Jan. 22, 2010
After sharply weaker demand in first half of 2009, Iluka meets its recovery in the second half year.
Zircon
"Zircon demand recovered progressively through the second half of 2009, particularly in China. Approximately 80 per cent of Iluka's annual sales were second half weighted, with over 50 per cent of the year's sales being recorded in the December quarter, reflecting the combination of severe demand retraction and customer inventory draw down evident in the first half of the year." Though it shows strong recovery signal in China, information of demand recovery are more muted from Europe and North America.
Rutile
Rutile production year-on-year declined by 9.3 per cent to 127 thousand tonnes and was lower than Iluka's initial expectations. However, it becomes clear that there will a recovery in 2010.
Revenue
Iluka's mineral sands sales revenue (before currency hedging) for the 12 months to 31 December 2009 was A$576.0 million, 34.9 per cent lower than 2008, reflecting the significantly lower global demand for mineral sands products, particularly in the first half of 2009. After currency hedging, sales revenue was A$533.0 million, 37.5 per cent lower than 2008. This lower revenue, as referred to above, was in the context of lower sales volumes year-on-year: zircon down 54 per cent; rutile down 14 per cent; synthetic rutile down 22 per cent and ilmenite down 41 per cent.
Conclusion
Iluka has the capacity, through its new production sources of Jacinth-Ambrosia and Murray Basin and through a restoration of full production in Virginia, to increase zircon and rutile production above pre-GEC levels as demand recovers and then grows. The company also has expansion potential at Jacinth-Ambrosia and latent synthetic rutile capacity in Western Australia dependent on suitable ilmenite feed and pricing arrangements.
After sharply weaker demand in first half of 2009, Iluka meets its recovery in the second half year.
"Zircon demand recovered progressively through the second half of 2009, particularly in China. Approximately 80 per cent of Iluka's annual sales were second half weighted, with over 50 per cent of the year's sales being recorded in the December quarter, reflecting the combination of severe demand retraction and customer inventory draw down evident in the first half of the year." Though it shows strong recovery signal in China, information of demand recovery are more muted from Europe and North America.
Rutile production year-on-year declined by 9.3 per cent to 127 thousand tonnes and was lower than Iluka's initial expectations. However, it becomes clear that there will a recovery in 2010.
Iluka's mineral sands sales revenue (before currency hedging) for the 12 months to 31 December 2009 was A$576.0 million, 34.9 per cent lower than 2008, reflecting the significantly lower global demand for mineral sands products, particularly in the first half of 2009. After currency hedging, sales revenue was A$533.0 million, 37.5 per cent lower than 2008. This lower revenue, as referred to above, was in the context of lower sales volumes year-on-year: zircon down 54 per cent; rutile down 14 per cent; synthetic rutile down 22 per cent and ilmenite down 41 per cent.
Conclusion
Iluka has the capacity, through its new production sources of Jacinth-Ambrosia and Murray Basin and through a restoration of full production in Virginia, to increase zircon and rutile production above pre-GEC levels as demand recovers and then grows. The company also has expansion potential at Jacinth-Ambrosia and latent synthetic rutile capacity in Western Australia dependent on suitable ilmenite feed and pricing arrangements.
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