ASX-listed Iluka Resources has entered into an agreement with fellow-listed VHM for the long-term supply of all planned rare earth concentrate produced from the Goschen deposit.

VHM is currently developing the Goschen project in western Victoria.

Under the agreement, VHM will supply Iluka with 146 000 t of rare earths concentrate containing 86 000 t of rare earth oxides over a period of 18 years. This equates to 8 320 t/y of rare earth concentrate, containing about 4 900 t of total rare earth oxides.

This will complement feedstock for Iluka's Eneabba rare earths refinery, with the company saying its overall refinery production levels will depend on the optimal blend of internal and external feedstocks, as well as circuit capacity constraints.

In addition to the offtake agreement, VHM has granted Iluka with a right of first refusal over any additional rare earths produced from Goschen and from VHM's earlier stage Cannie and Nowie projects.

Iluka is working to bring online Australia's first fully integrated rare earths refinery, which will produce seperated light and heavy rare earth oxides. The refinery is currently 50% complete, with commissioning expected in mid-2027.

To support VHM's development of Goschen, Iluka will provide a $40-million secured convertible note in two tranches: $10-million initially and $30-million after the final investment decision on the project, as part of VHM's construction funding package.

The pricing of the concentrate will be determined by a mechanism that is linked to the price realised by Iluka from the sale of its rare earths products from the Eneabba refinery.

"Iluka’s agreement with VHM marks another step in the development of our rare earths business and Australia’s rare earths industry. It follows recent milestones including Iluka’s inaugural offtake agreement for rare earth oxides produced at the Eneabba refinery; and the award of the final contract to complete the refinery’s construction," says Iluka MD Tom O’Leary.

Eneabba is a strategic infrastructure asset that is bringing new mines into production, with Iluka as their Australian refining customer.

"In VHM, we have secured a feedstock partner in western Victoria, a province notable for large deposits and attractive assemblage of heavy rare earths. This is a region Iluka knows well through the company’s historic operations and our Wimmera development, which is in the latter stages of definitive feasibility study," O’Leary adds.

VHM has environmental approvals for Goschen in place and has received letters of funding interest from both the Australian and US governments.

"Our agreement reflects Iluka’s focus on securing suitable, advanced third party feedstocks for Eneabba, in addition to progressing those in our own portfolio in parellel. This reinforces the longevity and flexibility of the rare earths business we are building," O’Leary concludes.