Iluka Resources, a company specializing in critical minerals, has confirmed that its Eneabba rare earths refinery project in Western Australia is facing significant cost overruns. The projected cost is now estimated to be between A$1.7 billion (approximately $1.105 billion USD) and A$1.8 billion (approximately $1.17 billion USD), marking the upper limit of the previously forecasted range of A$1.5 billion to A$1.8 billion announced in December. This increase is attributed to the inflationary pressures that have impacted many major resource projects in the region.
Tom O’Leary, Managing Director of Iluka, cited widespread inflation as a key factor affecting the Eneabba project, similar to other initiatives in Western Australia. Originally, when the final investment decision was made in 2022, the refinery was expected to cost between A$1 billion (approximately $650 million USD) and A$1.2 billion (approximately $780 million USD). The refinery aims to produce 17,500 tons per year of rare earth oxide, with financial backing from the Australian government, which includes a A$1.25 billion investment (approximately $812.5 million USD), combining a nonrecourse loan of A$1.05 billion (approximately $682.5 million USD) under the Critical Minerals Facility and a A$200 million (approximately $130 million USD) cost overrun facility.
Iluka is reportedly in discussions with the Australian government to find a feasible solution to complete the refinery, which is scheduled for commissioning in 2026. Despite the challenges faced by the refinery project, Iluka continues to generate income through its mineral sands operations. However, the company has experienced a downturn in its financial performance, with a 19% decrease in full-year revenue to A$1.24 billion (approximately $806 million USD) and a 42% fall in net profit to A$343 million (approximately $222.95 million USD). This decline reflects the reduced demand impacting the sector. Additionally, Iluka announced a final dividend of 4 cents per share, derived from the proceeds of its 20% ownership in Deterra Royalties.
