Iluka chief executive Tom O’Leary says China has previously implemented restrictions on the export of rare earth processing technology.Credit: Trevor Collens
“Rare earths are among very few metals where China has demonstrated a preparedness to withhold supply to achieve unrelated political or other objectives. We’ve also seen China previously implement restrictions on the export of rare earth processing technology,” Iluka managing director Tom O’Leary said.
“We’ve all seen the perils of concentrated supply chain over the last several years, and so there’s much greater awareness now of the importance of security of supply,” O’Leary said.
Iluka is building a fully integrated rare earths refinery at Eneabba in Western Australia with the help of a $1.65 billion federal government loan. Within a decade of firing up the plant in 2027, it will account for 10 per cent the world’s rare earth oxide supply, and refine more than a third of globe’s strategically important heavy rare earth oxides, the company says.
We’re seeing critical minerals being used more and more as bargaining chips in trade negotiations, with countries leveraging their control over supply chains to get a better deal
Cameron Perks, analyst at Benchmark Mineral Intelligence.
Meanwhile, ASX-listed Lynas – valued at $6.5 billion – late last year turned on production at its newly built $800 million mixed rare-earth processing plant in Kalgoorlie. It will ship the carbonate output from Kalgoorlie for further refining in Malaysia where it operates the world’s largest single rare earths processing plant producing separated rare earths for export.
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Lynas is also building a heavy rare earths refinery in Texas, backed by $384 million in Defence Department funding from the Biden administration, in a bid to accelerate America’s access to supplies of rare earths.
Another Benchmark analyst, Cameron Perks, said if the US-China trade war escalates, combined with new tariffs and export controls, it’s going to have a significant impact on the critical minerals sector as a whole.
“We’re seeing critical minerals being used more and more as bargaining chips in trade negotiations, with countries leveraging their control over supply chains to get a better deal,” Perks said.
“Clients in South Korea and Japan have been reaching out to Australia a lot lately, wanting insights on supply, demand, pricing, and cost curves as they try to figure out the impact of Trump’s policies. They’re trying to figure out if this is an opportunity or if they should be backing out,” he said.
Australia’s current heavy rare earth output accounts for just 1 per cent of global mined production, Mukherjee said. But it’s projected to jump significantly, reaching 14 per cent by 2029 – the fastest growth outside of China.
Ramping up refining capacity is costly, technically challenging and time-consuming. Few have gained the foothold required to compete with China, even on more basic materials like lithium.
ASX-listed IGO began producing battery-grade lithium hydroxide with joint venture partner China’s Tianqi Lithium from its Kwinana Refinery in Western Australia in 2022, only to shutter parts of the operation in January this year as sluggish demand for electric vehicles and slumping prices slowed sales and created a global stockpile of the white battery metal.
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