Pearl-clutching columnist Jennifer Hewett in today's ADR:Iluka...

Pearl-clutching columnist Jennifer Hewett in today's ADR:

Iluka Resources’ plans to build Australia’s first rare earths refinery are now in difficulties following a big increase in costs as well as the weaker prices for rare earths.

(The Australian) government provided a $1.25 billion loan to Iluka to build a refinery to separate rare earth oxides from its tailings at Eneabba and to process concentrate from other miners. The timetable for the start of operations has now been delayed a year to 2026, while Iluka is quietly asking for more assistance from its ‘‘strategic partner’’ in Canberra.

Chief executive Tom O’Leary will say only that the company is ‘‘working with the government to come to a pathway to deliver the refinery’’.

‘‘I think it’s fair to say that Eneabba’s strategic importance in providing a secure Western supply chain has only increased in recent times following China’s ban on the export of heavy rare earths technology in December,’’ he said at Iluka’s results this month.‘‘As we contemplate funding, both we and the government are really cognisant of the risks of the project and also its strategic importance, not only from a geopolitical and defence perspective but also from the perspective of its contribution to facilitating global decarbonisation.’’

Yet some other industry analysts suggest the refinery can never be commercially viable and the Australian government instead should be smoothing licensing and regulatory approvals and improving common infrastructure rather than giving subsidies to individual companies.

‘‘We should dig up rare earths if we can do so profitably,’’ one says.‘‘But it is the major advanced industrial economies of the US, Europe and Japan that are most at risk of unfair Chinese processing competition. They are the ones that should subsidise processing if their companies will not build it commercially.’’

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Outlines what I have been rabbiting on about: the Western countries who would gain the most from a non-Chinese source of Dy Tb ought to make a hefty contribution to standing up alternatives, from scratch if necessary. Their individual contributions need not be large, though they do need to be united and deliberate.

We civilian shareholders know little about government negotiations cloaked by national and collective security and development considerations.

ILU and NTU know how much is needed and that this is beyond their existing capital base. Load-bearing risk-sharing multi-government support is essential. Meanwhile, ILU/NTU have to hold their nerve and decline inadequate proposals.

Providing capital grants and long-term contracts may be difficult for governments sensitive to taxpayer and opposition criticism, yet nothing less will do.

Ash