Australia on the Move: Rare Earth Elements ”Ex-China”

Highlights

• The Australian government is investing $475 million in Iluka Resources to develop a rare earths refinery in Western Australia, aimed at reducing dependence on China’s rare earth processing.
• The $4 billion Critical Minerals Facility supports domestic mining and processing of strategic minerals crucial for clean energy, technology, and defense industries.
• Arafura Rare Earths Ltd’s Nolans Project is set to become a significant global supplier of neodymium and praseodymium oxides, with substantial government financial backing.

---

The Australian government is investing $475 million, primarily as a loan, in Iluka Resources (opens in a new tab) to develop a rare earths refinery in Eneabba, Western Australia. This initiative aims to boost domestic processing of critical minerals and reduce Australia’s dependence on China, which currently has a near-monopoly on rare earth refining.

Reported first late in 2024, the funding is sourced from the $4 billion Critical Minerals Facility (opens in a new tab), a government program designed to support the mining and processing of rare earths, lithium, cobalt, nickel, and manganese.

Rare earth elements play a crucial role in the manufacturing of electronic devices, batteries, magnets, defense applications, and clean energy technologies such as solar panels and wind turbines. Resources Minister Madeleine King emphasized that the refinery would create local jobs and enhance Australia’s supply chain independence. Prime Minister Anthony Albanese described the investment as a “future made in Australia” opportunity, aligning with the country’s goal to capitalize on the global transition to clean energy.

From an industry perspective, Iluka CEO Tom O’Leary (opens in a new tab) noted that the company’s commercial objectives align with government policy, acknowledging that Australia has historically fallen short in mineral processing and value addition. This refinery is part of a broader strategy to diversify supply chains and expand Australia’s refining capacity, positioning the country as a key player in the global rare earths market.

Australian State Backing

The Australian government’s Critical Minerals Facility actively supports the growth of its critical minerals sector through financing and strategic initiatives. The facility costs $4 billion and is designed to expand domestic mining, downstream processing, and supply chain infrastructure. This effort aligns with Australia’s Critical Minerals Strategy, which aims to position the country as a leading global provider of essential minerals needed for clean energy, technology, and defense.

To ensure viable projects receive funding, the government collaborates with other financiers, such as the Clean Energy Finance Corporation (opens in a new tab) and the Northern Australia Infrastructure Facility. Additionally, a Single Point of Entry (SPE) has been established with the Export-Import Bank of the United States (U.S. EXIM), enabling joint financing and faster referrals for eligible projects involving Australian and U.S. businesses.

The Critical Minerals Facilitation Office serves as the central coordination point for policies, programs, and industry support. When evaluating potential investments, key considerations include the project’s benefit to Australia, alignment with identified critical minerals, feasibility studies, market demand, use of proven processing technology, and the capability of the project’s proponents.

Through these initiatives, Australia seeks to strengthen its critical minerals industry, reduce global reliance on China, and establish a secure supply chain for materials vital to the clean energy transition and advanced manufacturing.

Arafura Rare Earths On the Move

Arafura Rare Earths Ltd (opens in a new tab) is an Australian mining company headquartered in Perth, Western Australia. The company specializes in the exploration and development of rare earth elements. Its flagship endeavor is the Nolans Rare Earths Project, (opens in a new tab) situated approximately 135 kilometers north of Alice Springs in the Northern Territory. This project is poised to become a significant global supplier of neodymium and praseodymium (NdPr) oxides, which are essential components in the manufacturing of high-performance permanent magnets used in electric vehicles, wind turbines, and various electronic devices.

Nolans Project Overview

The Nolans Bore deposit boasts a 56 million-tonne JORC 2012-compliant (opens in a new tab) mineral resource, with an average grade of 2.6% total rare earth oxides (TREO) and 11% phosphate (P₂O₅). Notably, approximately 26.4% of the rare earth mix comprises NdPr, underscoring its strategic importance.

The development encompasses a mine, processing plant—including beneficiation, extraction, and separation facilities—and related infrastructure. Once operational, the project aims to produce 4,440 tonnes of NdPr oxide annually, accounting for about 4% of the projected global demand. The mine is designed to have a minimum lifespan of 38 years, ensuring its long-term contribution to the rare earth supply chain.

Government Backing

The Nolans Project has garnered substantial financial backing, reflecting its strategic significance:

• National Reconstruction Fund Corporation (NRFC): in January 2025, the NRFC committed $200 million to support the project’s development, highlighting its potential to bolster Australia’s position in the global rare earth market.
• Additional Funding: Prior to the NRFC’s investment, the Australian government had allocated $840 million in loans through various channels, including the Northern Australia Infrastructure Facility and the Critical Minerals Facility, to advance the project’s progress.

Strategic Importance

The Nolans Project is set to be Australia’s first fully integrated rare earth processing operation, encompassing mining through to the production of refined NdPr oxide on-site. This vertical integration is anticipated to enhance supply chain security and reduce dependence on external processing facilities. Moreover, the project’s development is expected to generate significant economic benefits, including the creation of over 600 jobs during the construction phase and approximately 350 permanent positions once operational. These developments are poised to provide substantial economic and social advantages to the local communities in the Northern Territory reports (opens in a new tab) the National Reconstruction Fund Corporation.

Through the Nolans Project, Arafura Rare Earths Ltd. is positioning itself as a key contributor to the global supply of critical minerals. It plays a pivotal role in supporting the transition to sustainable energy solutions and advanced technologies.