Iluka Resources Limited · ASX:ILU
Iluka Resources — TZMI Congress 2016
25 slides from Iluka Resources's conference presentation, Nov 8, 2016
Slide 1: Iluka – Getting Set In The Cycle
Iluka Resources Limited Iluka – Getting Set In The Cycle TZMI Congress 2016 Matt Blackwell - Head of Marketing Hong Kong, 8 November 2016
Slide 2: Disclaimers
Disclaimers Forward Looking Statements – Slide 24 Important Notice Regarding the acquisition of Sierra Rutile Limited – Slide 25 2
Slide 3: Iluka – Getting Set In The Cycle
Iluka – Getting Set In The Cycle 1. Iluka’s approach to the market 2. Iluka’s outlook for minerals sands and what will drive growth 3. Overview of Iluka’s projects preparing for the future 3
Slide 4: Approach to Market
Approach to Market
Slide 5: Some Lessons For Iluka
Some Lessons For Iluka 5 • Iluka’s quality and reliability • Recognize and reward loyalty • Desire for stability • Zircon reference price ‹#› • Bigger discounts – but just for them Zircon sand 5
Slide 6: Service Proposition
Service Proposition 6 ‹#› Zircon sand 6
Slide 7: Technical Marketing Approach
Technical Marketing Approach • Regular technical visits to customer production facilities – deepen collaboration • Leverage Iluka’s resources and expertise in collaboration with customers to improve value proposition • Utilise state of the art equipment to optimize Iluka’s products in customer formu
Slide 8: Industry Needs better Returns and Stability
Industry Needs better Returns and Stability 8 % Industry EBIT / Capital Employed 50% 40% Iluka 30% Peer 1 Peer 2 20% Peer 3 10% Peer 4 Peer 5 0% Peer 6 -10% Peer 7 Weighted average -20% Weighted average (HGO) ‹#› -30% 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 Source: S&P Capital IQ, company
Slide 9: Prices Are Better Today
Prices Are Better Today 1980=100 9 Commodity Price History (real, indexed, 1980=100) 1,400 Zircon Chloride Ilmenite 1,200 Iron Ore 1,000 Sulphate Ilmenite Copper 800 Zinc Rutile 600 Nickel 400 Lead ‹#› Gold 200 Tin Aluminium - 1980 1981 1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 199
Slide 10: Downstream Response
Downstream Response 10 Zircon and Pigment Demand (Indexed to 100) 1990 = 100 Zircon and Pigment Price (2016 real, Indexed to 100) 1990 = 100 Zircon demand Pigment demand Zircon price World Pigment price 250 350 300 200 250 150 200 150 100 100 50 50 - - 1990 1991 1992 1993 1994 1995 1996 1997 1998 19
Slide 11: Imbalance in Drivers of Revenue
Imbalance in Drivers of Revenue 11 ‹#› Zircon sand 11
Slide 12: Market Outlook
Market Outlook
Slide 13: Materials Are Cyclical
Materials Are Cyclical US$/t (2016 real) Zircon and Pigment Price Zircon price World Pigment price 4,500 P 4,000 P P 3,500 P P 3,000 T T P T P 2,500 T T 2,000 1,500 P 1,000 P 500 T T - 1980 2015 1981 1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001
Slide 14: Macro View
Macro View Zircon Consumption % of total Short term Medium term Long term consumption outlook outlook outlook Ceramic tiles & sanitaryware 50% Refractories 16% Foundries 12% Specialty chemicals and 20% materials Other 2% TiO2 Feedstock % of total Short term Medium term Long term Consumption consumpt
Slide 15: Mega Trends Support Our Industry
Mega Trends Support Our Industry Improve health and Safety Reduce petrochemical exhaust Stronger, Lighter, Purify water More Efficient Cleaner air Transportations Assist health Care Enable Technology Solutions Transform Construction 15
Slide 16: Grade and Assemblage Challenges Ahead
Grade and Assemblage Challenges Ahead HM Grade Mineral assemblage in resources RZ Assemblage 5% 15% Trash Sulphate Ilmenite 4% 12% 12% Chloride Ilmenite Rutile and other high grade TiO2 3% 9% 9% Zircon Combined RZ in HM (RHS) 2% 6% 6% • Trash component in Heavy Mineral grade 1% 3% increasing • Valua
Slide 17: Significant Industry Re-investment Required
Significant Industry Re-investment Required Capital Spend, Mineral Sands Industry Capital Expenditure Prices, US$/t FOB, US$m, nominal (Based on reported capital expenditure) nominal 1,500 2,500 1,200 2,000 900 1,500 600 1,000 300 500 0 0 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016f
Slide 18: Preparing For The Future
Preparing For The Future
Slide 19: Sierra Rutile Acquisition
Sierra Rutile Acquisition • Meets Iluka criteria of Strategic rationale and Financial merit • Opportunity to build on SRL’s strong operating history • +80% increase in rutile resources • Ensures rutile supply to customers for decades • Transaction currently under review by German Antitrust Authority
Slide 20: Cataby
Cataby Cataby Deposit • Discovered in the 1970s • 150km from Perth • Conventional mine development with 2.1:1 strip ratio • Re-use of existing wet concentrator to lower cost/risk • HM grade ~7% (10% zircon, 4% rutile, 62% ilmenite) • Ilmenite sufficient to sustain 200ktpa SR production • Zircon/ruti
Slide 21: Ti Metal Market and Metalysis
Ti Metal Market and Metalysis > 50% Embodied Energy Saving for Titanium Production* Kroll Process145-165 kWh/kg Metalysis 66-90 kWh/kg • Global titanium metal demand strong with estimated growth of 5.2% CAGR 2013-2018 • Disruption will come from broader adoption of lower quality Ti based metals • Il
Slide 22: Iluka – Getting Set In The Cycle
Iluka – Getting Set In The Cycle 1. We will continue to evolve to serve our customers 2. We are positive for the future 3. We are focused on the activities that will deliver over the longer term 22
Slide 23: Supplementary Slides
Supplementary Slides
Slide 24: Disclaimer – Forward Looking Statements
Disclaimer – Forward Looking Statements Forward Looking Statements This presentation contains certain statements which constitute “forward-looking statements”. These statements include, without limitation, estimates of future production and production potential; estimates of future capital expenditu
Slide 25: Important Notice
Important Notice IMPORTANT NOTICES This presentation contains information regarding Sierra Rutile Limited (SRL) and its business, assets and operations (SRL Information) which SRL has provided to Iluka. Whilst steps have been taken to review that information, no warranty, expressed or implied, is ma