May 27 (Reuters) - Arafura Rare Earths ( ARAFF ) said on

Monday it had secured up to $300 million in debt financing from

Export Development Canada (EDC) for its Nolans Project in

Australia's Northern Territory.

The funding comes after Australia earlier this year pledged

up to A$840 million ($556.42 million) as Western nations

diversify the global supply chain for rare earths after

COVID-related snarls highlighted China-linked supply risks.

China produces more than 80% of the world's rare earths.

The Nolans project is slated to be the country's third rare

earths processing plant after Lynas Rare Earths' ( LYSCF )

Kalgoorlie operations and Iluka Resources' ( ILKAF ) Eneabba

heavy rare earths plant, which is under development.

Arafura said it had received conditional approval for 68% of

the targeted $775 million senior debt funding for the project,

bringing it closer to a final investment decision.

The company, whose largest shareholder is Australia's

richest person Gina Rinehart, already has supply agreements with

Hyundai Motor ( HYMTF ), Kia Corp ( KIMTF ) and Siemens

Gamesa Renewable Energy. It also has a provisional agreement

with General Electric ( GE ).

The funding arrangement between Arafura and EDC was

facilitated by a unit of General Electric ( GE ), the Australian

company said.

Arafura is working with a group of foreign and domestic

commercial banks to seek the remaining funding for the project.

($1 = 1.5097 Australian dollars)

(Reporting by Aaditya Govind Rao in Bengaluru; Editing by Tom

Hogue and Subhranshu Sahu)