Labor has cleared the path to the country’s first rare earths refinery after agreeing to lend its developer an additional $400 million, breaking a long impasse about who should cover a major cost blowout.

But shares in the developer, ASX-listed Iluka, crashed by 10 per cent to a four-year low on Friday after it agreed to cover a portion of the cost blowout on the Eneabba project in Western Australia, which was originally expected to cost around $1.2 billion when it was approved in April 2022.