Beach sands producer and exporter, Iluka Resources (ILU) says first-half mineral sands output increased by 5.6% in the June 30 period compared with a year ago as it restarted some mines shut amid the market downturn of the past couple of years.
The Perth-based company reported combined half-year production of 498,500 tonnes of zircon, rutile, synthetic rutile and ilmenite, up from 472,000 tonnes in the same period a year ago.
But revenue fell 3.2% year-on-year to $338.4 million, however, largely because of lower ilmenite sales.
Total sales volumes, Iluka forecast, will also be more heavily weighted toward the second half of the year and it says it will end 2016 with stock levels lower than they were at June 30.
Iluka said its cost of production fell in the half year.
“(The) Overall cash cost of production, which includes ilmenite concentrate and by-product costs (the latter mainly activated carbon and iron concentrate) declined by 19.8 per cent period-on-period to $140.7 million (2015: $175.5 million),” the company said.
Iluka is the world’s largest producer of zircon, used by the ceramics industry to make household products such as bathroom tiles and kitchenware, and a major supplier of rutile and synthetic rutile, used to create the pigments that give products like paint a bright white colour.
The company said production of zircon/rutile/synthetic rutile (Z/R/SR) at 334,000 is in line with Iluka’s full year production guidance of around 660,000 tonnes.
“First half production is higher than sales, given sales volumes are expected to be second half weighted,” the company said in yesterday’s June quarter and half year production report.
“Iluka’s total higher value product sales of Z/R/SR of 316 thousand tonnes represent a 14.7 per cent increase from the first half of 2015, with higher aggregate high grade chloride feedstock sales, especially.”
“Combined rutile and synthetic rutile sales in the first half of 2016 were 32.2 per cent higher than the first half of 2015,” the company told the market.
In their comments, directors were cautiously upbeat about the changing outlook for beach sands demand:
"Iluka has seen highly encouraging trends in terms of demand for high grade feedstock, including several customers bringing forward contracted volume. This is a positive indicator in terms of the potential for additional volumes in the second half and in terms of conditions leading into 2017,” the company said yesterday.
"Zircon demand overall has remained consistent with 2015 levels and slightly ahead of Iluka’s first half expectations. Iluka has advised customers of a US$60/tonne increase in the Zircon Reference Price (which is a "delivered ex China warehouse" price) effective from 1 July. Some additional time in the third quarter will be required to elapse to determine whether and to what extent this price increase is realised.”
Iluka shares rose 1.8% to $7.33 on the ASX yesterday after the reports’s release.
