Iluka’s profit takes a plunge as mine restarts deferred

Minerals sand miner Iluka Resources expects its net profit after tax to plunge to $18 million as it flags more than $45 million in writedowns.

The company said it expects to report an unaudited net profit of $18 million for the 2013 calendar year, after including $45 million in one off costs.

Iluka said it would writedown the value of equipment and mines currently idle by $28 million, plus $13 million in provisions for the rehabilitation of mines not in use.

The company said the restart of mining at its Tutunup and Yoganup mines in Western Australia had been deferred.

While in a further blow it also mothballed plans to recommence mining at its Eneabba mine.

The company said a combination of writedowns, falling prices and a number of "year-end accounting adjustments" had led to the profit decrease.

Iluka made a net profit of $363 million in 2012, but posted just a $34 million profit in the first half of 2013.

Despite cutting costs by more than 35 per cent and pairing back its workforce by 25 per cent, a slide in the price and demand of minerals sands proved too much for the miner.

A spokesman said the average price received fell from $1990 a tonne in 2012 to $1173/t last year.

In November year Goldman Sachs downgraded ratings for the mineral sands industry and warned the outlook remained challenging.

Analysts said the zircon market had been a “victim of its own success” and waning demand from China would not recover until the second half of 2014.

Goldman analysts cut zircon price forecasts from $US1500 tonne to $US1200 a tonne and the forecast for rutile, used to make paints and plastics, also fell from $US1563 to $US1150.

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