Iluka Resources Limited · ASX:ILU
Iluka Resources — Industry Minerals Congress 2018
27 slides from Iluka Resources's conference presentation, June 2018
Slide 1: Industry Minerals Congress 2018 Barcelona
Matthew Blackwell, Head of Marketing and Procurement Iluka Resources Limited (ASX:ILU) June 2018 20 18 Industry Minerals Congress 2018 Barcelona www.iluka.com l ASX:ILU
Slide 2: Disclaimer – Forward Looking Statements
Disclaimer – Forward Looking Statements This presentation has been prepared by Iluka Resources Limited (Iluka). By accessing/attending this presentation you acknowledge that you have read and understood the following statement. Forward Looking Statements This presentation contains certain statements
Slide 3: Iluka's Asset Base
Iluka’s Asset Base 60 years experience in exploration, project development, mining, processing and marketing of mineral sands. Western Australia Synthetic rutile kiln Cataby project Virginia, US Rehabilitation (mine closed Dec 2016) South Australia Jacinth-Ambrosia mine Legend Sierra Leone Gangama d
Slide 4: Iluka's Product Portfolio
Iluka’s Product Portfolio Zircon Premium grade zircons for ceramic tiles and sanitary ware Specialty grade zircons for chemical and refractory Zacura range for foundry and investment casting Titanium High grade titanium feedstocks for chlorination High purity titanium feedstocks for welding consumab
Slide 5: Business Focus
Business Focus Operational Expansion and excellence improvements Sustainable Marketing strategy development 5
Slide 6: Industry Dynamics
GY Industry Dynamics ILUKA
Slide 7: Global Mineral Sands Production
Global Mineral Sands Production Proportionately, Zircon generates the largest revenue when taking into account the volume mined Mineral Sands Mineral Sands Mineral Sands by Volume by Volume by Value as Mined as Finished Product as Finished Product* (2016 ~7.6mt) (2016 ~7.6mt) Rutile Rutile Rutile Ch
Slide 8: Valuable Heavy Mineral Decline
Valuable Heavy Mineral Decline Global Mineral Sands Resources Assemblage HM Grade RZ Assemblage Iluka’s assessment of industry ore bodies 5% 15% • Trash component in heavy mineral grade increasing 4% 12% • Rutile and zircon assemblage falling Industry challenge 3% 9% • Need technical solutions for u
Slide 9: New Project Supply Challenges
New Project Supply Challenges Unconventional deposits requiring technical solutions (eg. fine minerals, depth, product quality) Zircon and rutile typically induced as by-products of ilmenite projects Iluka evaluates many projects and will remain disciplined in allocating capital. Limited high zircon
Slide 10: Zircon Market
G Zircon Market ILUKA
Slide 11: Current Supply Demand Fundamentals Positive
Current Supply Demand Fundamentals Positive Zircon market tightness has arrived Recovery in prices Reduction in producer-held since 2H 2016 inventories Downstream Limited capacity for buyers to restocking movement increase stock Iluka balances supply Some customers when miners reduce slow to realise
Slide 12: 2018 Zircon Market
2018 Zircon Market Iluka’s Zircon Pricing Strategy • Tight supply conditions leading to steady price increases • Zircon <5% of final tile cost • Prices remain well down on previous spike • Previous price spike induced substitution and thrifting • Current price cadence avoiding historic volatility •
Slide 13: Zircon Market Outlook
Zircon Market Outlook • Zircon from existing producers declining due to depletion and grade/assemblage decline • Inventory largely depleted • Supply projections include Iluka’s Cataby development and recently funded Image Resources development • Structural deficit could be mitigated by a combination
Slide 14: High Grade Titanium Market
GY High Grade Titanium Market ILUKA
Slide 15: Market Position Strongest in Very High Grade
Market Position Strongest in Very High Grade Total TiO2 Feedstock High Grade Chloride Very High Grade Chloride Chloride & Sulphate Chloride Feedstock (80%+ TiO2) Feedstocks (90%+ TiO2) Feedstocks (2016 ~6.4 Mt) (2016 ~3.3 Mt) (2016 ~2.5 Mt) (2016 ~1.3 Mt) Iluka Iluka Iluka 7% 14% 17% Iluka Kwale Oth
