Iluka Resources Limited · ASX:ILU
Iluka Resources — TZMI China Conference 2009
28 slides from Iluka Resources's conference presentation, July 2009
Slide 1: Iluka - positioned for the rebound
Iluka Resources Limited Iluka - positioned for the rebound For further information, visit Iluka’s website www.iluka.com
Slide 2: Presentation Outline
Presentation Outline • Zircon in China and Iluka Sales • China Zircon Market in 2009 • Beyond 2009 • Iluka well positioned for the rebound 2
Slide 3: Zircon in China and Iluka Sales
Zircon in China and Iluka Sales 3
Slide 4: Zircon End Use: Global v China
Zircon End Use: Global v China Chinese zircon consumption is more heavily weighted towards Zirconia and Zirconium Chemical relative to Global consumption Global Zircon Segments 2008 China Zircon Segments 2008 TV Glass Zirconia & 3% TV Glass Chemicals 6% 15% Zirconia & Chemicals 27% Foundry/Casting 1
Slide 5: Chinese Share of Global Zircon Consumption
Chinese Share of Global Zircon Consumption •China has grown from ~16% of global zircon consumption in 1998 to > 30% in 2008 •2007 China accounted for 40% of global ceramic tile production •In 2008 China jumped to nearly 40% of Iluka’s global zircon sales •Iluka is the world’s largest zircon supplier
Slide 6: Iluka's Zircon Sales to China
Iluka’s Zircon Sales to China • Iluka’s sales in China are closely balanced to the proportion of consumption represented by each market segment • Iluka’s sales are well weighted in China towards the higher growth market segments Iluka China Zircon Sales 2008 China Zircon Segments 2008 TV Glass TV Gl
Slide 7: China Zircon Market in 2008 and 2009
China Zircon Market in 2008 and 2009 7
Slide 8: China Zircon Market 2008
China Zircon Market 2008 DEMAND • Zircon demand in first three quarters of 2008 very strong • Q3, 2008: Zircon consumption reached ~ 40kt/month • Q4, 2008: Zircon consumption dropped to ~ 20kt/month • Actual zircon consumption for 2008 ~ 400kt (same as 2007) SUPPLY • 2008 zircon imports and domestic
Slide 9: China Zircon Demand Strengthening
China Zircon Demand Strengthening • The Chinese government stimulus package is producing rapid results in infrastructure and property construction • The China Purchasing Manager’s Index (PMI) has been above 50 points since March 2009 • Industrial Production is increasing strongly • Fixed Asset Inves
Slide 10: 2009 China Zircon Imports Comparison
2009 China Zircon Imports Comparison Monthly China Import Comparison • China zircon stocks at low levels by 国进数对 May 2009 tonnes • Chinese domestic demand improving 500,000 since March 2009 450,000 • Re-stocking and increasing 400,000 production should boost imports for remainder of 2009 350,000 300
Slide 11: China Zircon Market 2009
China Zircon Market 2009 DEMAND • Jan + Feb ~ 20-25kt/month consumption • Mar + Apr ~ 30kt/month consumption • May + Jun ~ 35kt/month consumption • Total H1, 2009 consumption ~ 170-180kt • Expect H2, 2009 to be 35kt – 40kt/month consumption SUPPLY • 80kt stock from end 2008 • Imports + domestic prod
Slide 12: 2009 Supply Status
2009 Supply Status • Limited Indonesia production • Limited Hainan production • Slower than expected ramp-up of new global projects • Financial difficulty of some producers in Australia and Africa • Inadequate producer profitability for future investment 12
Slide 13: Indonesia Zircon Supply
Indonesia Zircon Supply Indonesia zircon supply remains constrained by resource depletion and increased government control of mining activity Tonnes ('000) Chinese Zircon Imports from Indonesia 16 14 12 10 8 6 4 2 - Nov Jan Jun Jul Mar Apr Feb Aug Sep Oct May Dec 2007 2008 2009 Source: Iluka interpr
Slide 14: 2009 China Summary
2009 China Summary • Slow zircon sales in Jan – Apr due to high stocks and low consumption • Consumption growing significantly since March 2009 • Limited supply causing tightness in China zircon market and increasing prices: Indonesia and Hainan zircon is now US$150/mt more than the price in Q1, 200
Slide 15: Beyond 2009
Beyond 2009 15
Slide 16: Recovery in the global economy to increase zircon demand
2010 • Recovery in the global economy to increase zircon demand significantly above 2009 levels • Drivers of past strong zircon demand remain the same for the future including: • Improved standard of living in developing countries • Increased focus on quality in developing countries • Massive urbani
Slide 17: 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 17
Slide 18: Future Zircon Supply
Future Zircon Supply • Limited zircon supply from existing sources will maintain tightness in the global market post 2009 • Iluka is investing heavily in major new zircon production to meet the future demand of the global industry into the long term • Iluka’s two major projects are: • Murray Basin S
Slide 19: Iluka Operations & Projects
Iluka Operations & Projects Darwin Northern Territory Queensland Western Australia Brisbane Mid West South Australia New South Perth Wales Adelaide Sydney Canberra South West Eucla Basin Victoria Melbourne Murray Basin Hobart Iluka’s major new zircon projects 19
Slide 20: Jacinth – Ambrosia (Eucla)
Jacinth – Ambrosia (Eucla) Summary 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 Min
Slide 21: Regional Geology
Regional Geology ILUKA 21
Slide 22: Development Overview
Development Overview Scope of Project • Total estimated production of 6 million tonnes of HMC: • ~2.8 million tonnes of zircon • ~1.5 million tonnes of ilmenite •~ 0.35 million tonnes of rutile •Can produce over 300,000 tpa of zircon from the JA project •Project on time and under budget •Expected st
Slide 23: Test Pit
Test Pit • Test pit successfully excavated • 200 thousand cubic metres • Confirms assumptions regarding mining conditions and ore grades 23
Slide 24: Development Overview: Wet Concentrator Plant
Development Overview Wet Concentrator Plant • MC2 concentrator relocated from USA • Refurbishment complete • Being erected on site • Capacity ~1000t per hour of sand feed • Capacity to produce 120t Heavy Mineral Concentrate per hour 24
Slide 25: Development Overview: Water
Development Overview Water • Hyper saline water to be drawn from paleochannel • Paleochannel aquifer is distinct from Eucla Basin • No groundwater dependent ecosystems associated with J-A water supply source • Bore field to be established approximately 34km from process plant • Bore field sufficient
Slide 26: Eucla Basin
Eucla Basin Transport and Processing Options • HMC transported 270km by road to Port Thevenard • 40,000 tonnes storage facility at Port Thevenard to be established Darwin Northern Territory Queensland Western Australia Brisbane South Narngulu Australia New South Perth Wales Adelaide Sydney Canberra
Slide 27: Iluka well positioned for the rebound
Iluka well positioned for the rebound 27
Slide 28: Iluka well positioned for the rebound
Iluka well positioned for the rebound • Iluka forecasts that demand for zircon will rebound from H2 2009 • China represents more than 30% of global zircon consumption and will continue to grow more rapidly than other zircon markets. • Iluka has a strong market position in China. • Iluka will be able