Iluka Resources Limited · ASX:ILU

Iluka Resources — TZMI Conference 2016

20 slides from Iluka Resources's conference presentation, Nov 8, 2016

  1. Slide 1: The Way Forward in the Zircon Industry

    The Way Forward in the Zircon Industry TZMI Conference Christian Barbier – General Manager Zircon Sales, ILUKA RESOURCES Hong Kong, 8 November 2016 1

  2. Slide 2: 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 expenditur

  3. Slide 3: Outline

    Outline  Zircon Demand  Zircon Supply  Need to Adapt 3

  4. Slide 4: Zircon Demand: Proprietary Ceramic Tile Study

    Zircon Demand 1. Iluka Tile Study PROPRIETARY CERAMIC TILE STUDY  4th annual study on ceramic tile.  Focusing on China (4 regions), SEA, India and Europe – representing 72% of world tile production  In 2015 large scale study in Europe, in particular Spain, Italy, Turkey.  Zircon loading of vario

  5. Slide 5: In China, continuing shift towards glazed porcelain & rustic tiles

    Zircon Demand 1. Iluka Tile Study In China, continuing shift towards glazed porcelain & rustic tiles, albeit slower Source: Ruidow/Iluka China Ceramic Market Study (2015) 5

  6. Slide 6: Differences between tile producing countries

    Zircon Demand 1. Iluka Tile Study Differences between tile producing countries Median Zircon Loading 2015 (g/sq.m) (index base 100 for Glazed Ceramic Tiles) 6

  7. Slide 7: Key messages: Stable loadings since 2012

    Zircon Demand 1. Iluka Tile Study Key messages: Stable loadings since 2012  High end and top brands are higher  Variations as per colour and texture trends  Digital printing sustains zircon usage  No sign of substitution PROPRIETARY CERAMIC TILE STUDY 7

  8. Slide 8: Zircon Processing: Operating Model with Overcapacity

    Zircon Demand 1. Iluka Tile Study 2. Zircon Processing Operating Model with Overcapacity Milling Fused Zirconia 40% ZOC Casting 40% BEFORE: Invest Ahead of Demand NOW:  Cost Optimisation  Swing Capacity (high cost)  Low Return on Investment 8

  9. Slide 9: Zircon Processing: Trends in Concentration

    Zircon Demand 1. Iluka Tile Study 2. Zircon Processing Trends in Concentration influenced by  Cultural resistance  Profitability pressure  Environmental regulations  Technology developments 9

  10. Slide 10: Since 2012 the growth of zircon demand has been very modest

    Zircon Demand 1. Iluka Tile Study 2. Zircon Processing 3. End-Market Growth Since 2012 the growth of zircon demand has been very modest Zircon Demand Source: TZMI Q2 2016 10

  11. Slide 11: Iluka's analysis suggests demand has been under estimated

    Zircon Demand 1. Iluka Tile Study 2. Zircon Processing 3. End-Market Growth Iluka’s analysis suggests demand has been under estimated Source: Iluka estimates, TZMI, company reports 11

  12. Slide 12: Outline

    Outline  Zircon Demand  Zircon Supply  Need to Adapt 12

  13. Slide 13: Supply: Zircon Deposits

    Zircon Demand Zircon Supply 1. Zircon Deposits  The highest quality and most accessible deposits are mined out  There is plenty of zircon left in the world… but  Capital required to develop new projects is higher per tonne of product Unforeseen events translate in costs  Governments modify the r

  14. Slide 14: Supply: Environmental Pressure

    Zircon Demand Zircon Supply 1. Zircon Deposits 2. Environmental Pressure Rehabilitation is essential… but is also increasingly expensive External pressure related to the environment is ever growing  Droughts  Floods  Community 14

  15. Slide 15: Supply: Cyclical Effects

    Zircon Demand Zircon Supply 1. Zircon Deposits 2. Environmental Pressure 3. Cyclical Effects The belief that the peaks of the cycle guarantee the viability of a project is no longer valid… The recent peaks are shorter and induce substitution. Price in 2016 real US$/mt Source: Iluka, TZMI. TZMI forec

  16. Slide 16: Outline

    Outline  Zircon Demand  Zircon Supply  Need to Adapt 16

  17. Slide 17: Need to Adapt: Capital Discipline

    Zircon Demand Zircon Supply Need to Adapt 1. Capital Discipline The Zircon industry can’t escape the change Miners and processors alike need to have a very disciplined approach to return on capital Zircon Miners Source: S&P Capital IQ, company announcements, Iluka. The Industry Margin of -10% in 201

  18. Slide 18: Need to Adapt: Developing Value

    Zircon Demand Zircon Supply Need to Adapt 1. Capital Discipline 2. Developing Value  Value protects from Substitution  Environmental Impact  Better rather than More  Technology in Processing 18

  19. Slide 19: From Commodity to Industrial Mineral

    Zircon Demand Zircon Supply Need to Adapt 1. Capital Discipline 2. Developing Value 3. Industrial Mineral From Commodity to Industrial Mineral  Technical Development  Commercial Initiative  Sustainable Practices  Financial Discipline Iluka will remain a leader in this evolution 19

  20. Slide 20: Christian Barbier, General Manager Zircon Sales

    Christian Barbier, General Manager Zircon Sales christian.barbier@iluka.com 20

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