Australia's capacity and status as a trusted supplier of the world's critical minerals is getting a $1.25 billion boost.
The federal loan approved on Monday for Australian company Iluka Resources will be used to build Australia's first integrated rare earths refinery in Western Australia.
The refinery will produce praseodymium, dysprosium, neodymium and terbium, which are critical for electric vehicles, clean energy generation, advanced electronics, and medical and defence technologies.
"Rare earths are among the key building blocks of an electrified economy, " Iluka managing director Tom O'Leary said in a statement to the ASX.
Minister for Trade and Investment Dan Tehan said the $1.25 billion loan would promote Australia as a reliable and trusted supplier of the oxides.
Iluka has been progressing its diversification into rare earths at Eneabba in Western Australia and Wimmera in western Victoria for several years.
Mr O'Leary said the continued transition of the global economy and the increasing policy push on critical minerals and their supply chains led the mineral sands company to adapt and accelerate its plans.
Shares in ASX-listed Iluka were up 55 cents at $12.07 in afternoon trade.
Resources Minister Keith Pitt said the project would help Australia increase its sovereign critical minerals processing capacity, potentially underpinning new industries and applications.
"The facility could supply up to nine per cent of the global rare earth oxide market when it comes online," Mr Pitt said.
"It will initially use the Eneabba Stockpile - one of the highest-grade sources of rare earth elements in the world."
The loan will be administered by Export Finance Australia and is the third project funded under the Critical Minerals Facility.
Mr O'Leary said the "risk-sharing" arrangement with the federal government has helped the company to make its final investment decision.
The latest quarterly report from the Office of the Chief Economist tipped resources and energy export earnings to surge to a record $425 billion for 2021-22, up 12 per cent on projections issued three months ago.
Coal becomes only the second Australian commodity after iron ore to break through the $100 billion annual export mark.
"Critical global shortages in energy and resource commodities have led to record prices for many of our commodities," Mr Pitt said.
The combined export earnings for lithium, nickel and copper will likely exceed $23 billion in 2021-22, which would be an increase of 38 per cent on the 2020-21 earnings.
"These forecasts again confirm just how important Australia's resources and energy sector is to the nation's economic and energy security," the minister said.
Australian Petroleum Production and Exploration Association CEO Andrew McConville said the industry announced investments of more than $27 billion last year in new supply, technology and decarbonisation initiatives.
"The return on our previous investments is clear to see," Mr McConville said.
