Iluka Resources Limited · ASX:ILU
Iluka Resources — UBS Resources, Energy & Utilities Conference June 2009
27 slides from Iluka Resources's conference presentation, June 2009
Slide 1: UBS Resources, Energy & Utilities Conference - June 2009
UBS Resources, Energy & Utilities Conference - June 2009 “Significant uncertainty…positive medium term fundamentals remain.” Robert Porter General Manager, Investor Relations Iluka Resources Limited
Slide 2: Disclaimer – Forward Looking Statements
Disclaimer – Forward Looking Statements This presentation contains forward-looking statements that are subject to risk factors associated with exploring for, developing, mining, processing and sale of minerals. Forward-looking statements include those containing such words as anticipate, estimates,
Slide 3: Company Overview
Company Overview • Principal objective: creation and delivery of shareholder value • Capital-efficient transformation of asset base from maturing WA resource base • Advanced stage of executing new mineral sands assets – Murray Basin Stage 2 (Victoria) and Jacinth-Ambrosia (Sth Aust) • Balance sheet
Slide 4: Iluka's Position in Mineral Sands
Iluka’s Position in Mineral Sands • #1 global producer of zircon • #2 global producer of titanium dioxide - significant market share position in the high value TiO2products of rutile (34%), synthetic rutile (62%) and chloride ilmenite (42%) Major Zircon and Titanium Dioxide Feedstock Producers, 2008
Slide 5: Market Conditions 2009
Market Conditions 2009 • Customer inventory build compounded by decrease in demand • TiO2 demand adversely affected by markedly lower pigment demand ¾ slow start to sales particularly in North America and Europe ¾ sales to end of May in line with revised forecast ¾ TiO2 sales contractually based • Z
Slide 6: Recent Responses to GEC
Recent Responses to GEC • Iluka supply response to weaker demand ¾ zircon production reduced by up to 20% ¾ rutile & synthetic rutile production reduced by up to 10% ¾ Idled 2 of 4 synthetic rutile kilns in WA ¾ reduced Mid West mining operations from 2 to 1 crew; Capel dry plant to be closed ¾ WA r
Slide 7: Recent Responses to GEC (cont.)
Recent Responses to GEC (cont.) • Price discounting not expected to stimulate demand ¾ “…not trying to discount our way to sales success.” David Robb, 2009 AGM • Further funding “headroom” actions ¾ Sale of 51% interest in CRL - $84 million ¾ Institutional share placement - $114 million • Continued
Slide 8: Mineral Sands Market
Mineral Sands Market 8
Slide 9: Mineral Sands Market: Generic Structure of the Industry
Mineral Sands Market Generic Structure of the Industry *Rutile/Leucoxene Welding and Ti Ti / Steel Sponge Metal Fabrications UGS, Ilmenite SR, Pigment TiO2 Coatings, Upgrading Slag Plants Pigment Plastics, etc Mining and Processing Ilmenite Zircon Zircon Flour Zircon Ceramics Mills Flour End Use Che
Slide 10: Titanium – Pigment Trends
Titanium – Pigment Trends Rio’s Model for Developing Nations 2007 Population Infrastructure distribution in bands of Urbanisation income levels** Based Growth Average Wealth per capita in PPP terms Inflection Point for growth phase 10 Source Rio Tinto TZMI Conference Singapore
Slide 11: Titanium – Pigment Trends
Titanium – Pigment Trends vs Regional GDP/capita (1980-2007) Pigment (kg) / person 5 erica North Am 4 3 pe Euro rn W este 2 Japan 1 hina rld C Wo Asia 0 0 5,000 10,000 15,000 20,000 25,000 30,000 35,000 40,000 45,000 50,000 India Note: Real GDP / Capita calculated on PPP, constant 2008US$ basis. Rea
Slide 12: Titanium – Pigment Trends
Titanium – Pigment Trends Rest of World vs China Growth Pigment (mt) 6 World China Rest of World 1990-07 CAGR 5 = 3.3% 4 1970-90 CAGR 3 = 2.9% 1990-07 CAGR = 2.2% 2 1990-07 CAGR 1 = 21.5% 0 1970 1972 1974 1976 1978 1980 1982 1984 1986 1988 1990 1992 1994 1996 1998 2000 2002 2004 2006 • Demand for pi
Slide 13: Zircon Consumption Trends
