Mineral sands major Iluka Resources (ASX: ILU) has announced board approval of its $1.2 billion Eneabba Phase 3 rare earths refinery in Western Australia with construction to start in the second half of the year.
The mining heavyweight made the highly anticipated final investment decision following the completion of a feasibility study and a risk-sharing agreement with the Australian Government, which includes a 16-year non-recourse loan totalling $1.05 billion.
The loan will come from the Critical Minerals Facility administered by the federal government’s Exports Finance Australia. It also includes a $200 million cost overrun facility if required.
Iluka managing director Tom O’Leary in a statement today described Eneabba Phase 3 as a “defining opportunity” for the company.
“Our final investment decision for Phase 3 will see Eneabba become a strategic hub for the downstream processing of Australia’s rare earth resources,” he said.
“The refinery has been designed specifically to have the capacity to be globally material, the capability to process both Iluka’s feedstocks and those held by third parties, and to have minimal environmental impact, including as a result of being located entirely on a brownfields site.”
Mr O’Leary added that the partnership with the Australian Government mitigates risk and provides a strong platform for Eneabba’s success as a sustainable, secure and globally competitive source of separated rare earth oxides.
“This is consistent with Iluka’s disciplined approach to capital allocation and the development pathway we have been pursuing for some time, based on the alignment of commercial and policy objectives.”
Rare earths refinery builds on existing Eneabba operation
Eneabba Phase 3 will be a fully integrated refinery for the production of separated rare earth oxides, with feedstock expected to be sourced both from Iluka’s projects and a range of potential third party concentrate suppliers.
The high-value rare earth oxides to be produced at the refinery include neodymium, praseodymium, dysprosium and terbium, which are considered critical inputs for many industries and technologies such as electric vehicles, sustainable energy, advanced electronics, medical and defence applications.
Iluka’s Eneabba project currently consists of its phase one screening and phase two concentration plant. Phase three will build on the operation to deliver a significant downstream infrastructure asset comprising roasting, leaching, purification, solvent extraction, and product finishing.
According to the completed feasibility, the refinery will have a total rare earth oxide capacity of 17,500 tonnes per annum.
Construction phase to start in second half
Iluka is expecting to employ a construction workforce of around 300 people with construction set to commence in the second half of 2022.
Eneabba Phase 3 will be owned and operated by Iluka’s wholly-owned special purpose facility RefineryCo, the recipient of the government’s critical minerals loan facility.
First production is anticipated in 2025 with an operational workforce of about 270 people.
US offers helping hand to Australian critical minerals projects
The United States has also recently taken an interest in helping Australian critical minerals projects as the two countries work together to impose export bans and other sanctions on Russia.
Last week Australian trade minister Dan Tehan said the US has agreed to help finance Australian projects to accelerate the delivery of critical minerals for technology that goes into defence equipment, batteries, smart phones and electric vehicles.
Iluka representatives, along with other Australian mining majors, reportedly travelled with Mr Tehan to Washington to table the issues with US secretary of commerce Gina Raimondo.