Iluka Signs US$20M Loan-Backed Deal for 6,000tpa Rare Earth Feedstock
Iluka Resources has secured a long-term supply of rare earth concentrate from Lindian Resources’ Kangankunde mine, underpinning its Eneabba refinery’s capacity and advancing Australia’s rare earth ambitions.
- 15-year agreement for 6,000 tonnes per annum rare earth concentrate
- US$20 million loan facility to support Kangankunde mine development
- Supply to feed Eneabba refinery, Australia’s first integrated rare earths plant
- Pricing linked to Iluka’s realised NdPr oxide prices, not Asian Metals Index
- Rights of first refusal for expanded supply volumes and future projects
Strategic Feedstock Partnership
Iluka Resources has taken a significant step in securing its rare earth supply chain by signing a 15-year feedstock agreement with Lindian Resources. The deal commits Lindian to supply 6,000 tonnes per annum of rare earth concentrate from its Kangankunde mine in Malawi, a project noted for its high-grade monazite deposits. This supply will represent about 10% of the capacity of Iluka’s Eneabba rare earths refinery, currently under construction in Western Australia.
The Eneabba refinery is poised to become Australia’s first fully integrated rare earth processing facility, capable of producing separated light and heavy rare earth oxides. Scheduled for commissioning in 2027, Eneabba is a strategic asset developed in partnership with the Australian Government, reflecting national priorities to diversify rare earth sources away from traditional supply chains.
Financial Support and Conditionality
To facilitate Kangankunde’s development, Iluka has agreed to provide a US$20 million loan facility with a five-year term and an interest rate tied to the Secured Overnight Financing Rate plus 11%. The loan’s drawdown is contingent on several conditions, including Lindian securing full project funding, completion of due diligence by Iluka, and meeting construction milestones. Interest will be capitalised for the first two years during the mine’s construction phase.
This financial backing underscores Iluka’s commitment not only to securing feedstock but also to catalysing new rare earth mining operations internationally. The Kangankunde deposit’s potential for a low-cost, straightforward mining operation aligns well with Iluka’s strategy to build a resilient and diversified supply chain.
Pricing and Future Growth Options
Pricing for the concentrate will be linked to the prices Iluka achieves for its neodymium and praseodymium oxides, rather than relying on the Asian Metals Index. This approach aims to enhance supply chain security and pricing transparency. The agreement also includes rights of first refusal for Iluka to increase supply volumes if Kangankunde expands beyond its initial capacity, potentially increasing Iluka’s entitlement up to 31,000 tonnes per annum.
Iluka’s Managing Director highlighted the deal as a key milestone in building Australia’s rare earth industry, emphasizing the importance of complementary feedstocks from both domestic and international sources. The partnership with Lindian is expected to contribute positively to a sustainable rare earths sector, supporting global efforts to diversify supply.
Looking Ahead
With construction progressing well at Eneabba and ongoing discussions with other potential feedstock suppliers, Iluka is positioning itself at the forefront of the rare earths market. The success of this partnership will depend on Lindian’s ability to bring Kangankunde into production on schedule and on the evolving dynamics of rare earth pricing and demand.
Bottom Line?
Iluka’s strategic alliance with Lindian marks a pivotal advance in securing rare earth supply, but execution risks remain as both projects progress toward production.
Questions in the middle?
- Will Lindian meet the funding and construction milestones to draw down Iluka’s loan?
- How will fluctuations in NdPr oxide prices impact the economics of the supply agreement?
- What other feedstock partnerships might Iluka secure to fully utilise Eneabba’s capacity?
