The Australian government on Friday announced an additional AUD 400 million ($257.2m) loan to Iluka Resources to develop its Eneabba rare earths refinery in Western Australia.

Kallanish understands the funding is on top of an initial AUD 1.25 billion loan facility agreed in 2022. However, the expected capital cost of the project increased last December to AUD 1.7 to 1.8 billion. Iluka and the Australian government had been in talks throughout this year for additional financing to bridge the funding gap.

Meanwhile, the miner will contribute an additional AUD 214m cash equity, on top of the AUD 200m cash equity and stockpile it has already earmarked for the project.

“Critical minerals are the building blocks for a clean energy future and we are determined to seize this economic opportunity to support local businesses and local jobs,” comments Prime Minister Anthony Albanese. 

Resources minister Madeleine King adds: “Supporting our critical minerals and rare earths industry is about Australia taking responsibility to lead on critical minerals globally. Not only are critical minerals and rare earths key to the energy transition, they are essential to the defence industry and our national security.”

Eneabba, set to be the country’s first fully integrated rare earths refinery, will have a production capacity of up to 23,000 tonnes/year of rare earth oxides. First production was originally scheduled for 2025.

Despite the funding announcement, Iluka’s shares were trading 10% down at the time of writing.

With China heavily dominating the global rare earths supply chain, countries like Australia have been looking to develop their own rare earths downstream industry. Only a handful of ex-China large-scale refining facilities exist, with Lynas Rare Earths officially opening Australia’s first rare earths processing facility in Kalgoorlie last month.

Early this year, the government also backed Arafura Rare Earths’ combined rare earths mine and refinery in the Northern Territory with a funding of up to AUD 840m.