Iluka Resources Limited · ASX:ILU
Iluka Resources — Macquarie Conference 2024
26 slides from Iluka Resources's conference presentation, May 9, 2024
Slide 1: Iluka Resources (ASX:ILU)
Iluka Resources (ASX:ILU) Macquarie Conference, 8-9 May 2024 Adele Stratton, Chief Financial Officer and Head of Development
Slide 2: Disclaimer
Disclaimer 2 This presentation has been prepared by Iluka Resources Limited (Iluka). By accessing this presentation you acknowledge that you have read and understood the following statement. This presentation includes forward-looking statements reflecting Iluka’s current expectations. These statemen
Slide 3: A global critical minerals company
3 A global critical Critical minerals for everyday life Operational experience minerals company Zircon, titanium and rare earths are used in an array of everyday applications and are Over 70 years of critical minerals exploration, mining, processing, marketing and critical for sustainable developmen
Slide 4: Mineral sands: Iluka's core business
4 Mineral sands: Iluka’s core business Cataby plant 1 and 2 Eneabba
Slide 5: Market update – zircon
Market update – zircon 5 Ongoing tightness for premium zircon and Iluka’s disciplined approach supporting the price. US$/t Zircon (premium and standard) net realised FOB price 2,800 Q1 2024 • Sand sales of 48kt plus 11kt of zircon-in-concentrate (ZIC) 2,400 result 2,000 • Zircon premium and standard
Slide 6: Market update – high-grade titanium feedstocks
Market update – high-grade titanium feedstocks 6 Take-or-pay synthetic rutile contracts provide high degree of revenue certainty. Rutile sales achieve price premium in welding market. Rutile sales 1 and net realised FOB price 2 US$/t kt Q1 2024 • Rutile sales1 of 9kt, synthetic rutile sales of 37kt
Slide 7: Marketing approach
Marketing approach 7 Focus on delivering sustainable prices Hub and spoke distribution model Prices negotiated with customers based on Warehouses positioned close to key markets value in use and other factors Value in use Global Multilingual / multinational salesforce pricing logistics network Susta
Slide 8: Debunking rare earth industry myths
8 Debunking rare earth industry myths Cataby plant 1 and 2 Eneabba
Slide 9: The problem
The problem 9 “The Middle East has its oil, China has rare earths” Deng Xiaoping, 1987 China’s industrial policies have for over three decades targeted global supply chain domination in rare earths critical to many modern technologies. The rest of the world is today reliant on Chinese supply of rare
Slide 10: Rare earth supply chain dominated by China's vertical integration
Rare earth supply chain dominated by China’s vertical integration 10 China has vertically integrated its rare earth industry from oxides to metals, alloys, powders and magnets. Pricing and other support mechanisms ensure market dominance across the value chain to ultimately support value add end use
Slide 11: Asian Metal Index price = effective Chinese policy
Asian Metal Index price = effective Chinese policy 11 The Asian Metal Index is the only publicly available price index for rare earth oxides. It is influenced by actions of the Chinese government and Chinese enterprises. The Asian Metal Index is not a reflection of free market dynamics. Daily Asian
Slide 12: China rare earth quotas and policies
China rare earth quotas and policies 12 The Chinese Ministry of Industry and Information Technology set quotas (typically six monthly) for rare earth mining and smelting and separation. The quotas act to preserve the longevity of Chinese rare earth deposits but do not purport to control total rare e
Slide 13: China rare earth concentrate imports
China rare earth concentrate imports 13 China sources over 20% of rare earth oxide feedstock from imported concentrates (including from the US, Myanmar, Madagascar). Imports have been growing strongly as China secures feed for its downstream processing. Bastnaesite imports Monazite imports Mixed rar
Slide 14: Impact of rare earth price on producers
14 Impact of rare earth price on producers Eneabba plant 1 and 2
Slide 15: Price impact on Chinese producers
Price impact on Chinese producers 15 Current price levels are impacting profitability of Chinese producers. The three major Chinese rare earth companies reported negative cash flows and little to no profit in Q1 2024. Net operating cash flow vs REO prices Quarterly net profit vs NdPr price Quarterly
Slide 16: Price impact on non-China producers
Price impact on non-China producers 16 Quarterly operating cash flows of Lynas (ASX:LYC) and US-based MP Materials (NYSE:MP) show the impact of low NdPr prices and show the level is not sustainable for ongoing operations. MP Materials quarterly net operating cash flow vs NdPr price Lynas quarterly n
Slide 17: Implications for the rare earth industry
17 Implications for the rare earth industry Eneabba plant 1 and 2
Slide 18: Key implications for the rare earth industry
Key implications for the rare earth industry 18 1. 2. 3. China’s business model is Current price level is not New supply is needed for this reliant on imported feed sustainable growth industry with strong fundamentals China imports over 20% of feed for its rare At current prices, companies supplying
Slide 19: Strong industry fundamentals
Strong industry fundamentals 19 Global demand forecasts vary on market penetration of renewable energy technologies, substitution and magnet composition. Additional NdPr oxide required over the next decade is 30 - 108 thousand tonnes. Materially higher amounts of DyTb also required in currently supp
Slide 20: Iluka's Eneabba refinery opportunity
20 Iluka’s Eneabba refinery opportunity Eneabba plant 1 and 2
Slide 21: Eneabba rare earths refinery, Western Australia
Eneabba rare earths refinery, Western Australia 21 Representation of the Eneabba rare earths refinery Brownfield site, access Producing separated light Major employer Permanent waste to major utilities Camp and heavy rare earths Construction workforce ~300 disposal Site has all major utilities – ~ 5
Slide 22: Building Australia's first fully integrated rare earths refinery
Iluka’s Eneabba refinery opportunity 22 1. 2. 3. Downstream processing Independent rare earth Facilitating global producing sustainable, oxide supply electrification secure rare earths Eneabba will be a multi-decade piece of Diversifying the global rare earth supply chain Eneabba will produce separa
Slide 23: Iluka's approach to rare earth marketing
Iluka’s approach to rare earth marketing 23 Iluka is experienced in selling specialty minerals through direct customer relationships and is targeting EV OEMs who can redirect material to their preferred suppliers. Engagement also includes other market segments, such as consumer electronics and defen
Slide 24: Iluka's approach to its rare earths business
Iluka’s approach to its rare earths business 24 Prices for rare earth oxides to reflect the true value of the product, including supply security and traceable product provenance attributes; and not to be inextricably linked to prices set by the Asian Metal Index Financial risk mitigation through a s
Slide 25: For more information contact
25 For more information contact Luke Woodgate, General Manager, Investor Relations and Corporate Affairs investor.relations@iluka.com
Slide 26: Appendix: Rare Earth Office announcement, March 2022
Appendix 26 4 March 2022: Ministry of Industry and Information Technology of the People’s Republic of China, Department of Raw Materials Industry announcement The Rare Earth Office interviewed key enterprises on the price of rare earth products In view of the continuous rise and high market prices o