Regional and Rural Development Minister Jacinta Allan yesterday announced $3.97 million in State Government support for new unloading and siding facilities in Hamilton and a loading site in Hopetoun.

The infrastructure will cut about 20,000 B-double trips per year between the two towns and is to be used for transport of mineral sands from Iluka Resources' Kulwin mine near Ouyen.

Steve Wickham, the company's new eastern and western operations general manager, said it was an important step forward.

"Any deposits that we find through our exploration and our future deposits in the Murray Basin area, even if they are outside the south-west or in South Australia or New South Wales, that mineral concentrate will all come down to Hamilton," he said.

Ms Allan said the multi-million dollar grant was part of a broader push to improve freight networks across Victoria.

"By putting more of the freight on rail it's going to make for a safer road network," she said.

"This will add to (a) network of inter-modal hubs which also help with that efficient movement of goods around the state."

Funding would allow for the construction of 31 custom-built containers to transport extracted mineral concentrate, the minister said.

Mineral sands are processed in Hamilton and then sent on to export from the Port of Portland, with Iluka yesterday confirming its interest in stronger rail linkages between the two sites.

"We've spent $500 million in building this processing facility in Hamilton; we do not want to build another one elsewhere," Mr Wickham said.

"What happens now for me is as we develop new mines and we start to look at our future strategies, rail will now play a part because we now have the spur line at our mineral separation plant operations."

The company expects to spend up to $4 million on the rail upgrades in addition to Government support.

Southern Grampians Shire Mayor Marcus Rentsch said the project proved mining's local importance.

"It certainly secures the mineral separation plant here at Iluka in Hamilton and it gives great flexibility for their operations," he said.

"This line, and the facility at Hopetoun, with the further exploration that they we'll continue to do gives us great permanency."

Mr Wickham said Iluka had kept in close contact with its road transport provider Kalari and would still need drivers between the Kulwin mine and Hopetoun.

"Everyone is aware of what's happening, so it's been very transparent with our current trucking contractor," he said.