Iluka Resources announced a positive outcome to the funding discussions with the Australian Government. Seeking additional financing support to deliver the Eneabba rare earths refinery. This is an attractive opportunity for Iluka to meet its objective: to deliver sustainable value thus establishing its credentials as one of the potential growth companies,
Iluka Resources Limited (ASX: ILU)
Iluka Resources Limited has made significant progress in advancing its strategic goals, highlighted by the announcement of additional financing support from the Australian Government for the Eneabba rare earths refinery. This collaboration underscores Iluka’s commitment to sustainable value creation and aligns with Australia’s "Future Made in Australia" initiative, emphasizing supply chain resilience and domestic value addition. The Eneabba refinery positions Iluka as among the growing companies to invest in. It becomes a key player in the emerging Australian rare earths industry, a critical growth area.
In Q3 2024, Iluka reported total production of 138kt of zircon, rutile, and synthetic rutile (Z/R/SR), with sales reaching 97kt. Zircon sales contributed 59kt, including 24kt of zircon-in-concentrate (ZIC). Year-to-date (YTD) ZIC sales of 49kt exceeded the company’s guidance by 9kt, and a further 10kt is anticipated in Q4. Synthetic rutile sales totaled 25kt for the quarter, marginally impacted by the deferral of a 12kt shipment into Q4. Notably, Iluka’s long-term take-or-pay contracts for synthetic rutile, which account for ~200ktpa, provide stability in sales volumes and underpin the 2024 outlook. Weighted average zircon sand prices remained steady at US$1,891/t, while synthetic rutile prices saw a slight decrease to US$1,178/t. YTD unit cash costs of production were A$1,302/t, influenced by reduced output from the paused SR1 kiln and associated inventory buildup. On the production front, operations delivered mixed results. The Jacinth-Ambrosia mine in South Australia produced 52kt of heavy mineral concentrate (HMC) during Q3, a decline from 80kt in Q2 due to lower-grade ore processing, consistent with the mine plan. Meanwhile, the Cataby mine in Western Australia delivered 159kt of HMC, supported by the successful commissioning of a second mining unit. At the Narngulu plant, processing primarily Jacinth-Ambrosia material resulted in the production of 69kt of zircon (including ZIC) and 10kt of rutile. The SR2 kiln performed steadily, producing 59kt of synthetic rutile and meeting contractual obligations.
Market conditions were uneven during the quarter. Chinese demand for zircon remained subdued, particularly in the ceramics and opacifier sectors, despite government stimulus aimed at boosting economic activity. European and U.S. zircon markets were stable, though seasonal factors and year-end inventory management are expected to create downward pressure on Q4 zircon prices, estimated to decline by US$40-50/t. In contrast, synthetic rutile sales showed resilience, with a weighted average price of US$1,178/t. The titanium pigment market exhibited stability, with optimism for 2025 driven by key external factors, including EU anti-dumping tariffs on Chinese imports, economic stimulus measures in China, and potential benefits from easing U.S. interest rates.
Looking ahead, Iluka is well-positioned to navigate market challenges and capitalize on growth opportunities. Its disciplined marketing approach, strategic inventory management, and robust contract base provide a strong foundation for resilience amid softer demand. Furthermore, the Eneabba rare earths refinery and ongoing operational improvements enhance Iluka’s long-term growth prospects, reinforcing its ability to deliver value for shareholders while supporting Australia’s ambitions in critical minerals development.
Source: Company’s Report
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