Australia’s $1.15 billion rare earths bet strengthens market for Malawi’s Kangankunde mine

Australia’s decision to unlock the full A$1.65 billion ($1.15 billion) financing package for Iluka Resources’ Eneabba refinery has strengthened the commercial outlook for Malawi’s Kangankunde project, one of Africa’s most closely watched rare earth developments.

• Australia has confirmed access to a A$1.65 billion ($1.15 billion) government-backed loan for Iluka Resources’ Eneabba rare earths refinery.
• The refinery will process part of the output from Malawi’s Kangankunde project, which is expected to become Africa’s next producing rare earth mine.
• The development strengthens Kangankunde’s commercial outlook by securing long-term processing capacity and an established offtake pathway.
• The project forms part of broader Western efforts to build alternative rare earth supply chains and reduce dependence on China’s dominance in processing critical minerals.

The Australian government-backed funding removes a major uncertainty surrounding the refinery, which is expected to become a critical processing hub for rare earth materials from Australia and overseas, including output from Kangankunde.

Iluka announced on Tuesday that Export Finance Australia had confirmed access to the full A$1.65 billion loan facility for the Eneabba rare earths refinery in Western Australia.

The company said the project remains on schedule, with the refinery more than 50% complete and commissioning targeted for 2027.

The development is significant for Lindian Resources, which is advancing the Kangankunde rare earths project in Malawi and has already secured a long-term supply agreement with Iluka.

Under a 15-year deal signed in 2025, Kangankunde will supply approximately 6,000 tonnes of rare earth concentrate annually to Eneabba, representing about 10% of the refinery’s expected feedstock requirements.

The agreement gives Kangankunde a clearer pathway to market at a time when many critical minerals projects globally are struggling to secure processing capacity and long-term buyers before production begins.

Why the refinery matters

Rare earths are essential for manufacturing electric vehicles, wind turbines, robotics, smartphones, military equipment and advanced magnets.

While deposits exist across several countries, China dominates global processing and refining capacity, giving Beijing significant influence over supply chains.

As a result, Western governments have increasingly shifted their focus from simply supporting mines to funding processing facilities that can challenge China’s dominance.

Eneabba sits at the centre of that strategy. Once operational, the refinery is expected to become Australia’s first fully integrated rare earths refinery capable of producing separated light and heavy rare earth oxides.

It is also one of the few facilities outside China designed to process material from multiple sources, including third-party mines.

Industry analysts view such facilities as crucial to building alternative supply chains stretching from mineral-rich regions such as Africa to manufacturers in North America, Europe and Asia.

A growing role for Malawi

Kangankunde has emerged as one of Africa’s most promising rare earth projects and is expected to begin production by the end of 2026.

The project is widely seen as a potential milestone for Africa’s critical minerals sector, particularly as governments and investors seek to position the continent as a key supplier of minerals required for the global energy transition.

Before Eneabba begins operations, part of Kangankunde’s output is expected to be processed through a facility in Kazakhstan, where Lindian acquired a controlling stake earlier this year.

The facility is expected to produce mixed rare earth carbonate, a higher-value intermediate product used in downstream processing.

The Malawi project is expected to produce about 20,000 tonnes of concentrate annually once fully operational, making it one of the continent’s largest emerging rare earth developments.

Demand already taking shape

In a further sign of growing demand for non-Chinese rare earth supply chains, Iluka also disclosed that it has signed a binding agreement to supply magnet rare earth oxides to an unnamed global automotive company.

The four-year deal is expected to account for about 10% of the refinery’s planned production during the period and generate between $155 million and $172 million in revenue, depending on market prices.

For Kangankunde, the combination of secured processing capacity, a long-term offtake arrangement and rising Western investment in critical minerals infrastructure offers increasing confidence that its future production will have a ready market.