Australian Government Provides Additional Funding for Iluka's Eneabba Rare Earth Plant

Iluka Resources

The Australian government has pledged up to A$400 million ($257 million) in additional funding to support Iluka Resources’ Eneabba rare earth refinery project in Western Australia. The facility aims to bolster Australia’s presence in the critical minerals supply chain amid rising global demand.

Addressing Cost Uncertainties in Eneabba Project

Iluka Resources, a leading mining firm, initially secured an A$1.25 billion loan facility from the Australian government in April 2022 to finance the Eneabba refinery. However, escalating construction costs—now estimated at A$1.7-1.8 billion—created a funding shortfall. To bridge the gap, the government has approved an additional A$400 million loan, contingent on Iluka securing customer offtake agreements and utilizing its existing credit facilities.

The support package also includes A$75 million for a cost overrun facility, with Iluka agreeing to contribute an equal amount, although the company indicated it might not need to draw on this capital.

Iluka’s refinery, set to commence operations in 2027, will produce 12,100-18,400 tonnes per year of rare earth oxides, including neodymium-praseodymium (NdPr)—key components for electric vehicle motors, wind turbines, and other green technologies.

Policy Support and Industry Expansion

The announcement aligns with Australia’s broader strategy to strengthen its critical minerals sector. Last week, the Australian Parliament passed the Future Made in Australia package, which provides funding incentives for domestic mineral processing. Under this framework, Iluka can claim tax incentives worth 10% of its processing costs once the refinery begins operations.

Currently, Australia has only one operational rare earth refinery, Lynas Rare Earths’ Kalgoorlie plant, but the government is actively encouraging new entrants. The move comes as global demand for rare earth elements like praseodymium, dysprosium, and terbium is projected to rise significantly by 2033.

Geopolitical Context

Iluka’s funding boost comes amid heightened geopolitical tensions. China recently suspended exports of gallium, germanium, and antimony to the US, a retaliatory move against US semiconductor export restrictions. Such disruptions underscore the importance of diversifying critical mineral supply chains, a goal Australia aims to achieve by expanding its domestic refining capacity.