Iluka takes an FID amid record revenue

2023-02-22

Feb. 21, 2023 - ASX-listed Iluka has taken a final investment decision (FID) on the A$480-million Balrandald critical minerals project, in New South Wales.

The development is focussed on the rutile- and zircon-rich West Balranald deposit, which also contains material quantities of rare earth minerals.

The project is expected to produce 60 000 t/y of rutile, 50 000 t/y of zircon, between 50 000 t/y and 70 000 t/y of synthetic rutile, up to 4 000 t/y of rare earth concentrate and up to 150 000 t/y of sulphate ilmenite over an initial mine life of 9.5 years.

Unit cash cost of production for the project has been estimated at A$1 125/t.

Construction is expected to take 18 months, and first production is expected in the first half of 2025. During construction, the project would employ 250 staff, and during operation Balrandald would require 270 staff, including contractors.

“With scarcity, security and reliability of supply increasingly prominent considerations for many downstream consumers, the Balranald development enhances Iluka’s portfolio offering of high-grade, high-quality critical minerals products produced in Australia,” said MD Tom O’Leary.

“More significant still is the way these products will be delivered. Iluka’s underground mining technology is akin to keyhole surgery for the mining of critical minerals. This enables access to ore bodies previously thought uneconomic, with marked reductions in both environmental disturbance and carbon intensity relative to traditional mineral sands extraction techniques, which are themselves less impactful than other commodities.

The company has invested substantially in this technology over a number of years and we are pleased and excited at the prospect of its first full scale commercial deployment.

“Furthermore, Balranald underscores the complementary nature of Iluka’s mineral sands and rare earth 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,” said O’Leary.

Meanwhile, Iluka on Tuesday reported record revenue for the full-year ended December, and a 45% increase in earnings before interest, taxes, depreciation and amortisation (Ebitda).

Revenue for the full year reached A$1.7-billion while Ebitda reached A$917-million. Net profits after tax were up 61% to A$589-million.

“2022 was an extraordinary year for Iluka. The company confirmed its diversification into rare earths; exited its business in Sierra Leone; and achieved substantial progress throughout its Australian growth pipeline, including via the commercialisation of new technologies,” said O’Leary.

“We delivered this while once again demonstrating the strength of our existing business. Iluka’s financial results were underpinned by a strong operational and sales performance. Our production facilities were at capacity, and we materially sold out of all our products.

“Despite ongoing macroeconomic and geopolitical uncertainty, mineral sands markets proved resilient. Discipline was observable in many downstream sectors in the face of the energy crisis in Europe, inflationary pressures in the US and Covid-19 restrictions in China. This saw supply remain tight and inventories low, market features reinforced by continued production disruptions at other major mineral sands producers and as a result of Russia’s invasion of Ukraine.”

Meanwhile, O’Leary said on Tuesday that Iluka’s diversification into rare earths was a company-defining transformation.

“It will occur in the first instance through our development of Australia’s first fully integrated rare earths refinery at Eneabba. This follows the historic partnership between Iluka and the Australian government to establish a domestic rare earths industry. The Eneabba refinery will be fed initially by Iluka’s unique stockpile of rare earths, which we have built progressively over the past 30 years.

“Additional feedstocks have been progressed from both internal and external sources, with an emphasis on securing Iluka’s competitive advantage in the valuable heavy rare earths dysprosium and terbium. At the Wimmera development, we have approved a definitive feasibility study and declared an ore reserve, marking a key milestone for what is a potential multi-decade critical minerals province.”

Wimmera is estimated to host a probable reserve of 180-million tonnes at 5.4% heavy minerals, for 9.9-million tonnes of heavy minerals at the WIM100 deposit, which will be the initial and primary focus of a definitive feasibility study.

The study is scheduled for completion by the end of 2025 at a cost of A$30-million, and subject to study outcomes and board approval, commissioning of the project is currently scheduled for 2028.

The total Wimmera mineral resource inventory, including the previously reported WIM50 and WIM50N deposits, is 380-million tonnes of indicated resource grading 4.6% heavy minerals containing 18-million tonnes of heavy minerals and an inferred resource of 1-billion tonnes grading 5.1% heavy minerals containing 51-million tonnes of heavy minerals for a total Wimmera mineral resource of 1.3-billion tonnes of material grading 4.9% heavy minerals and containing 68-million tonnes of heavy minerals.

“We have also concluded an agreement with Northern Minerals –an emerging rare earths company –for the future supply of concentrate from its planned mine at Browns Range in the Eastern Kimberley. In parallel, Iluka continues to evaluate the production of rare earth metals, which would increase our reach and value to consumers in key and emerging markets,” said O’Leary.