Iluka to reopen South Australian mine, halt Victorian operation

Iluka's Jacinth-Ambrosia operation in the Eucla Basin, South Australia. Image: Iluka

Iluka Resources will restart mining at the Jacinth-Ambrosia zircon mine in the Eucla Basin of South Australia in December, reflecting a lift in market conditions and boosting employment in the region.

However, the mineral sands miner also plans to place its Hamilton mineral separation plant in Victoria on care and maintenance, which will result in a $150 million pre-tax impairment charge in its upcoming financial reports.

Activities at Jacinth-Ambrosia, about 270km from the Port of Thevenard, were suspended in April 2016 to allow heavy material concentrate inventory to be drawn down during a time of subdued market demand.

It was initially expected that operations at Jacinth-Ambrosia, Iluka’s primary source of zircon, would be suspended for 18-24 months.

With market conditions improving and concentrate inventories sufficiently drawn down, Iluka now plans to restart activities at Jacinth-Ambrosia in December 2017, following a two-month lead time. It will cost the company about $7 million to restart the mine

Iluka’s managing director Tom O’Leary said the company continued to be encouraged by the improvement in mineral sands markets.

“The restart of Jacinth-Ambrosia reflects the continued tightening of the zircon market and follows the substantial draw down of heavy mineral concentrate inventory over 2017,” O’Leary said.

“The restart will ensure Iluka is able to continue to support its customer base.”

According to Iluka, about 40 employees and 60 contractors will be recruited to support the restart. Following the restart, Iluka will directly employ approximately 85 personnel at the site. A further 105 contractors will be employed for mining, transport and company operations.

Iluka South Australian operations manager Hamish Little added: “This is a welcome development for Iluka’s employees, contractors and community and government stakeholders, particularly in South Australia.”

Discovered in 2004, Iluka launched production at Jacinth-Ambrosia in 2009 after spending $400 million to develop the operation.

The South Australian Chamber of Mines & Energy (SACOME) welcomed Iluka’s plans to restart Jacinth-Ambrosia, especially from an employment perspective for the state.

“SACOME is thrilled that Iluka will be looking to recruit 40 employees and 60 contractors to support the restart process,” it said.

Jacinth-Ambrosia’s key product is zircon, but it is also a source of rutile and chloride ilmenite.

In Victoria, Iluka reported that it plans to put the Hamilton plant on care and maintenance in October. In addition to the $150 million pre-tax impairment associated with this decision, Iluka will also record redundancy and restructure costs of $14 million in its half-year results.

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