Iluka Resources Limited · ASX:ILU
Iluka Resources — 22nd Industrial Minerals International Congress and Exhibition 2014
44 slides from Iluka Resources's conference presentation, Apr 1, 2014
Slide 1: 22nd Industrial Minerals International Congress and Exhibition
22nd Industrial Minerals International Congress and Exhibition For personal use only 1 - 3 April 2014 : Vancouver, Canada David Robb, Managing Director and CEO Iluka Resources Limited 1 April 2014
Slide 2: Disclaimer – Forward Looking Statements
Disclaimer – Forward Looking Statements For personal use only 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 fu
Slide 3: Shifting Sands
For personal use only “Shifting Sands” • A changing mineral sands landscape • The role of technology – past, present and future • Iluka’s response 3
Slide 4: South African Origins
South African Origins For personal use only Cecil John Rhodes (1853 - 1902) Charles Rudd (1844 -1916) 4
Slide 5: Australian Origins
Australian Origins For personal use only George Renison Bell (1890 - 1958) 5
Slide 6: Company Overview
Company Overview For personal use only • Largest producer of zircon in the world • Significant high grade titanium dioxide producer (rutile and synthetic rutile) • ~10 years reserve life; resources1 ~ 5 times reserves • Royalty from BHP Billiton's Mining Area C in WA • Strong balance sheet, 11.8% ge
Slide 7: Iluka Operating and Marketing Locations
Iluka Operating and Marketing Locations For personal use only 7
Slide 8: Mining Area C Iron Ore Royalty
Mining Area C Iron Ore Royalty For personal use only • MAC covers part of BHP Billiton’s iron ore • In perpetuity royalty stream mining operations in WA’s Pilbara region, operated by BHP (85%) under a JV with - 1.25% of FOB A$ revenues Itochu and Mitsui • One-off payments: $1m per 1mdmt production i
Slide 9: Zircon Attributes and Applications
Zircon Attributes and Applications For personal use only Ceramics Floor and wall tiles Sanitary ware Opacity (whiteness) Table ware Water, chemical & abrasion resistant Refractory and Foundry Steel & glass manufacturing Heat resistant Precision metal casting Non-reactive Zirconium Metal Nuclear reac
Slide 10: Titanium Dioxide Attributes and Applications
Titanium Dioxide Attributes and Applications For personal use only Pigment Paints and coatings Opacity (whiteness) Paper UV resistant Inks Non-toxic and inert Packaging Aircraft engines and frames Titanium Metal Defence armourments Chemical & desalination plants High strength to weight ratio Medical
Slide 11: Robust Longer Term Demand Growth
Robust Longer Term Demand Growth For personal use only Urbanisation Increasing array of applications Consumption based growth in developing economies Consumption based growth in developing economies 11
Slide 12: Urbanisation and Tiles
Urbanisation and Tiles For personal use only • Large urban population and floor space increases in developing countries • Growth regions have preference for tiles as floor covering China Urban Residential Floor Space Tile Use as Floor Covering % of all floor Billion sqm covering 40 80% 30 60% 20 40%
Slide 13: Consumption Based Growth
Consumption Based Growth For personal use only • Developing economies moving from investment to consumption based economic growth • Rising incomes and living standards create S-curve demand trend Motor Vehicles Per Capita China Motor Vehicles Per Capita 2010/11 1985-2011 Vehicles per 1000 Vehicles p
Slide 14: Pigment Demand Intensity
Pigment Demand Intensity For personal use only TiO2 Feedstocks: Intensity of Use Kgs per Capita 7.0 USA 6.0 5.0 4.0 Europe 3.0 2.0 1.0 China 0.0 0 5,000 10,000 15,000 20,000 25,000 30,000 35,000 GDP per Capita (US$; real 1990 terms; at PPP) Europe (1993-2010) China (1993-2010) USA (1993-2010) Source