Zircon Consumption Trends Rest of World vs China Growth Zircon (kt) 1.4 1990-07 CAGR World China Rest of World 1.2 = 3.6% 1.0 1980-89 CAGR 0.8 = 2.8% 1990-07 CAGR 0.6 = 1.5% 0.4 1990-07 CAGR = 17.9% 0.2 0.0 1980 1982 1984 1986 1988 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 * 2008 Iluka estim
Slide 14: Zircon Demand
Zircon Demand Ceramics – square meters of tiles by region Tiles sqm (millions) 10000 China West Europe North America 8000 East Europe Central & Sth America Middle East & Africa Other Asia Pacific Rest of World 6000 4000 2000 0 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 Tiles sqm (million
Slide 15: China's Urban Residential Floor Space
China’s Urban Residential Floor Space Massive Growth Forecast – Infrastructure Build & Urbanisation (Billions of Square Metres) 35 33 30 24 25 20 18 15 9 10 5 0 2000 2008 2015 2025 Source: McKinsey & Co; BHP Billiton estimates 15
Slide 16: China Zircon Imports
China Zircon Imports Zircon Sand Imports to China '000 tonnes 500 450 400 350 300 250 200 150 100 50 0 2004 2005 2006 2007 2008 Iluka Imports to China Other China Imports • Total China zircon imports CAGR (2004 - 2008) = 15.8% • Iluka China zircon imports CAGR (2004 – 2008) = 28.8% Source: Iluka int
Slide 17: Monthly China Import Comparison
2009 China Zircon Imports Comparison Monthly China Import Comparison tonnes 500,000 450,000 400,000 • China zircon stocks at low 350,000 levels by May 2009 300,000 • Chinese domestic demand 250,000 improving since March 2009 200,000 • Re-stocking and increasing 150,000 production should boost 100,00
Slide 18: Enhanced Marketing Arrangements - China
Enhanced Marketing Arrangements - China • Shanghai marketing office established with senior marketing manager and local staff • Sales re-focused to high value, high growth zircon, selective high grade TiO2 minerals (rutile) • Direct sales focused on strategic customers – distributors refocussed on m
Slide 19: Global Supply/Demand
Global Supply/Demand • Major suppliers to date been prepared to cut production to manage supply and inventory • New projects continue to struggle to achieve design capacity • Financing challenges pose risk to viability of some operators and impede start ups • Dearth of economically robust, high qual
Slide 20: New Project Developments
New Project Developments 20
Slide 21: Murray Basin Stage 2
Murray Basin Stage 2 ILUKA eeroken Hill NEW SOUTH WALES SOUTH AUSTRALIA Murray Basin Mildura VICTORIA Douglas Mine N Hamitt Ballarat A i e 2 ummon Melbourne Mineral Separation Plant Kilometres a 50 100 Portland 21
Slide 22: Murray Basin
Murray Basin Physical Characteristics Mineral Resources 47.8 million tonnes of heavy mineral (HM) Ore Reserves 8.7 million tonnes of HM Average Ore Reserve HM Grade 20.6% Average HM Assemblage 15% rutile 11% zircon Planned Mining and Production Commencement Stage 2 – third quarter 2009 Expected cape
Slide 23: Jacinth-Ambrosia
Jacinth-Ambrosia Eucla Basin Tenement Position 23 Source: Iluka
Slide 24: Jacinth-Ambrosia
Jacinth-Ambrosia Physical Characteristics Mineral Resources 9.5 million tonnes of HM Ore Reserves 6.4 million tonnes of HM Avg Ore Reserve HM Grade 6.5% Avg HM Assemblage 50% zircon 28% ilmenite 5% rutile Planned Commencement First half 2010 Expected Capex $420 million Expected Mine Life Ten years p
Slide 25: Shareholder Value Delivery
Shareholder Value Delivery Emerging Characteristics 25
Slide 26: Shareholder Value Delivery
Shareholder Value Delivery Emerging characteristics despite highly uncertain environment • Both new projects operating within 12 months • Higher margin [revenue:cash cost (R:CC)] operations • Significantly lower group capital appetite post 2009 ¾ minor residual Jacinth Ambrosia spend in 2010 ¾ susta
Slide 27: Iluka Resources Limited
Iluka Resources Limited For further information, contact: Dr Robert Porter General Manager, Investor Relations + 61 8 93604751 + 61 (0) 407391829 robert.porter@iluka.com www.iluka.com 27
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