming anywhere other than China? And is this the new norm where the government makes stakes in big companies?

ED HUSIC: So, I guess a number of things. One is Darryl indicated that 4 per cent is the start and that that will increase over time. I mentioned, too, that demand is expected to double over the course of the decade. That may hit sooner rather than later. So, coming to the earlier question, it indicates that while prices might bump up and down, you know that demand will be a constant.

I think a number of things post-pandemic and also geopolitics is enlivened in the minds of many countries the need to be able to diversify where we get products from. In our case as a government we said, for instance, when it comes to our resources, in many of the key resources that are in demand Australia has a natural – is a natural beneficiary of the fact that we possess probably so much of the world’s demand in resources that actually sits underground in Australia, on Australian soil. And so, for us it’s not just about digging it up and shipping it off; it’s the value add.

The National Reconstruction Fund was set up to encourage value-adding. If we can work with firms like Arafura Rare Earths to open up opportunities on value add and increase the amount of money that the country earns and increase the jobs it creates, and particularly in Central Australia and Alice Springs – again, 600 jobs in construction, 350 ongoing in and around Alice Springs – you can see how that benefit, you know, opens up.

And to your other point around is this is nature of what’s happening, I think you can see in different parts of the planet different countries have invested to open up their capability to do things themselves. I mean, notably the Inflation Reduction Act is an example of that. What we’ve done here through our – the range of investments we’ve made as a government shows that we do need to do that.

But traditionally I might – and I’ll end on this point – governments have had to kick things off. Governments have had to make strategic investments either through grants or investments we’re announcing today to kick things off. And then it takes off more broadly by attracting private investors to sustain growth into the future. This is nothing new. But it is, to those who say, “Oh, just let the market decide,” it doesn’t necessarily reflect the history of the way these things have opened up. We’ve needed to have a way, a very dynamic which, in which governments and the private sector work together in terms of developing new industries and capability.

JOURNALIST: Thanks, Minister. Will the same level of taxpayer support be given to mining and processing vanadium, which is needed for long-term batteries?

ED HUSIC: Well, vanadium will play a big role in supporting the development of flow batteries, a technology that was developed in Australia that’s quite different to lithium batteries. The scale of these batteries is huge, and you can see in some of the installations – again, if we’re producing so much energy through one of the greatest installations of solar anywhere on the planet, you need to be able to store it and stabilise the grid, so it will play a role. I might – I know you’d like me to make a contribution or suggest where we might make investments, but I think there is a deep interest in vanadium. There are a lot of private investors that are backing in terms of mining vanadium here and processing longer term. There is a market for it. But I might hold off on flagging where those investments might get made. We’ll announce them in due course.

JOURNALIST: I have a question on another issue.

ED HUSIC: I might just deal with this, if I may, and then come back.

JOURNALIST: Is it Mr – can I ask you about the fund?

MARTIJN WILDER: Yeah.

JOURNALIST: It was obviously off to a bit of a slow start with allocating some of that money. Are you planning on speeding up the allocation of that money, and just how will you do that? And can you give us a bit of a timeline, too?

MARTIJN WILDER: Sure. So, I’d say we weren’t actually off to a slow start. I’d say that we set up NRF, it was probably one of the fastest to get money out the door. In the 12 months since the board was appointed, we set the whole organisation up and went through that process, hired CEO, CIO, and then, as the Minister said, we’ve made $400 million of investments now in the last eight weeks.

We have a pipeline of investments coming through, so probably we’ll just be – we’ve now got to a cadence where we are assessing a lot of transactions. We go through that process and then at the end of that process we announce things. So, we’ve got quite a lot in the pipeline.

I think the one thing to remember is that we do have a mandate, and that mandate is to make a return for the taxpayer of 2 to 3 per cent above the government bond rate. So, we go through a proper due diligence process for every investment.

That return is over the life of the fund and so and it – you know, some things will get a lower return and other things a higher return are, so it’s a balanced portfolio approach. But, you know, we do proper due diligence, and in the case of any transaction, some of those deals can take 12 months, some of those deals can take, you know, two months. And everything is – it depends on how – and some things come and go, other things fall over, other things example from nowhere and go quickly.

So, we’ve now got a very strong CIO with Mary Manning, who’s up the back there. We’ve got a very good team of investment professionals and we’ve just – we’ve approved quality deals. And you’ll now see a steady flow of deals being announced as we go forward.