Slide 15: Increasing Array of Applications
Increasing Array of Applications For personal use only Zircon Chemicals Applications Titanium Metal Applications Catalytic converters Desalination plants Nuclear fuel rods Offshore oil and gas components Oxygen and pressure sensors Power plant cooling systems Fibre optics Aerospace Electrical mother
Slide 16: A Changing Landscape
A Changing Landscape For personal use only • Recent industry activity - Sichuan Lomon MOU with WTR (subsequently rescinded) - Huntsman/Rockwood - DuPont spinoff - Iluka re-acquisition of Puttalam resources in Sri Lanka • Assets/operations/businesses for sale – all parts of value chain • DuPont Altam
Slide 17: Exchange Rate Pressures
Exchange Rate Pressures 1998 to 2013 For personal use only A$ : US$ FX Rate 1.20 1.00 0.80 0.60 0.40 0.20 - 1998 2001 2002 2007 2008 2010 2011 2013 Average Range 17
Slide 18: Mineral Sands Cycle Characteristics
Mineral Sands Cycle Characteristics For personal use only “High” cycle point • Ore bodies high-graded • Above trend GDP growth • Assets fully utilised • Strong end use demand • Prices peak • Scarcity fears • Zombie projects return “Mid” cycle • “Normal” mining & processing • Trend GDP growth • Some
Slide 19: Price Volatility
Price Volatility For personal use only Annual Average Selected Mineral Sands Prices, to end 2013 US$/t 3000 Zircon Rutile Synthetic Rutile 2500 2000 1500 1000 500 0 1980 1983 1986 1989 1992 1995 1998 2001 2004 2007 2010 2013 Source: Iluka and TZMI 19
Slide 20: Tier & Discoveries: Australia
Tier 1 & 2 Discoveries: Australia For personal use only 20
Slide 21: Discovery Rate of Major Mineral Deposits
Discovery Rate of Major Mineral Deposits For personal use only 21
Slide 22: Mineralogical and Energy Intensity Barriers
Mineralogical and Energy Intensity Barriers For personal use only 22
Slide 23: What Prompts Innovation
What Prompts Innovation For personal use only • Desire to achieve • Problem Solving • Desperation / Survival • Mistakes • Risk Management • Economics • Tyranny of distance 23
Slide 24: Heavy Minerals Innovation
Heavy Minerals Innovation For personal use only Innovation Examples 1920’s Zircon Flotation 1930’s • Monazite concentrate (wet tables) Cerium • Kroll process Ti Sponge 1940’s • Air tables HM Separation • Electro-magnetic separation Ilmenite from rutile concentrate • HT roll electrostatic plate separ
Slide 25: Heavy Minerals Innovation
Heavy Minerals Innovation For personal use only Innovation Examples 1950’s • Chloride pigment • Australian rutile Titanium metal for aircraft • Suction cutter dredge • Rock ilmenite Sulphate slag, Canada 1960’s • Improved fibre glass spiral and cone concentrator • Becher SR, Australia 1970’s • Ilmen
Slide 26: Iluka Synthetic Rutile Evolution
Iluka Synthetic Rutile Evolution For personal use only Kiln Location Commissioned Decommissioned ‘A’ South Capel 1968 1993 ‘B’ South Capel 1974 1997 SR1 North Capel 1986 ‘C’ = SR3 Narngulu 1988 ‘D’ = SR4 Narngulu 1991 SR2 North Capel 1997 26
Slide 27: Where To From Here
For personal use only Where To From Here 27
Slide 28: Iluka Response Game Plan
Iluka Response Game Plan For personal use only 28
Slide 29: Continued Improvement in Safety Performance
Continued Improvement in Safety Performance For personal use only Total Recordable Injury Frequency Rate (TRIFR) Lost Time Injury Frequency Rate (LTIFR) 16 15.1 14 12 10.5 Frequency Rate 10 8 6 4.6 4 3.1 1.9 2 0.3 0 2011 2012 Jan-13 Feb-13 Mar-13 Apr-13 May-13 Jun-13 Jul-13 Aug-13 Sep-13 Oct-13 Nov-
Slide 30: Iluka Approach
Iluka Approach For personal use only • Focus on shareholder returns through the cycle • Flex asset operation in line with market demand • Continue market development through the cycle • Preserve/advance mineral sands growth opportunities • Maintain strong balance sheet • Continue to evaluate/pursue
