Filenews 8 October 2025
By Tim Treadgold
The "rare earth frenzy" has gripped the market, with investors turning en masse to Iluka Resources stock, although the start of production of its major project in Australia is postponed to mid-2027. The rally of recent months brings to the fore the FOMO syndrome that is fuelling the rise in gold, while some investment banks are cautious.
Stock rally and Chinese restrictions
Over the past six months, China has tightened control over the supply of rare earths, causing Iluka's stock to rise 120%, hitting an 18-month high of A$7.45. This momentum has been maintained despite pressure on the company's traditional titanium and zirconium business, where prices have fallen.
Iluka, with a decades-long history in mining, is developing Australia's second-largest rare earth project and is gradually transitioning from zirconium and ilmenite production to the new rare earth market, competing with Lynas Rare Earths.
The advantage of monazite
The company had stored for decades the slightly radioactive mineral monazite, which contains rare earths of high value. This strategy is justified today, as this material is used to meet the growing demand.
The project in the city of Eneabba, in Western Australia, has been partially funded by the government, with the cost estimated at $1.2 billion.
Demand and reservations
Global demand for neodymium, praseodymium and dysprosium is soaring, with neodymium having seen a 55% increase since April. However, analysts appear cautious about capital expenditure and the time required to production.
Ord Minnett warned that Iluka's stock would hardly maintain the same momentum, noting that current levels price NdPr above $110/kg, a price similar to what the U.S. government pays for rare earths from the Mountain Pass mine.
Positions of investment banks
Morgan Stanley reported a slight delay from its estimates, as production of NdPr is postponed to mid-2027 and other metals such as dysprosium and terbium to the end of 2027. The bank maintains a buy recommendation with a target price of A$6.40, lower than the current price.
In contrast, Barrenjoey expressed more optimism, giving an overweight recommendation and a target price of A$7.60, highlighting that the project remains within budget despite the delays.
The market seems to have "embraced" Iluka and rare earths, however the excessive rise and FOMO syndrome raise questions about the viability of the stock's momentum until the start of production.
