The Iluka Resources Limited (ASX: ILU) share price is starting the week in a positive fashion.
In early trade, the mineral sands and rare earths producer's shares were up 8.5% to a new record high of $12.50.
The Iluka share price has pulled back a touch but still remains up 6% to $12.20.
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Why is the Iluka share price shooting higher?
Investors have been bidding the Iluka share price higher today after the company made a final investment decision on phase three of the Eneabba Rare Earths Refinery.
As you might have guessed from the share price reaction, the company has decided to go ahead with the construction of the refinery. This follows the completion of a feasibility study, which demonstrates solid economics and significant potential for growth.
Also supporting the decision was the government's agreement to a risk sharing arrangement, which includes a non-recourse loan under the Australian Government's $2 billion Critical Minerals Facility.
What is phase 3?
According to the release, phase 3 will deliver a fully integrated refinery for the production of separated rare earth oxides at Eneabba, Western Australia.
The release notes that following completion, the refinery will be capable of processing rare earth feedstocks sourced from both Iluka's portfolio and from a range of potential third party concentrate suppliers.
Iluka's refinery will produce high value rare earth oxides neodymium, praseodymium, dysprosium and terbium. Management notes that these are critical inputs across a range of industries and technologies, including electric vehicles, sustainable energy, advanced electronics, medical and defence applications.
Management commentary
Iluka's managing director and CEO, Tom O'Leary, spoke very positively about the plans. He said:
"Eneabba Phase 3 represents a defining opportunity for Iluka and an order of magnitude evolution for value addition to Australia's rare earth resources.
"Rare earths are among the key building blocks of an electrified economy and our final investment decision for Phase 3 will see Eneabba become a strategic hub for the downstream processing of Australia's rare earth resources. The refinery has been designed specifically to have the capacity to be globally material, the capability to process both Iluka's feedstocks and those held by third parties, and to have minimal environmental impact, including as a result of being located entirely on a brownfields site.
"Beyond the production of rare earth oxides, the refinery also provides a foundation for undertaking potential further steps along the value chain in future, such as rare earth metallisation. Iluka has already had strong and positive engagement with potential rare earths customers."
