Iluka Resources hints at more Federal Government support for $1.7b rare earths refinery in Eneabba

Mineral sands miner Iluka Resources will need to keep courting the Federal Government for more money to build a huge new rare earths refinery after handing down a weak sales and production result for the quarter.

Iluka sold 105,700 tonnes of zircon, rutile and synthetic rutile between January and March generating revenue of $268 million, compared with 134,400 tonnes sold for $305m at the end of 2023.

Sales for zircon — often used in ceramics — were more than double the previous period, as property customers in China work to finish and furnish new apartments. But overall Iluka said demand for the product remained subdued, reflected in prices which dropped from $US2045/t to $US1873/t.

In WA the miner has been building what’s been billed as Australia’s first fully-integrated rare earths refinery that will be able to produce oxides used in magnets and aircraft. Production of rare earths is dominated by China.

The project is so far expected to chalk up a price tag of between $1.7 billion to $1.8b, with first cost estimates blown out significantly since inflationary pressures started to ramp up in Australia.

Iluka confirmed on Friday that it needed “further funding arrangements” to keep delivering on the build and that “discussions with the Commonwealth continue in relation to those funding arrangements”.

It comes after Prime Minister Anthony Albanese recently unveiled plans for a Future Made in Australia Act that has suggested the Government will provide subsidies to support local manufacturing and downstream processing efforts if and when the scheme gets up.

A pair of critical minerals projects in Queensland and South Australia this week received $585m in Government loans between them from the Federal Government, which is a partner on Iluka’s Eneabba project and has already supplied a $1.25b loan through a critical minerals scheme handled by Export Finance Australia.

Construction at Eneabba is well under way and Iluka said on Friday that it had lined up long lead procurement packages. The company is also negotiating on engineering and earthworks contracts.