And I think on that point, you know, you can see the sort of transactions we’ve done. So, this is transaction Number 6. And I think what’s – as we do more and more deals, I’d encourage more people to look at the track record we’re building and to come forward with ideas that they have. We’ll also be going out to market to seek proposals in specific areas which we’re very keen on. But I think to the extent that we – that people are looking at what we’re doing, I really would welcome as many proposals coming forward as we can see.

JOURNALIST: Minister, my understanding for the NRF is that it would help small companies to scale to larger companies and, you know, padding out that missing middle. How do you justify the scale of this investment, which is significantly larger than all the other NRF investments to date and given it’s already received such a large loan commitment from other parts of government?

ED HUSIC: Well, I’m glad you’ve made that reference because then I’d point you to the fact that we invested in Quantum Brilliance, and that is a firm that’s looking to scale up out of Canberra.

So, we’ve made those investments, to go to the heart of your question. We don’t make investments on the basis that, you know, everyone gets a large lick of capital; it’s made on the basis of what the Chair just said – they’ve got an investment mandate, there’s an expected rate of return and there’s also an expectation that we make decisions that will give taxpayers confidence about how we are investing. That’s exactly what’s going on.

The - to the other question that was just asked, providing the $15 billion in investment capital is important. A way of acting as a magnet for other private investors, crucial. The incredibly important ingredient in all that is not just having the capital available; it’s having the highly skilled people to make the investment decisions. Dr Mary Manning as Chief Investment Officer has put together, along with the NRFC, a group of people, highly talented, they’re working very hard and diligently in assessing those investments.

We said, too, that what we wanted with the NRF is to end what we saw previously where investment decisions by government were made by colour-coded spreadsheets that prioritised political benefit over national interest. So, we will make those calls, supporting a range of businesses, as we have, with investment decisions that cater to what the firm actually needs.

I think it would be dangerous to give firms more than what they require or ask for. You don’t want to be creating investment bubbles; you want to be able to do this smart and over – with a long-term view. And that’s exactly what the NRF is doing, and I want to commend them.

In the time that they’ve had, the amount of investment we’ve announced – and what I can tell you is the pipeline based on the drawdowns that we have approved means that there will be a lot of investments coming over the coming weeks that are designed to do exactly what the government does – we want to build Australia’s future by building industrial capability that will create long-term jobs.

MARTIJN WILDER: So, can I just add one to that, if that’s okay?

ED HUSIC: Yeah, by all means.

MARTIJN WILDER: So, I think the point about we are here to grow companies, and we do that, but we’re also here to grow industries. So, if we can help Darryl and his – and Arafura grow, the number of small businesses that can then support Arafura and grow is enormous. So, I think it’s really important to see this as not just a one-off investment but how it fits within a broader ecosystem of building an entire industry and having Australia, you know, a kind of key player in that industry going forward and all the jobs that flow off that. So, I think that’s just a really important thing to bear in mind.

JOURNALIST: Just to another issue, you’ve spoken a lot about social cohesion in the Australian community. Today the government’s Envoy on Antisemitism has said that there needs to be stronger sentences. She’s calling on a national cabinet meeting to combat Antisemitism. Do you agree?

ED HUSIC: I think it’s important to note we set up – the Prime Minister set up Special Envoy in both Antisemitism and Islamophobia for a reason – to be able to crack down on behaviour that is making Australians feel unsafe. And we do – I absolutely want to condemn particularly recently the graffitiing of synagogues.

People should have the space to practice their faith securely, confidently, comfortably, without fear. And so, we do need to look at the range of things that can be done to be able to protect people from Antisemitism and Islamophobia, both that have increased unacceptably. Frankly, at any time their increase is unacceptable, but what we’ve seen in the last few months we do need to address.

Ideas that are put forward by a Special Envoy absolutely will be considered and taken on board and we’ll see what can be done. But, again, I haven’t just looked at it through the course of what we’ve lived through with the conflict in Gaza. Post Christchurch I was deeply concerned about the rise of far-right extremism. Under the previous government, urged quite regularly for them to take seriously the threats of Antisemitism and Islamophobia. You saw internationally in different parts of the world – notably particularly in the US – synagogues that had been not just graffitied and vandalised, people lost their lives at synagogues as a result of extremist behaviour.

This has been on the march for quite some time. And when we’ve seen in protest people, you know, the Nazi salute, it’s just staggering. And doing it at places where we lost personnel fighting fascism and fighting Naziism and Antisemitism I think for a lot of veterans and people, families who’d had those serve in World War II, it would be absolutely horrifying. So, this has been a long-term issue. It is something that needs an answer. We are very grateful for the contributions of our Envoys and particularly those that have been made today, and we’ll absolutely take those on board.