Slide 16: High Grade Titanium Feedstock Advantage
High Grade Titanium Feedstock Advantage • Iluka is largest producer of Rutile • Natural and synthetic rutile have a higher titanium grade than most slag feedstocks • Advantages in pigment production: – lower ore tonnes required – lower chlorine input cost – lower waste generation (environmental and
Slide 17: 2018 High Grade Titanium Feedstock Market
2018 High Grade Titanium Feedstock Market • Positive conditions in downstream pigment market (90% of demand) Rutile prices increasing, historical lag to pigment prices • Pigment plant closures in EU and China increasing Index Oct 2015 = Rutile price US$/t US pigment export price US$/t utilisation of
Slide 18: High Grade Titanium Dioxide Supply/Demand
High Grade Titanium Dioxide Supply/Demand • Supply–demand overlaid with swing capacity not requiring additional mine investment • Subject to price rises inducing brownfields investment, the high grade market has sufficient supply capacity to meet demand to 2019 − This idle capacity has existed for f
Slide 19: Industry Challenges Of Current Market
Industry Challenges Of Current Market ZIRCON SUBSTITUTION NEW PROJECT LANDSCAPE SUPPLY CHALLENGES VALUABLE HEAVY MINERAL GRADE AND ASSEMBLAGE DECLINE SUSTAINABLE DYNAMICS 19
Slide 20: Zircon Substitution Options
Zircon Substitution Options Although substitutes exist, zircon is the better product Zircon attributes • Opacity – whiteness • Hardness Alumina • Low thermal expansion Feldspar • High melting point Kaolin • Thermal conductivity Chromite • Chemically inert Synthetic Mullite • Low neutron ab
Slide 21: Substitution Landscape
Substitution Landscape % of zircon Adoption Market Application Major Substitute Mitigation market (est) Hurdle Calcined alumina; • Alumina content in tile formulation Body 16 white clays; white Medium • Final product attributes (e.g. porosity, dimensions) • Declining availability and quality of cera
Slide 22: Zircon vs Alumina - Technical Attributes
Zircon vs Alumina - Technical Attributes 30 Index Index oC 104 30 25 250 102 25 G-ZR 200 20 Gloss (60º) 20 G-AL3 150 100 15 15 G-AL4 100 98 10 50 96 10 5 0 94 0 5 Viscosity Thixotropy Shrinkage Colour L Additional firing temperature 0 Zircon 1140 1160 1180 1200 1220 1240 Alumina A Alumina B Temperat
Slide 23: Zircon vs Alumina - Environmental Footprint
Zircon vs Alumina - Environmental Footprint Zircon has a lower Environmental Footprint Ceramic Tile Mixture A 110% 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% ADPe [kg Sb eq.] ADPf [MJ] AP [kg SO2 eq.] EP [kg Phosphate GWP [kg CO2 eq.] ODP [kg R11 eq.] POCP [kg Ethene PED [MJ] eq.] eq.] Zircon Mixtu
Slide 24: Zircon Facilitates New Ceramics Design and Applications
Zircon Facilitates New Ceramics Design and Applications Zircon is a key enabler to new trends in ceramic designs Zircon intensity (grams per sqm); Global zircon in China % of world tile production (%); ceramics (kt) 1000 Global zircon in ceramics, kt (LHS) 200 China percent of world tile production,
Slide 25: Tile Production Costs
Tile Production Costs Final product Zircon-containing selling price, input , as % of US$/t2 100% production cost3 89% 100% 80% 60% 40% 1.2% 20% 0.9% 0% Cost of zircon in end-use products Zircon Opacifier Polished porcelain Digitally-pirinted China glazed porcelain Polished porcelain 1.2% Final produ
Slide 26: Summary
Summary 1. The supply of Zircon is inextricably linked to the supply of Titanium 2. A challenge for the industry is maintaining sustainable pricing outcomes through the value chain 3. Zircon does have some substitutes but adoption hurdles are high and there are real risks to end product performance
Slide 27: For more information contact:
For more information contact: Matthew Blackwell, Head of Marketing and Procurement matthew.blackwell@iluka.com www.iluka.com Synthetic rutile kiln, Western Australia