The Australian government is set to commit an additional A$400m ($257m) to support the development of Iluka Resources’ Eneabba rare earths refinery in Western Australia.
The new funding aligns with the government’s “Future Made in Australia” agenda, aimed at enhancing supply chain resilience. It also supports objectives such as promoting domestic value addition and refining while fostering the growth of an Australian rare earths industry.
Iluka Resources’ Eneabba refinery will produce both separated light and heavy rare earth oxides. The project is designed as a single domestic production facility with a brownfield location, leveraging existing infrastructure.
Initially approved in 2022 with an estimated capital cost of A$1.2bn ($770m), the Eneabba refinery’s budget increased to a range of A$1.7bn ($1.09bn) to A$1.8bn ($1.16bn) following front-end engineering and design completion in December 2023.
The Australian government had already contributed a A$1.25bn ($800m) non-recourse loan through its critical minerals facility, administered by Export Finance Australia (EFA).
Iluka Resources also increased its cash equity contribution of A$214m. The additional funding is contingent on securing satisfactory offtake agreements and meeting community benefit principles set by the government.
Commissioning of the Eneabba refinery is slated for 2027.
The facility’s design supports processing feedstock from Iluka Resources’ rare earths stockpile and third-party sources.
To manage potential cost overruns, a A$150m ($96m) facility has been established, with contributions split equally between the company and the government.
Under the revised terms, if Iluka Resources does not secure additional feed sources for the refinery, base royalty payments will be capped at A$40m annually during the first four years of production.
Iluka Resources managing director Tom O’Leary: “This is a strategic infrastructure asset that puts Iluka and Australia at the forefront of global electrification, the creation of new and resilient critical minerals supply chains, and the establishment of a rare earths industry that is genuinely independent.
“Iluka’s partnership with the Australian Government encompasses key contributions from both parties, an appropriate sharing of risk and the alignment of commercial and policy objectives.
“I thank the Australian Government for its continued support for what is a globally important critical minerals development and look forward to formalising our agreement through detailed documentation.”
