Iluka confirms cost blowout at Australian rare earths refinery
Iluka MD Tom O'Leary says the Eneabba refinery project has not been immune to inflation
Critical minerals company Iluka Resources on Wednesday confirmed a major cost overrun at its Eneabba rare earths refinery, stating that the project would cost between A$1.7-billion and A$1.8-billion.
This is at the top-end of the A$1.5-billion to A$1.8-billion guidance range provided in December, when the company first flagged a cost blowout.
“Inflation has affected nearly all major resources projects in Western Australia in recent times and Eneabba has not been immune,” said MD Tom O’Leary.
When Iluka took a final investment decision in 2022, the project was expected to cost between A$1-billion and A$1.2-billion.
The company is building the refinery, which will have a 17 500 t/y rare earth oxide capacity, with the assistance of a A$1.25-billion investment from the Australian government.
The federal government contributed A$1.05-billion through a nonrecourse loan under the Critical Minerals Facility, along with a A$200-million cost overrun facility.
According to an article in the Financial Review, Iluka is in talks with the Australian government to “come to a pathway to deliver the refinery”.
The refinery commissioning remains scheduled for 2026.
Meanwhile, Iluka is generating revenue from its mineral sands business. The company reported a 19% drop in full-year revenue to A$1.24-billion and posted a 42% decrease in net profit to A$343-million, reflecting subdued demand.
The company also declared a final dividend of 4c a share, reflecting the pass-through of funds received from its 20% holding in Deterra Royalties.
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