Australia's Government announces funding for Illuka rare earths refining

Australia's Government announces funding for Illuka rare earths refining

The government of Australia announced a loan of AUD1.25Bn (US$0.9Bn) from its Critical Minerals Facility to Iluka Resources (Iluka) for the development of a rare earths refinery.

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Australia is already one of the major rare earths mine producers in the world, sourcing nearly all its rare earth minerals from the Mount Weld deposit operated by Lynas. At present, the rare earth minerals are exported to Malaysia, where Lynas has established a refinery to separate out the elements for market. The company is in the process of building its refinery at Kalgoorlie, which will relocate refining to Australia for the company.

Iluka’s Eneabba mineral sands operation stared monazite-rich tailings in the open pit void, but extraction and sale of monazite-rich sands to China commenced in 2020, adding a second operating RE resource to Australia. Iluka’s refining project is scheduled to separate rare earths using its monazite heavy mineral sands from 2026 onwards.

Both downstream investments by Lynas and Iluka sit within Australia’s strategy that has identified rare earths as a critical raw material market for value potential in the country. Rare earths, in particular neodymium (Nd), dysprosium (Dy) and terbium (Tb), are critical from a demand perspective as part of the magnet supply chain to allow for efficient motor and generator technologies, the largest markets being electric vehicles (EVs) and wind turbines. As a result, the rare earth supply chain is a key part of the energy transition towards non-fossil-fuel alternatives.