Iluka Resources reported in its September quarter update that construction of the Eneabba rare earths refinery in Western Australia is 65 percent complete, with capital expenditure reaching $1.237 billion and the total capital estimate held at $1.7 billion to $1.8 billion. Major equipment placement and assembly, concrete installation, pipe rack module erection, large tanks and the main solvent extraction circuit buildings are complete, with structural, mechanical, piping, electrical and instrumentation work continuing.
The refinery is being developed in partnership with the Australian Government, supported by a non recourse loan under the Critical Minerals Facility administered by Export Finance Australia. It will produce separated magnet rare earth oxides, including neodymium, praseodymium, dysprosium and terbium. During the quarter Iluka also produced dysprosium and terbium metal to specification in feasibility work on extending the value chain beyond oxides, and purchased metallisation equipment to support potential commercial scale capacity of 200 tonnes a year of dysprosium and terbium metal.
The mineral sands business that funds the build was mixed. The Balranald operation in New South Wales is ramping up, with enhancements to one mining rig completed in October after which it consistently achieved targeted extraction rates, and the first 30,000 tonnes of heavy mineral concentrate were shipped from Balranald to Western Australia in September for processing in November. Across its mineral sands operations Iluka produced 76,000 tonnes of zircon, rutile and synthetic rutile in the quarter against sales of 115,000 tonnes, with both synthetic rutile kilns idle and any restart subject to market conditions.
Pricing moved in Iluka’s favour. The weighted average realised zircon sand price was US$1,685 a tonne for the quarter, while volumes contracted during the quarter averaged US$1,768 a tonne, up US$222 a tonne from second quarter contracted sales. Iluka expects a zircon sand price of US$1,825 a tonne in the December quarter, with fourth quarter contracts incorporating an average increase of US$80 a tonne. Mineral sands net debt fell to $249 million at September 30 from $273 million at the end of June. The read for the equity is two sided: the legacy zircon business is generating price led cash while the balance sheet carries a refinery build whose remaining spend is roughly $460 million to $560 million on the company’s own estimate range.