JOURNALIST: Do you think Australians should be hopeful of a ceasefire deal in Gaza?

ED HUSIC: I think we’ve – the world and particularly Palestinians and Israelis would want to see a ceasefire. I think the sooner this happens the better. The prospect that appears to be becoming more concrete that this may occur is tremendous. We need to see this conflict end. So many Palestinians have been killed through the course of this conflict through the actions we’ve seen there that have been undertaken by the Israeli government. We need those hostages. Everyone expects – rightly, and particularly Israeli families who’ve been – who have been separated from people who have been held hostage illegally, those hostages have to be released.

And the other pressing priority is the flow of aid in there. This is a humanitarian catastrophe in Gaza. We need to see that aid go in and help people and prevent further deaths. And not just death, I mean, I think long term the health impacts on Gazans as a result of not being able to get medical and humanitarian aid cannot be underestimated. That needs to – that can be sorted out. This is a human-induced catastrophe that can be solved by people.

JOURNALIST: Your colleague Mark Dreyfus is travelling to Israel or might already be there. Who’s he meeting with and what sort of discussions will be held? Is it to try and repair the relationship between Australia and Israel?

ED HUSIC: Look, I’d encourage you to talk with the Attorney-General on that. I don’t have the details of his visit. So, he can respond to that.

JOURNALIST: Just one more for Darryl, if that’s okay?

ED HUSIC: Sure.

JOURNALIST: How confident are you that the Australian industry can compete with China when it is so much cheaper to make things there?

DARRYL CUZZUBBO: Yeah, so, firstly, this is really around the processing technology. But the reason why we will be successful is because nearly 90 per cent of the world’s NdPr comes from China today. You need NdPr for electric vehicles and wind turbines. This will ultimately become a multi-trillion-dollar sector. They need alternative sources of NdPr.

Just to put some economics around it, the average price last year of an electric vehicle was 55,000 US dollars. The cost of NdPr that enables it was $55 – a thousand to one. So, this is not around what is the cost of NdPr; this is around supply security in support of what will become a multi-trillion-dollar sector. But today it’s controlled by one country.

ED HUSIC: And just quickly, if I may add on that point, too, I think you’re seeing an evolution in thinking that is just not anchored to price. There’s a recognition, too, as we’ve seen, I point to the fact again that experience we lived through with the pandemic – that if supply chains aren’t working in a way that aligns with national interest, we’ve got to do something differently. So, I think you’re seeing a lot of countries think differently around what they’re making, prioritising key areas.

That’s what we’ve done with the National Reconstruction Fund. We’ve set up priority areas. We can’t do everything. We need to do the important things. And there’s a huge economic and commercial benefit if we get that right. But price is not necessarily, I’d say, just the one point at which we make a decision longer term.

Sorry, before I go to you, Brendan, do you mind if I just take questions from others who haven’t had the opportunity, and then I’ll come back to you.

JOURNALIST: That’s okay. Cassidy from Seven News. Penny Wong this morning said all options are on the table with the Russian Ambassador after reports of the death of Oscar Jenkins. Do you think that the Russian Ambassador should be expelled, and what steps are being taken to confirm those reports?

ED HUSIC: A lot of this I might leave to the Foreign Minister. And you’ve heard that the Foreign Minister, at her direction DFAT called in the Russian Ambassador to get details about what has occurred to Mr Jenkins and also to remind the Russian Federation of their obligations under International Humanitarian Law with respect to prisoners of war.

I do note the Coalition giving us advice on the way we treat Ambassadors that they didn’t take themselves with the downing of MH17, where they never, I don’t believe, expelled the Russian Federation Ambassador.

So, what might be best here is to calmly and with determination get to the bottom of what has gone on. We will, based on what you’ve just referred to in terms of the Foreign Minister’s response, make our decisions when they are appropriate to be made.

But, again, I think Australians will, in particular, look in horror for a prisoner of war has been mistreated. And if it’s breached International Humanitarian Law then you would expect a response to that.

JOURNALIST: I just wanted to clarify with Darryl, do you have a timeline for when you expect to take a final investment decision on the Nolans project?

DARRYL CUZZUBBO: We’re targeting by the end of this first half to complete the equity and move into construction. Very confident we will get the funding. We’re dealing with a number of cornerstone investors. And obviously, we’re working to their timeline. But we’re targeting the end of the first half.

ED HUSIC: Terrific. Thanks, folks. Have a great day.