Iluka Resources has completed the first phase of its diversification into a rare earths producer in Western Australia.
The company has concluded construction and commissioning activities at the Eneabba project, and received the board approval to proceed with the phase two.
The rare earths project contains a stockpile rich in monazite and zircon currently stored in a former mining void. The monazite-zircon concentrate is planned for sale for the third quarter of this year.
Iluka will commit to a funding of around $35 million to produce an upgraded monazite feedstock, confirming its gradual entry into the rare earths market.
The company has been hit by the COVID-19 pandemic as it realised a 20 per cent decline in mineral sands sales volumes in the first half of the year.
Iluka sold 242,000 tonnes of zircon/rutile/synthetic rutile, as well as lower than expected sales for synthetic rutile during the period.
Company managing director Tom O’Leary, however, said the decline had been less than that experienced in previous periods of market weakness.
“Iluka has recorded a solid first half result given the impact of COVID-19 on zircon and titanium markets and the global economy broadly,” he said.
“Given the volatility experienced throughout the world over recent months, we’re pleased with the earnings and cash position we’ve delivered.”
Iluka is also charging ahead with plans to demerge its royalty business from its mineral sands business.
The board of Iluka has approved of the demerger, which will be called Deterra Royalties, with Iluka increasing the level of shareholding in the company from 15 per cent to 20 per cent as a result of uncertainties posed by COVID-19.
The proposed demerger will carry Iluka’s royalty over the BHP-operated Mining Area C iron ore operation in Western Australia as a key asset.
“We are actively progressing the demerger which we expect to complete in the second half,” O’Leary said.
“This will be an important milestone for the company and result in two high quality businesses.”