Might work if a cap was set on it. We get, what, 400 Arx a week for free just by playing the game? So put a cap of 200 Arx per week on material spending (to allow for the fact that not everyone will be playing enough per week to make that 400 limit), and then price the materials such that buying them with Arx is a bonus rather than gamebreaking.
Say, 25 Arx for a grade one material, 50 for a grade two, 100 for a grade 3, 200 for a grade 4, 400 for a grade 5.
That way you get access to a handful of free materials per week. Helpful for getting started on Engineering, helpful for getting that last piece or two for an intermediate to high grade modification but that's about it. If you're relying on Arx to fully engineer your latest gankship, you'll be waiting a long time.