Iluka Resources on Monday committed to building Australia’s first rare earths refinery after lining up A$1 billion ($749 million) in cheap debt from the federal government, which wants to diversify critical minerals supply away from China.
The mineral sands producer’s Eneabba refinery in Western Australia is expected to cost between A$1 billion and A$1.2 billion, with production of light and heavy rare earths crucial for a range of tech applications – from electric vehicles to missiles – due to begin in 2025.
The new plant is key to a push by the United States and allies, including Australia and Japan, to develop new sources of a range of critical minerals, including rare earths, to counteract China‘s dominance over those supply chains.
“Our final investment decision would not have been taken without the support of the Australian government,” Iluka said in a statement on Monday.
At full tilt, the plant could supply up to 9% of the global rare earth oxide market, Australia’s Resources Minister Keith Pitt said.
Iluka shares jumped as much as 9% to a record A$12.50 after the announcement.
Rare earths projects worldwide have faced numerous cost and funding setbacks over the past decade. To ensure this project went ahead, Iluka set up the refinery as a separate entity and negotiated a risk-sharing agreement with the government to cover cost blowouts.
Iluka is contributing A$200 million in equity towards the construction cost, a screening plant, a concentrating plant, and a stockpile it has at Eneabba of the minerals monazite and xenotime, which hold rare earths.
Future material to feed the refinery could come from other deposits owned by Iluka and other companies.
The plant will have capacity to produce 5,500 tonnes a year of rare earth oxides neodymium and praseodymium and 750,000 tonnes a year of dysprosium and terbium.
In another project to diversify supply, Australia’s Lynas Corp – the world’s largest producer of rare earths outside China – is building a processing plant in Western Australia which will produce rare earth carbonate to feed a separation facility it is building in the US.
• Reuters with additional editing by Jim Pollard
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