Iluka Resources has experienced a decline in mineral sands revenue amid difficult market conditions for zircon.
The mineral sands revenue slid by 10 per cent from $606.9 million in the first half of last year to $545.6 million in the same period this year.
This slow start to 2019 reflects “usual seasonal patterns” in the zircon market, however, ongoing trade tensions and political instability has impacted end consumer sentiment and reduced buying activity, according to Iluka.
The company now expects its sales volumes to be at the lower end of its expectations in the second half of 2019, with sales volumes similar to the first half.
Its sales volumes were down 31 per cent from the corresponding period in 2018, while zircon and rutile prices were up 19 per cent and 22 per cent respectively this year.
Iluka, however, expects a lower average realised price in the second half as it continues to support its buyers through rebating system and flexible product offering, including more standard zircon product.
The company has also increased its outlook for 2019 unit cost of goods sold from $765 to $840 a tonne.
“Today’s results reflect a mix of factors. While overall profit has increased, the global economic and political environment are headwinds as we move forward in 2019,” Iluka managing director Tom O’Leary said.
“Operationally, we have delivered the Cataby mine development on time and on budget, the Jacinth-Ambrosia operation continues to operate at capacity and the move from Jacinth to Ambrosia has now also been completed, while the synthetic rutile kiln in the South West has undergone a planned major maintenance outage, returned to full capacity and begun its next four-year campaign.”
In Sierra Leone, West Africa, Iluka’s Gangama operation is also running in line with expectations, with the expansion project having been commissioned.
However, the Lanti operation continues to experience issues with run time and throughput, according to O’Leary.
Gangama and Lanti is part of a multi-mine operation, which hosts the world’s largest natural rutile deposit.
Iluka will continue to implement “a range of measures” to ensure the company sees improvement in the period ahead.
Conversely, Iluka sees strong conditions in high grade titanium markets and are fully sold with strong ongoing customer enquiries, according to O’Leary.
“Average prices for all our products are well up on this time last year and we believe our pricing strategy is contributing to some stability in the market,” he concluded.