Iluka Resources Limited · ASX:ILU
Iluka Resources — 2017 TZMI Conference
40 slides from Iluka Resources's conference presentation, Nov 15, 2017
Slide 1: 2017 TZMI Conference
2017 TZMI Conference Matthew Blackwell, Iluka Resources, Head of Marketing 15 November 2017
Slide 2: Disclaimer – Forward Looking Statements
Disclaimer – Forward Looking Statements 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 contains certain statements
Slide 3: Compliance Statement
Compliance Statement Mineral Resources and Ore Reserves Estimates As an Australian company with securities listed on the Australian Securities Exchange (ASX), Iluka is subject to Australian disclosure requirements and standards, including the requirements of the Corporations Act and the ASX. Investo
Slide 4: Overview
Overview Introduction • Portfolio • Approach Operations and Projects • Sustainability Improvements • Jacinth-Ambrosia restart and expansion • Sierra Rutile improvements and expansions • Major projects update Markets Outlook • Zircon market • Titanium market 4
Slide 5: Iluka's Mineral Sands Portfolio
Iluka’s Mineral Sands Portfolio PERTH BASIN EUCLA BASIN MURRAY BASIN SIERRA RUTILE VIRGINIA SRI LANKA Western Australia South Australia Victoria / New South Sierra Leone USA Wales Tutunup South mine Jacinth-Ambrosia mine Balranald project Gangama dry mine Mining concluded 2016 Puttalam project Synth
Slide 6: Iluka's Approach
Iluka’s Approach Create and deliver value for shareholders Flex assets in Preserve and Act counter Disciplined line with market advance growth cyclically where capital allocation conditions opportunities appropriate Jacinth-Ambrosia restart Cataby project Sierra Rutile acquisition Strict financial c
Slide 7: Iluka's Operations and Projects
Iluka’s Operations and Projects Jacinth-Ambrosia, South Australia 7
Slide 8: Sustainability
Sustainability * * Excludes Sierra Rutile, acquired in December 2016 8
Slide 9: Jacinth-Ambrosia Restart
Jacinth-Ambrosia Restart • J-A restart decision reflects: – continued tightening zircon market – substantial drawdown of heavy mineral concentrate (HMC) inventory • Rapid return to full production • 40 employees and 60 contractors recruited for restart • Restart expected to be complete in mid-Decemb
Slide 10: Jacinth-Ambrosia Upgrade
Jacinth-Ambrosia Upgrade Project Objectives • Increase J-A plant throughput by ~30% to offset declining ore grades Project Scope • Wet concentrator plant expansion • 2nd mining unit to handle additional ore • Accommodation camp capacity increase • Project cost ~$40 million • Project completion Q2 20
Slide 11: Sierra Rutile Improvements Achieved
Sierra Rutile Improvements Achieved • Align safety practice with international standards • General improvement in operating practices • Implementation of Iluka mine planning approach • Improved standard of tailings dam construction and management • Investment in maintenance, increasing life of asset
Slide 12: Sierra Rutile Improvements Achieved
Sierra Rutile Improvements Achieved • Adjustments to plant settings at dry mines and establishment of standard operating practice has: – debottlenecked concentrator throughput and increased runtimes; and – improved rutile recovery and increased heavy mineral concentrate grades. • These adjustments h
Slide 13: Sierra Rutile Deposit Locations
Sierra Rutile Deposit Locations Sembehun deposits Proposed mine development Port Gangama Truck and shovel mining, fixed dry mining unit. DM2 mining 500-600tph ore. Mineral Separation Plant Commissioned 2016. Nameplate ~175ktpa rutile, expanding to up to 300ktpa Lanti Dry Lanti Dredge Truck and shove
Slide 14: Sierra Rutile Mine Schedule
Sierra Rutile Mine Schedule Plant Unit1 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 D1 Lanti dredge 780tph DM1 Lanti dry 500-600tph Lanti dry 1,000-1,200tph Sembehun 1,000-1,200tph DM2 2 Gangama 500-600tph Gangama 1,000-1,200tph Sembehun 1,000-1,200tph DM3 Sembehun 1,000-1,200tph Note: Mi
