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.