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Iluka takes bold first step to rare earths future

2023-03-04

Mar. 3, 2023 - Iluka Resources might have spun off its African beach minerals business while it focuses on a rare earths future, but to get to the new world it has greenlit its Balranald critical minerals development in southern NSW’s Riverina.

The project will tap a rutile- and zircon-rich deposit which also contains material quantities of rare earth minerals.  

The mine will cost $480 million (half a billion with inflation) and have a life of around 9 and a half years with first production in 2025.

It will be mined via a method that some media reports have nicely described as being akin to keyhole surgery – it will be a ground breaking use of new technology developed by Iluka.

“The Balranald development is an important new source of rutile, zircon, synthetic rutile feedstock and rare earth feedstock,” Iluka CEO Tom O’Leary said in a statement to the ASX last week.

“Iluka’s final investment decision for Balranald further enhances the company’s product offering, underscores the complementary nature of our mineral sands and rare earths businesses, and exhibits the value of our sustained focus on research and development. 

“Iluka’s diversification into rare earths is a company-defining transformation.” 

 The project has an average annual production target of 60,000 tonnes a year of rutile, 50,000 tonnes a year of zircon, 50,000-70,000 tonnes of synthetic rutile, 4,000 tonnes a year of a rare earth concentrate, and 150,000 tonnes a year of sulphate ilmenite.  

Iluka said that “Owing to its relative depth (approximately 60 metres below surface), Iluka has over several years assessed the potential to develop West Balranald via a novel, remotely operated, underground mining (UGM) technology.

The company said it has trialled the new technology (it has a patent pending).

“Balranald underscores the complementary nature of Iluka’s mineral sands and rare earths businesses. Balranald’s rare earth minerals deliver incremental additional feed and value to our Eneabba refinery and the refining of these minerals to produce separated light and heavy rare earth oxides at Eneabba increases the value generated from the Balranald development,” Mr O’Leary said.

Employment at Balranald is expected to comprise a workforce of ~250 for construction and ~270 for operations (including contractors). Most personnel will be housed in purpose-built accommodation located close to site. Iluka anticipates that some employees will live in the town of Balranald.

All primary environmental approvals to commence operations at Balranald are in place. Approval for mining was granted via a Modification of Consent (MOD) to the approval granted in 2016 for an open cut operation.

Iluka’s UGM technology has the potential to unlock other development opportunities that, owing to their depth, would be otherwise unavailable via conventional mining techniques.

These opportunities may include deposits in Iluka’s portfolio. Conceptually, UGM technology could also be applied to other commodities. Further evaluation of these opportunities will be considered post implementation of UGM technology at Balranald.

Iluka reported record financial results for 2022, underpinned by strong operational and sales performance. 

The company had $1.72 billion in revenue from its mineral sands’ operations, up 16% from 2021. 

Earnings before interest, taxes, depreciation and amortisation (EBITDA) surged 45% to $917 million from the previous year. 

Net profits after tax jumped 61% to $589 million.

Iluka had net cash of $489 million at the end of December, 2022. 

Iluka said its production facilities were at capacity, and that it materially sold out of all of its products towards the end of the year.  

A final dividend of 20 cents a share made a full year payout of 45 cents per share, up from 24 cents for 2021.
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