Slide 15: Cataby Development Plan and Ore Reserve
Cataby Development Plan and Ore Reserve Deposit • 8.5 year mine life based on development plan which is underpinned by 86% Proved Ore Reserve and 14% Probable Ore Reserve. • Two in-pit mobile mining units • 1,100 tph feed rate to wet concentrator plant • Mine life could increase beyond 8.5 years – b
Slide 16: Cataby Project Update
Cataby Project Update Schedule 2017 2018 2019 Newman Wet Concentrator Plant (Eneabba) Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Engineering Award contracts Construction Pre-strip Commissioning SR Production Note – Timing assumes Q4 2017 Board approval • Major environmental approvals obtained Capital Cost $ million
Slide 17: Balranald Project
Balranald Project Project Overview • Large, deep, high grade rutile-rich deposit near Balranald, New South Wales • Industry significant source of rutile, ilmenite and zircon • Definitive feasibility study based on conventional mining method completed • Progressing separate technology study using und
Slide 18: Balranald Way Forward
Balranald Way Forward • Continue staged de-risking in 2018 with third production trial – current estimate ~$25 million • Staged approach to production start up in 2021 – requires approvals (modification of consent) – new mining equipment and plant modifications Commerciality Trial Activity Status Co
Slide 19: Sri Lanka PQ Deposit
Sri Lanka PQ Deposit Location and History • Located ~130km north of Colombo • 1990’s – PQ deposit explored – ceased work due to civil conflict • 2012 – Iluka returned to Sri Lanka • 2015 – Scoping study conducted • 2017 – Pre-feasibility phase progressed Deposit • Homogeneous deposit with ore up to
Slide 20: Industry Dynamics
Industry Dynamics
Slide 21: Global Mineral Sands Production
Global Mineral Sands Production Mineral Sands Mineral Sands Mineral Sands by Volume by Volume by Value as Mined as Finished Product as Finished Product* (2016 ~7.6mt) (2016 ~7.6mt) Rutile Rutile Rutile Chloride ilmenite Chloride ilmenite Chloride ilmenite Upgraded Chloride Slag (UGS) Chloride Upgrad
Slide 22: Capital Required to Sustain Industry Production
Capital Required to Sustain Industry Production Capital Spend, Prices, US$/t FOB, US$m, nominal nominal 1,500 2,500 Estimated industry capex of ~US$1-1.5b* or US$500-750m p.a. over 1,200 2,000 2018-19 to sustain current production 900 1,500 600 1,000 300 500 0 0 Capital Spend (LHS) 2005-16 Average C
Slide 23: Global Zircon Supply - Demand
Global Zircon Supply - Demand • Zircon from existing producers declining due to depletion and grade/assemblage decline • Inventory largely depleted • Varying demand estimates − Iluka estimates demand based on industry supply and inventory movements − TZMI’s demand differs from Iluka’s view • From 20
Slide 24: New Project Supply Challenges
New Project Supply Challenges Unconventional deposits requiring technical solutions (eg. fine minerals, depth, product quality) Zircon and rutile typically induced as by- products of ilmenite projects Iluka evaluates many projects and will remain disciplined in Limited high zircon and rutile assembl
Slide 25: High Grade Titanium Dioxide Supply/Demand
High Grade Titanium Dioxide Supply/Demand • Supply-demand overlaid with upgrading capacity not requiring additional mine investment • This capacity has remained idle for some time • Additional idle upgrading capacity (not shown) requires investment in ilmenite mines • Highlights importance of Iluka’
Slide 26: Inventory Movement
Inventory Movement Total Inventory $m 1000 800 600 400 Normal inventory level, 200 $300-400 million 0 Dec-14 Dec-08 Dec-09 Dec-10 Dec-11 Dec-12 Dec-13 Dec-15 Dec-16 Jun-09 Jun-10 Jun-11 Jun-12 Jun-13 Jun-14 Jun-15 Jun-16 Jun-17 Finished Goods Work in Progress* • Total inventory reduced by $116 milli
Slide 27: Zircon Market
