Rare earths mined in Africa headed to WA in twist on Labor’s critical minerals processing dream

One of the world’s biggest rare earths projects could ship material to Australia for processing under a joint venture involving Kenya and Iluka Resources in order to freeze out China’s dominance.

The processing plant at Iluka Resources’ Eneabba rare earths project in WA.

Rare earths mined in Africa could be shipped to Australia for processing under a joint venture uniting an ASX minnow, taxpayer-backed Iluka Resources and the US-aligned Kenyan government.

The deal is designed to boost the non-China supply of rare earths to the Western world in what Perth-headquartered RareX has described as a “Pearl Harbour moment” for US access to critical minerals.

Kenya has allowed a RareX-Iluka consortium to pitch for control of the Mrima Hill rare earths project near the coast, about 85km from Mombasa, on a sealed road with access to geothermal power.

Labor in December lent $400m to Iluka under its Future Made in Australia policy to finish a rare earths refinery serving customers in allied countries that was beset by cost blowouts. Iluka borrowed $1.25bn from the Morrison government in 2022.

RareX and Iluka plan to ship ore from Mrima across the Indian Ocean to WA where Iluka is building the refinery at Eneabba.

To feed the refinery in its early years, Iluka is relying on stockpiles of tailings rich in rare earths that were left behind from mineral sands mining.

Eneabba has been touted as Australia’s first fully integrated rare earths refinery and is billed as a partnership between the company and the federal government.

The US elevated Kenya to major non-North Atlantic Treaty Organisation (NATO) US ally status in 2024 after its president, William Ruto, became the first African leader in more than 15 years to make an official state visit.

China dominates global rare earths supply and has imposed export restrictions as part of an escalating trade war with the US. The bans apply to permanent magnets that contain heavy rare earths crucial in guided missiles and jet fighters, as well as in robotics and renewables.

RareX managing director James Durrant said the company had spent several years building trust and relationships in Kenya as US and Chinese interests circled Mrima, which also has potential to produce manganese, phosphate and niobium.

He said bringing Iluka on board had been crucial to submitting a suitable proposal to Kenya’s National Mining Corporation.

If the proposal is successful, Iluka will take 25 per cent in a joint venture alongside RareX. The deal includes a binding conditional offtake agreement with Iluka for all rare earth and heavy mineral product from Mrima.

The joint venture partners would need to negotiate a deal with Kenya. Under Kenyan laws, the National Mining Corporation would typically get 10 per cent free carry into a mining project of strategic importance.

“We have to get the right balance here because they see it as the jewel in the crown of their mineral endowment,” Mr Durrant said.

“They’ve not been able to develop it and now they’re getting a lot of pressure globally, particularly from Western nations, to develop it and make sure it doesn’t fall the way of China. I think that’s what we can offer them.

“There’s no better ally of the US than Australia, and the US have had their – as our advisers would say – that Pearl Harbor moment and realised they don’t in any way have control over their critical mineral supply chain.

“This provides not only a solution for Kenya and a solution for Eneabba, but it also provides a solution for the US when they’re desperately in need of all of these critical minerals.

“If successful, the project could become part of a unique and independent mine to rare earth metal solution, backed by allied governments, and could contribute to deeper diplomatic relations between two Commonwealth countries, both non-NATO strategic allies of the US and both members of the Indian Ocean Rim Association.”

RareX would the lead and fund the development of the project, and Iluka would focus on building Eneabba and plans to develop its own mines in Australia.

Perth-based Iluka exited Africa in 2022 with the spin-off of its troubled Sierra Rutile business based in Sierra Leone.

RareX’s share price jumped more than 11 per cent to 4c in trading on Tuesday. The stock was trading at less than 1c in late March.

Originally published as Rare earths mined in Africa headed to WA in twist on Labor’s critical minerals processing dream