The Arafura Resources Limited (ASX: ARU) share price notched up its second day of gains following its upbeat investor presentation.
Investors are drawn to anything exposed to electric vehicles (EVs) and the natural magnet miner is no exception.
Shares in Arafura jumped to a two-month high of 37.5 cents each in afternoon trade before closing at 36 cents a share, 2.86% higher on the day. In contrast, the All Ordinaries (ASX: XAO) closed up 1.62% today.
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Strong attraction to the Arafura share price
The miner is aiming to be a major global player in the neodymium and praseodymium (NdPr) market. NdPr is used in making ultra-strong permanent magnets – the kind needed in electric motors.
What may be attracting investors to the Arafura share price is the company's goal to supply 5% of global demand for NdPr oxide from its Nolans Project in the Northern Territory. The project is the only NdPr- focused facility in Australia with plans to mine and process ore to oxide at the one site.
The project is close to existing infrastructure and the miner claims the key approvals are in place.
Investors drawn to green minerals
NdPr isn't only required in EVs. The magnets are also key to robotics, wind turbines, and mobile phones – the stuff that excites investors.
A lot of the cool and sustainable technologies also require batteries. This is why ASX lithium shares were also in hot demand today.
The Pilbara Minerals Ltd (ASX: PLS) and Allkem Ltd (ASX: AKE) share prices both hit their record highs today. Pilbara Minerals hit $4.24 a share in intraday trading. It closed the session at $4.23 a share, a gain of just over 7% for the day.
Allkem also notched its new record price of $15.10 a share. It closed at $15.07, up 7.03%. Meantime, the IGO Ltd (ASX: IGO) share price closed at its intraday high of $13.54, 5.45% higher.
Magnet prices falling
With all this positive sentiment boosting the Arafura share price, it's easy to forget that the NdPr price has been declining. Since hitting a monthly average of US$164 per kg in March, it has fallen to under US$130 a kg.
Slowing economic growth and China going in and out of COVID lockdowns are dragging on prices. But the bulls believe this weakness may not last when the world is moving to decarbonise.
Longer-term outlook is more promising
Arafura believes the security of supply will be challenged given that China is a big supplier of NdPr. Higher prices will be needed to incentivise new production from friendlier nations.
From that perspective, the ASX miner claims that 10 Nolans Projects are needed by 2030 to fill forecast demand.
Around a third of Arafura's output is reserved for Hyundai Motor Corporation and GE Renewable Energy under a non-binding Memorandum of Understanding (MoU).
Arafura is in discussions with more than 10 other parties for the rest of the planned output from Nolans.
Arafura share price snapshot
The Arafura share price has performed strongly over the past year with a 132% gain. This compares with a 9.25% fall in the All Ordinaries and a 3.3% loss in the S&P/ASX 300 Metal & Mining Index (ASX: XMM).
The outperformance of Arafura also puts it ahead of some ASX lithium shares. This includes Pilbara Minerals with its 94% jump, Allkem with a 59% gain, and IGO with its 43% increase during the period.
Even leading rare earths producer Lynas Rare Earths Ltd (ASX: LYC) can't keep up with its 21% advance in the last 12 months.