Zircon Market Jacinth-Ambrosia, South Australia
Slide 28: Current Supply Demand Fundamentals Positive
Current Supply Demand Fundamentals Positive Zircon market tightness has arrived Recovery in prices Reduction in producer-held since 2H 2016 inventories Downstream restocking Limited capacity for buyers to movement increase stock Iluka balances supply when Some customers slow some miners reduce to re
Slide 29: Zircon Market 2017
Zircon Market 2017 Zircon Prices* Pricing US$/t • H1 2017 weighted average premium and standard 1,400 received price up 7% relative to H1 2016 • Increase to Reference Price of US$130/t to 1,200 Opening 1 Jan 16* US$1,100/t from 1 July 2017 announced 1,000 • Further price increase of US$130/t to US$1
Slide 30: Zircon Substitution
Zircon Substitution Although substitutes exist, zircon is the better product Zircon attributes • Opacity – whiteness • Hardness Alumina • Low thermal expansion Feldspar • High melting point Kaolin • Low thermal conductivity Chromite • Chemically inert Synthetic Mullite • Low neutron absorp
Slide 31: Substitution Landscape
Substitution Landscape Market Application % of zircon Major Substitute Adoption Mitigation market (est) Hurdle Body 16 Calcined alumina; Medium Alumina content in tile formulation white clays; white Final product attributes (e.g. porosity, dimensions) feldspar; kaolinite Declining availability and q
Slide 32: Ceramics Zircon Intensity
Ceramics Zircon Intensity Substitution of zircon appears to have reached technical limit and rise of digital printing is supporting zircon intensity in tiles Zircon intensity (grams per sqm); Global zircon in ceramics China % of world tile production (%); (kt) Digital printers installed (hundred uni
Slide 33: Titanium Market
Titanium Market Jacinth-Ambrosia, South Australia
Slide 34: Market Position Strongest in Very High Grade
Market Position Strongest in Very High Grade Total TiO2 Feedstock High Grade Chloride Very High Grade Chloride Chloride & Sulphate Chloride Feedstock (80%+ TiO2) Feedstocks (90%+ TiO2) Feedstocks (2016 ~6.4 Mt) (2016 ~3.3 Mt) (2016 ~2.5 Mt) (2016 ~1.3 Mt) Iluka Iluka Iluka 7% 14% 17% Iluka Kwale Oth
Slide 35: High Grade TiO2 Feedstock Advantage
High Grade TiO2 Feedstock Advantage • Natural and synthetic rutile have a higher titanium grade than most slag feedstocks • Advantages in pigment production: – lower ore tonnes required; – lower chlorine input cost; and – lower waste generation (environmental and cost benefits). • High ‘value in use
Slide 36: High Grade Feedstock Market
High Grade Feedstock Market Pricing Pigment Rutile • H1 2017 rutile prices up 4% relative to H1 2016 US$/t US$/t 4,000 3,000 – 40% of SRL’s 2017 rutile production volumes (~60kt) contracted at fixed prices for 2017 • Successful implementation of US$70-100/t increase effective 1 July on uncontracted
Slide 37: Pigment Use Grows with Income
Pigment Use Grows with Income • Pigment demand growth per capita follows typical ‘s-curve’ pattern • Further per capita growth to come in China and other developing economies Pigment use per capita follows S-curve commodity demand path with GDP per capita1 Pigment per capita (kg) 3.0 North America W
Slide 38: Pigment Industry Technology Waves
Pigment Industry Technology Waves Net pigment capacity change Approved before new (kt) Chinese legislation 300 200 Iluka’s key feedstock markets Well positioned for demand 100 growth - Future announced chloride capacity increases in China (100) Europe/Mdl East Sulfate Asia-Pacific Sulfate (200) Amer
Slide 39: Long Term Trends Support Our Industry
Long Term Trends Support Our Industry Improved health and safety Reduce petrochemical exhaust Stronger, lighter, more Water purification efficient transportations Cleaner air Enable technology solutions Medical applications Transform construction 39
Slide 40: Jacinth-Ambrosia, South Australia
Jacinth-Ambrosia, South Australia