Australia-based rare earths company Arafura Resources has announced the formal termination of land purchase agreement in Whyalla, South Australia.

The termination of the agreement will be effective as of 24 June 2013.

Arafura had conducted comprehensive investigative work on the Whyalla site, which observed that site is no longer required to facilitate the needs of Molans project.

The land purchase agreement was signed in mid-2011, and the latest decision to terminate the deal follows Arafura’s recently announced cost savings initiatives aimed at improving the economics of the Nolans Rare Earths Project.

The cancellation of the agreement is part of the company’s goal of achieving A$400m ($371.06m) in capital savings by relocating intermediate chemical processing closer to the Nolans Bore Mine site in the Northern Territory.

Arafura said that this may also potentially involve locating rare earths separation alongside established infrastructure at a suitable chemical precinct. The company is examining several potential sites for rare earths separation as part of a global site assessment study.