Rare Earths
by David Archibald
10 November 2025
Australia recently signed to a critical minerals arrangement with the U.S., which was a good thing. The U.S. went on to sign similar critical minerals and rare earths deals with Thailand, Cambodia, Malaysia and Vietnam. After one such signing, President Trump quipped to reporters “In about a year from now, we’ll have so much critical mineral and rare earths that you won’t know what to do with them.” That is also a good thing, because modern war will chew through a lot of rare earth elements.
First Person View drones are now causing 80% of deaths and injuries in the Ukraine War. Each drone requiring about 20 grams of neodymium and praseodymium to make high strength permanent magnets for the rotors of each drone. At the other end of the scale, more than 400 kilos of rare earths are used to make an F-35, three percent of its dry weight.
Now that we are to have more rare earth mines in this country, what makes a good one? There are 14 rare earth elements, plus scandium and yttrium. Their current prices in US$ per kilo of oxide on the Shanghai Metal Market are shown in the following graphic. The major elements for making rare earth magnets are praseodymium (Pr) with neodymium (Nd), and terbium (Tb) with dysprosium (Dy). The latter two are more valuable than the former two because they are rarer and maintain their magnetic properties to much higher temperatures.
Iluka Resources used to sell their monazite production to the French company Rhone-Poulenc which processed it at their La Rochelle plant. That plant closed in 1984, after which Iluka stockpiled monazite at their Eneabba operation, in the Eneabba Monazite Pit (EMP). That stockpile, now a million tonnes, provided most of Iluka’s equity contribution to a largely federally funded processing plant that will cost $1,800 million to build and commission. The following graph shows the value in the ground of the rare earth assemblage at Eneabba. Not all these values will be realised due to recovery rates.
It is a similar situation to gold mines operating on refractory ore. They might get an 80% yield of the contained gold to a concentrate, and then a third-party smelter might pay them 80% of the value of the gold in the concentrate. The net result is that the miner might get, on a good day, two thirds of the value of the gold in the ground. Rare earth miners selling mixed concentrate would fare much the same.
While on the subject of Rhone-Poulenc, that company is restarting its gallium recovery plant at Alcoa’s Pinjara alumina refinery. Darling Range bauxite is up to 110 ppm gallium.
Praseodymium and neodymium provide most of the revenue for monazite processors. An onsite plant might concentrate on those two elements and ship everything else off in a mixed concentrate. Iluka is building its plant with a terbium/dysprosium circuit as well, to give it the ability to maximise value from its own terbium/dysprosium production. To achieve economies of scale in doing that, it also has to source third party, non-monazite ore sources. To that end it has done a deal with Northern Minerals for access to concentrate from that company’s Wolverine Deposit. Wolverine is unique in its high terbium and dysprosium levels in the mineral xenotime.
At the current gold price of US$4,000/oz, gold is worth US$129 per gram. At current rare earth oxide prices, the value in the ground of Iluka’s stockpile is equivalent to 17.7 g/t (grams of gold per tonne of ore) of gold. It is only a small stockpile though, and Iluka is likely to try to extend its life by bringing in third party ore that provides similar profitability at the plant level. This would be to provide a buffer against closure, in that the Eneabba stockpile has already been dug up and ready for processing.
An amusing detail about Iluka’s Eneabba operation is that monazites are between 5% and 12% thorium oxide. Thorium might be used as a nuclear fuel when a reactor technology is commercialised. It is illegal to operate a mine to produce thorium for sale in Western Australia. There is no mention of the fate of the thorium oxide in Iluka’s process flow sheet, though they will be producing and stockpiling tens of thousands of tonnes of it. It is the element that dare not speak its name. Eventually thorium will sell for the same price as uranium, so Iluka’s thorium stockpile will become valuable in time.
The Wolverine deposit of Northern Minerals is south of Halls Creek in Western Australia. It has an in-ground value equating to 9.8 g/t gold equivalent. From production commencing in 2028, the mine will process 5.9 million tonnes of ore per annum to produce 17,500 thousand tonnes of concentrate containing 4,350 tonnes of rare earth oxides. This will be trucked 2,700 km to Eneabba.
Arafura Resources is developing its Nolans deposit, 135 km north of Alice Springs. It is a characteristic monazite deposit with an element suite dominated by praseodymium/neodymium. The in-ground value of the rare earth content equates to 5.2 g/t gold equivalent. The economics of the project are helped by co-production of phosphoric acid for making fertiliser.
Lynas Rare Earths’ Mt Weld mine, 30 km south of Laverton in Western Australia, started production in 2011. Concentrate is trucked to Perth then shipped to Malaysia for processing. Processing of rare earths is labour-intensive, with up to 120 process steps. Lynas would have chosen Malaysia for lower labour costs. The element assemblage looks exactly the same as that of Arafura Resources (and Iluka’s) though the value per tonne of ore in the ground is twice Arafura’s at 10.1 g/t gold equivalent.
Lastly, another opportunity to mention President Trump. He started his second term by casting covetous eyes on Greenland, which hosts the Kringlerne rare earth deposit. Previously owned by the private Australian company Tanbreez, the deposit was sold to the American-listed Critical Metals Corp. The rare earths in this deposit have an in-ground value of 1.1 g/t gold equivalent. About 20% of the orebody, some 940 million tonnes of the total 4.7 billion tonnes, also contains 2.0% zirconium oxide, 0.2% niobium oxide, 0.03% tantalum oxide and some hafnium oxide. That mineral assemblage has an in-ground value of a further US$265 per tonne, equating to 2.0 g/t gold equivalent. It will also be ideal for making alloys for molten-salt nuclear reactors when that technology is commercialised.
China created its rare earth monopoly by running its operations at low margins combined with some predatory pricing. Once it pulled the trigger on its supply weapon, the West responded by initiating a structural oversupply which will be supported by a price floor in some countries. For example, the U.S. will pay US$110 per kilo for neodymium/praseodymium oxide. There is no shortage of rare earths deposits; there is only a temporary shortage of processing capacity. The U.S. floor price is nearly twice the current Shanghai price for that stuff.
Lynas Rare Earths has an annual production rate of 8,500 tonnes per annum of neodymium/praseodymium and a market capitalisation of $13.6 billion, a price/earnings ratio of 1,590 times and a cash flow multiple of 132 times (ASX figures). Iluka’s Eneabba operation will cost $1.8 billion to get into production and then produce 5,500 tonnes per annum of neodymium/praseodymium. Lynas’ market capitalisation could pay for seven Eneabba-sized processing plants which would produce five times as much as Lynas is producing now. That is a pointer to relative value. Eneabba’s production will equate to about one quarter of current non-Chinese demand.
A positive sign is that China is now importing 40% of the feed for its heavy rare earths (meaning terbium and dysprosium) production from Myanmar. This likely means that China is running out of this type of ore.
David Archibald is the author of The Anticancer Garden in Australia.