Iluka Resources Limited · ASX:ILU
Iluka Resources — Zircon Industry Association Conference 2018
21 slides from Iluka Resources's conference presentation, Sep 6, 2018
Slide 1: Zircon Industry Association Conference 2018
Zircon Industry Association Conference 2018 For personal use only Tom O’Leary, Managing Director, Iluka Resources 6 September 2018
Slide 2: Disclaimer – Forward Looking Statements
Disclaimer – Forward Looking Statements For personal use only 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 conta
Slide 3: Key Messages
Key Messages For personal use only 1. Tight market in 2018 reflecting sustained demand and reduced production 2. Iluka’s approach directed toward sustainability for the zircon industry 3. ZIA has important role to play representing the industry, informing debate & settings standards Jacinth-Ambrosia
Slide 4: Today's Zircon Market
Today’s Zircon Market For personal use only Geraldton port, Western Australia 4
Slide 5: Solid Demand Fundamentals
Solid Demand Fundamentals For personal use only • Solid demand broadly based, both regionally and by application • European ceramics industry benefitting from growth in domestic and export markets • Industrial activity in US and Japan delivering growth in refractory and foundry applications • Overal
Slide 6: 2018 Supply and Consumption Balanced
2018 Supply and Consumption Balanced For personal use only Global Zircon Supply and Consumption 2018 Global Zircon Production • Significant supplier inventory depleted in Other Asia recent years Americas Indonesia Europe ‒ 2016 to 2018 supply = production + India inventory draw Australia, 35% China
Slide 7: Iluka's Production Response
Iluka’s Production Response For personal use only Iluka’s Zircon Production and Sales kt Production 1 Sales 400 300 200 100 0 2 2012 2013 2014 2015 2016 2017 2018 2 2019 2 2020 Iluka’s response to tight market conditions: • Guided 2018-2020 zircon production of ~335ktpa ‒ Cataby project tonnes avail
Slide 8: Industry Response
Industry Response For personal use only • Aside from Iluka, current industry response limited to Kalimantan Chinese imports from Indonesia / Indonesian exports Zircon Sand and Sand China imports from Indonesia Indonesia export volume Price US$/t Equivalent (kt) 14 China import price (US$/t CIF) Indo
Slide 9: Approach to Pricing
Approach to Pricing For personal use only • Supply / demand fundamentals have driven recent price trajectory • Iluka approaching pricing decisions mindful of history and of potential impacts of decision • Pricing cadence slowed • Focus on monitoring: – zircon customer and ‘end user’ behaviour – pric
Slide 10: Iluka's Approach to Zircon - Sustainability
Iluka’s Approach to Zircon - Sustainability For personal use only Production / Marketing / Sales Approach Pricing Approach • Maintain security of supply to customers • Consider quantum of price increases in market ‒ draw inventory and release to market context ‒ guided production 2018-2020 • Monitor
Slide 11: Modernisation, Substitution and Thrifting
Modernisation, Substitution and Thrifting For personal use only 11
Slide 12: Zircon Price and Consumption: 2008-2018
Zircon Price and Consumption: 2008-2018 For personal use only Zircon Price and Consumption History Nominal Price Global consumption 2008 Global US$/t kt Financial Crisis Demand Price 1400 2,000 1200 1,500 1000 800 1,000 600 400 500 200 0 0 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018f Sour
Slide 13: Lessons Learned
Lessons Learned For personal use only Industry myths ‘debunked’ after 2012 … Myth 2012 experience No substitute for zircon - demand inelastic Alumina, feldspar and other materials were to price used to reduce zircon loading. Double charging and other new manufacturing techniques reduced the loading
Slide 14: Where Zircon Demand Was Lost
Where Zircon Demand Was Lost For personal use only Modernisation, Thrifting and Substitution - Modernisation, Thrifting and Substitution - by Region (kt) in Chinese Porcelain Tiles (kt) Thinner tiles ROW Substitution and thrifting North America Ultra Fine grinding EU Raw material upgrading China Dou
Slide 15: Zircon Substitution
Zircon Substitution For personal use only Although substitutes exist, zircon is the better product Zircon attributes • Opacity – whiteness • Hardness Alumina • Low thermal expansion Feldspar • High melting point Kaolin • Low thermal conductivity Chromite • Chemically inert Synthetic Mullit
Slide 16: Substitution Landscape
Substitution Landscape For personal use only Market Application % of zircon Major Substitute Adoption Mitigation market (est) Hurdle Body 16 Calcined alumina; Medium Alumina content in tile formulation white clays; white Final product attributes (e.g. porosity, dimensions) feldspar; kaolinite Declin
Slide 17: Ceramics Zircon Intensity
Ceramics Zircon Intensity For personal use only Reduced loading of zircon appears to have approached technical limits Rise of digital printing is supporting zircon intensity in tiles Zircon content (g/sqm); Global zircon in China % of world tile production (%); ceramics (kt) Digital printers install
Slide 18: Role of the ZIA
For personal use only Role of the ZIA 18
Slide 19: Role of Industry Associations
Role of Industry Associations For personal use only Development of industry standards Forum for Product information promotion and exchange and innovation debate Promote Influencing policy Corporate and and regulation Social development and Responsibility setting 19
Slide 20: Key Messages
Key Messages For personal use only 1. Tight market in 2018 reflecting sustained demand and reduced production 2. Iluka’s approach directed toward sustainability for the zircon industry 3. ZIA has important role to play representing the industry, informing debate & settings standards Jacinth-Ambrosia
Slide 21: For more information contact
For personal use only For more information contact: Matthew Blackwell Head of Marketing and Procurement matthew.blackwell@iluka.com +61 (0) 498 989 969 Rehabilitated land, Murray Basin 21
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