Iluka takes legal action against US chemical firm

Heavy minerals concentrate. Image: Iluka Resources

Iluka Resources has commenced legal proceedings against its American client, Chemours, after failing to pay the mining company for its scheduled shipments.

The company flagged the issue after Chemours defaulted on its pay for the May shipment, amounting to 20,000 tonnes of synthetic rutile.

Iluka has now escalated the issue to the Supreme Court of the State of New York after encountering two failed payments for May and July.

Although fearing that this would impact the company’s sales for the quarter, synthetic rutile sales improved by 3.4 per cent in the June quarter compared with the prior corresponding quarter, while total mineral sands sales dropped by 17.6 per cent.

There was also a 10 per cent boost in production to Iluka’s synthetic rutile production at the Capel operations in Western Australia, thanks to ilmenite upgrade rates and improved underlying ilmenite quality.

Production of rutile and zircon, however, was altered due to market uncertainty brought about by the COVID-19 pandemic.

Iluka proceeded to scale back its production settings at the Narngulu mineral separation plant near Geraldton, Western Australia to reduce zircon production.

This resulted in a 16 per cent drop to production to 42,000 tonnes of zircon in the June period compared with the 50,000 tonnes produced in the previous quarter.

Iluka’s mineral separation plant at Narngulu retains the flexibility to return to its higher usual production settings within 24 hours, should conditions improve.

Rutile production also decreased by 29 per cent to 35,000 tonnes in comparison with the prior quarter due to lower runtime and throughput at Sierra Rutile in Africa.

Despite facing the challenges of the COVID-19 pandemic, things are looking brighter for the next quarter, with mining operations scheduled to return at the Jacinth deposit in South Australia in early August.

“This will result in improved cash flows from the lower operating costs at Jacinth mainly due to lower strip ration and lower cost units due to less haulage and pumping costs,” Iluka stated in an ASX announcement.

Iluka continues to monitor market conditions and customer offtake levels and is ready to adjust production settings “if appropriate”.

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