Highlights

• Iluka Resources secures strategic momentum with U.S. Department of Defense's $600 million offtake deal for rare earth oxides.
• Eneabba rare earth refinery in Western Australia progressing with $570 million invested and Australian government co-funding.
• Project includes export restrictions to China, supporting allied efforts to diversify rare earth supply chains.

Iluka Resources (opens in a new tab) (ILU.AX) is riding a fresh wave of investor optimism after the U.S. Department of Defense(DoD) agreed to a $600 million offtake deal with MP Materials that includes a fixed minimum price of $100/kg for separated rare earth oxides. The move is being hailed as a possible turning point for Iluka’s flagship Eneabba rare earth refinery project in Western Australia.

Iluka told investors the U.S. price floor validates its long-held push for pricing mechanisms independent of the China-linked Asian Metals Index. The company has previously modeled the Eneabba refinery’s (opens in a new tab) utilization at a long-term neodymium-praseodymium (NdPr) price of $108/kg, making the MP deal a strategic benchmark for non-Chinese suppliers. Note that Rare Earth Exchanges (REEx) has suggested the price floor afforded by the DoD to MP Materials is for one company, and not necessarily indicative of a market price.  Only time will tell if this assumption manifests.

Construction at the Eneabba site is progressing, with $570 million already spent, and major equipment has arrived on-site. The refinery, co-funded through a $1.65 billion package with the Australian government, includes strict restrictions on exporting future output to China, aligning with allied efforts to diversify away from Beijing’s dominance in rare earths.

Despite yanking zircon production guidance for the next quarter—citing tariff-related uncertainty—Iluka shares rose 4% to $5.39 on the back of confidence in its rare earth positioning. While zircon exports may face a 10% U.S. tariff from August 1, titanium dioxide feedstocks and rare earth oxides remain exempt.

Key Questions for Investors:

• Will the U.S. price floor trigger a broader shift in rare earth pricing outside China?
• Could Iluka ink a similar offtake agreement with the U.S. or allied buyers?
• How enforceable and long-lasting are the China export restrictions embedded in the Eneabba project?
• Will tariff pressures on other mineral sands products impact Iluka’s broader margins?

REEx Take: Iluka’s exposure to U.S. tariff risk is offset by its strategic positioning in the rare earths sector. The MP Materials–DoD price floor strengthens Iluka’s refinery economics and may catalyze more Western-aligned price standardization. Retail investors should watch for new offtake announcements and Australian policy moves reinforcing REE independence.

Source: The West Australian (opens in a new tab) | Author: Simone Grogan