Iluka is pressing for more government support for its ‘critical’ rare earths project

Iluka Resources has warned its $1.8bn Eneabba mineral sands refinery, which it says is critical to national security, needs more government support to get over the line.

Operations at an Iluka Resources mineral sands mining operation.

The development of Iluka Resources’s $1.8bn Eneabba mineral sands refinery appears to hang in the balance with the company warning it needs more federal support to press ahead with the project, which it says is critical to national security and the energy transition.

Iluka originally costed the Western Australian project at $1bn-$1.2bn, with the federal government’s Export Finance Australia (EFA) coming to the party with a limited recourse loan of up to $1.25bn under the Critical Minerals Facility.

Costs have since blown out and the project is now expected to come in at $1.7bn-$1.8bn.

The Eneabba refinery is seen as strategically important given China’s dominance in the global rare earths trade, a point Iluka Resources managing director Tom O’Leary was at pains to make while handing down the company’s first half results on Wednesday.

“The Eneabba refinery will be a critical piece of infrastructure for both national security and the energy transition,’’ Mr O’Leary said.

“It’s an archetypal project for the delivery of western and like-minded policy initiatives in these areas.

“I’ve noted many times before the risk and opportunities that this investment presents.

“I’ve also been clear that Iluka requires an appropriate risk sharing partnership with the Australian government in order to continue the refinery development.’’

Mr O’Leary said discussions with the government were “well-advanced”, and to comment further would be inappropriate given the confidential nature of those talks.

“I will say though that the Australian government, our strategic partner, understands Iluka’s position regarding risk sharing and also understands the merits of the Eneabba refinery, which is central to its critical minerals policy objectives,’’ he said.

“As I said before, I know shareholders’ patience is limited and we are doing all in our power to delivery certainty.’’

A spokesperson for Resources Minister Madeleine King said the EFA “has been working closely with Iluka, like it would with any borrower, to assess options and identify appropriate solutions for Iluka to address cost increases at its Eneabba project’’.

“EFA has well-established, robust due diligence processes that it applies to all transactions,’’ they said.

“Proper examination and consideration of financing options takes time.

“Taxpayers would expect the Government to undertake a robust and rigorous process when considering a potential financial commitment of this size.’’

Iluka said in its half year report it expected to provide further updates on its rare earths business in the second half of the current calendar year.

Iluka on Wednesday reported a first half profit of $133.7m, down 34.4 per cent on the previous corresponding period, on revenue of $606.2m, down 14.9 per cent.

The company said three key factors played into the result, which were subdued activity globally in the construction and real estate markets, a strategic decision to build ilmenite inventory, and investment in capital developments.

The company said global economic uncertainty was “affecting customer buying behaviour in both the titanium and zircon markets’’.

“Prices for Iluka’s zircon products are relatively strong and stable,’’ the company said.

“In titanium feedstocks, the long term contracts Iluka has in place for synthetic rutile offtake provide the company a high degree of revenue certainty.’’

Iluka said its Balranald rutile deposit in western NSW was on track for commissioning in the second half of 2025 “and will produce material volumes of high quality zircon and rutile, as well as feedstocks for synthetic rutile and rare earths production’’.

Iluka will pay a fully-franked dividend of 4c per share, up 1c from the previous corresponding period.

Iluka shares closed 2.5 per cent higher at $5.82 on Wednesday.

Originally published as Iluka is pressing for more government support for its ‘critical’ rare earths project