Rare earths revolution: Iluka’s Eneabba refinery

Iluka Resources (ASX: ILU) is spearheading a significant development in Australia’s critical minerals sector with the construction of the country’s first fully integrated rare earths refinery.

Located at the Eneabba mineral sands mine, about 280km north of Perth, this landmark project is set to enhance Australia’s role in the global rare earths supply chain.

With construction progressing steadily, the refinery is expected to commence production in 2026, processing valuable rare earths from Iluka’s own operations as well as potentially from third-party sources.

Diversification & phased development

The Eneabba rare earths refinery marks a transformative step for Iluka and Australia’s broader mining landscape.

Traditionally known for its production of zircon and high-grade titanium dioxide feedstocks (rutile and synthetic rutile), Iluka’s venture into rare earths refining positions the company as a key global supplier of separated rare earth oxides, with the initiative not only diversifying Iluka’s portfolio, but also strengthening the country’s critical mineral capabilities at a time when global demand for rare earths is soaring.

The refinery’s development is structured in phases to ensure efficient progress and risk management.

Phase 1, which involved establishing a screening plant, has been operational since 2020, setting the foundation for expansion while Phase 2, completed in June 2022, introduced a concentrator that enhanced the facility’s ability to process rare earth feedstock.

Now, the project is progressing toward full-scale refinery operations, integrating advanced processing technologies to produce high-purity rare earth oxides.

Processing for a global market

The refinery is designed to process rare earth minerals sourced from Iluka’s existing and future mineral sands mines. Additionally, Iluka has indicated its readiness to accommodate third-party feedstock, positioning the facility as a regional processing hub.

It’s an approach that aligns with global efforts to secure diversified and sustainable supply chains for critical minerals, particularly as geopolitical factors impact traditional supply routes.

Rare earth oxides produced at Eneabba will include neodymium, praseodymium, dysprosium, and terbium — key elements used in high-tech applications such as electric vehicle motors, wind turbines and advanced electronics — all essential minerals used for modern technologies, with demand that is expected to grow significantly in the coming years.

Strategic funding

Recognising the strategic importance of this project, the Federal Government has provided significant financial backing through a $1.65b non-recourse loan from the Critical Minerals Facility.

This funding underscores the project’s role in strengthening Australia’s position in the global rare earths market while reducing reliance on international processing hubs, particularly those in China.

The investment aligns with more broad national objectives to build sovereign capabilities in critical mineral supply chains and enhance economic resilience.

In December 2024, the Federal Government announced an additional $400m loan, bringing the total funding to $1.65b, an increase that is reflective of the refinery’s growing strategic importance.

Construction & production timeline

Construction activities for the refinery are in full swing, encompassing procurement, engineering, equipment fabrication, and on-site development.

With these processes advancing, Iluka initially projected the refinery to be operational in 2026 however a recent update from December 2024 confirmed that commissioning is now expected in 2027, reflecting adjustments in the project timeline.

The estimated capital cost of the refinery has also increased from an initial $1.2b to between $1.7b and $1.8b, in line with the complexity of the development, a revision that accounts for expanded project scope and necessary modifications to ensure long-term operational efficiency.

Eneabba’s legacy & future potential

The Eneabba mineral sands mine has been a cornerstone of Iluka’s operations for more than three decades, producing vital minerals for various industrial applications.

By leveraging its established infrastructure and mineral deposits, Iluka is set to extend the mine’s legacy into the rare earths sector. Additionally, the refinery’s potential expansion to process third-party feedstock presents opportunities for more broad industry collaboration and economic growth.

With the completion of the Eneabba rare earths refinery, Iluka Resources is poised to become a leading force in the global rare earths supply chain. The project not only reinforces Australia’s commitment to developing its critical minerals sector but also contributes to securing a sustainable and independent rare earth supply.

As production gears up for 2026, the refinery represents a major step toward a future where Australia plays a central role in meeting the world’s growing demand for high-tech minerals.