Many mallee eucalyptus species have leaves that contain terpenoid oils commonly known as eucalyptus oil, of which 1,8-cineole is the major constituent. 1,8-Cineole is potentially a high-value product that might improve the economic viability of a mallee-based biomass industry. It can be extracted by hydrodistillation, but the extraction process may affect the fuel properties of spent biomass. It was found that extraction of 1,8-cineole from mallee biomass is fast initially and tapers off to completion after 30 min of hydrodistillation. The distillation process has little effect on the fuel chemistry or the mass energy density of the spent biomass. However, hydrodistillation can potentially extract a substantial proportion of the alkali and alkaline earth metallic species from the raw biomass, depending on the biomass component (leaf, wood, and bark). Typically, Na and K are easily extracted while Mg and Ca are hard to extract. After hydrodistillation, the spent leaf becomes more difficult to grind than the raw leaf, apparently because of the poorer grindiability of the oil gland enclosures and vascular bundles after hydrodistillation. However, hydrodistillation appears to have little effect on the grindability of spent wood and bark fractions.