Iluka Resources shares drop on refinery delay

The news: Mineral sands miner Iluka Resources' shares have fallen 3.8% after it announced a project delay and cost blowout at Australia's first rare earths refinery.

The numbers: Iluka had initially hoped front end engineering and design (FEED) at its Eneabba Rare Earths Refinery would be complete at the end of 2023, after engaging Fluor Australia for the project step in Jun 2022. FEED is now expected to be completed some time in Q1 2024. Market consenus for the project cost is between $1.3 billion and $1.6 billion, with an average of A$1.5 billion, but Iluka said work to date indicated costs of up to 20% above that.

Iluka shares were trading 3.8% lower on Friday, fetching $6.54.

The context: Iluka's has had a challenging run in 2023, its share price tracking with a decline in lithium prices and weaker demand for commodities such as zircon and rutile. Rare earths, and the high strength magnets created from them, are crucial to the electrification of the global economy.