Slide 31: Production Flex – Zircon & High Grade TiO2
Production Flex – Zircon & High Grade TiO2 For personal use only 52% 67% reduction reduction Sales profile - zircon Sales profile (rutile and synthetic rutile) 31
Slide 32: Integrated Operations
Integrated Operations For personal use only 32
Slide 33: Marketing and Supply Evolution
Marketing and Supply Evolution For personal use only Qingdao, China Antwerp, Belgium Zircon Premium Zircon - Premium Castellon, Spain Zircon Premium Shanghai, China Zircon Premium Rutile Malaysia Wilmington, Warehouse/ Delaware distribution hub Zircon Premium Xiamen, China Zircon Premium • Iluka has
Slide 34: The Long Tail
For personal use only The Long Tail 34
Slide 35: China
China Direct Sales to China Customers For personal use only Zircon End Customers – China (excludes sales to traders, processors and distributors) 35
Slide 36: Zircon Loading - Digital vs Conventionally Printed Tiles
Zircon Loading - Digital vs Conventionally Printed Tiles For personal use only Zircon Loadings (Indexed to 100) Mean = 100 Mean = 180 Low Mean High Conventionally Printed 65 100 135 Digitally Printed 140 180 210 Conventionally printed Digitally printed Notes: • This slide charts the distribution of
Slide 37: Mineral Sands Project Development
Mineral Sands Project Development For personal use only Project Location Characteristics Pre-execute Hickory Virginia, USA • Chloride ilmenite with associated zircon • Utilisation of existing mineral separation plant (MSP) • ~ 10 year mine life Definitive Feasibility Study West Balranald Murray Basi
Slide 38: WRP Mine Move
For personal use only WRP Mine Move 38
Slide 39: Iluka Response – Sources and Uses of Funds
Iluka Response Sources and Uses of Funds For personal use only A$m Gearing (%) 600 45 400 30 200 15 - - (200) (15) (400) (30) (600) (45) Ave 2002 - 2007 Ave 2008 - 2010 Ave 2011 - 2013 Cash from operations Disposals Equity issued Tax refund Net debt drawn Tax paid Net capex Share purchases/acquisiti
Slide 40: Metalysis – Strategic Fit
Metalysis – Strategic Fit For personal use only • Adjacencies with mineral sands business – could transform demand for titanium metal • “Right” stage of technical/commercial development • Ability for Iluka to contribute more than cash – supply of high grade titanium feedstocks – process engineering
Slide 41: New Investment - Metalysis
New Investment - Metalysis For personal use only • 18.3% equity interest in Metalysis (UK VC Company) for $22.5 million • Metalysis can produce titanium powder directly from rutile – process has the potential to materially reduce the cost of titantium powder • Metalysis process – developed patented
Slide 42: Ti Metal Industry – Potential
Ti Metal Industry – Potential For personal use only • Lower cost Ti metal compete with High Performance Alloys (US$4.5b market) & Duplex stainless steel (US$2.3bn market) – access to a small percentage of these markets would significantly increase the size of the Ti metal industry • 3D printing: pot
Slide 43: Iluka Approach
Iluka Approach For personal use only • Focus on shareholder returns through the cycle • Flex asset operation in line with market demand • Continue market development through the cycle • Preserve/advance mineral sands growth opportunities • Maintain strong balance sheet • Continue to evaluate/pursue
Slide 44: Iluka Resources Limited
For personal use only Iluka Resources Limited www.iluka.com For more information, contact: Robert Porter, General Manager Investor Relations robert.porter@iluka.com +61 3 9225 5008 / +61 (0) 407 391 829 44
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