Iluka Resources is a major global producer of zircon and the world’s largest producer of the high-grade titanium dioxide products of rutile and synthetic rutile. In the lead-up to the 2014 AJM Mineral Sands conference, we had the chance to speak to Iluka’s Manager Eastern Operations, Dan McGrath, about the outlook for the industry and the company’s future project plans.
The outlook for the global mineral sands industry remains challenging in the near term. In your opinion, what are the main factors influencing the current market?
Dan McGrath: Global demand for TiO2 pigment, which fell substantially in 2012, is a key factor affecting the industry today. The impact of this is compounded by the preference for western pigment producers to absorb the residual long term contract off-take and drawing down those inventories created in the last 18 months whilst at low utilisation rates. Several pigment producers have indicated that pigment inventories are at or near “normal levels”, and we can expect pigment plant output to increase toward more usual levels. With this comes improvement in demand for higher grade titanium products in the feed mix, with quality considerations becoming more significant.
In regards to zircon, the key factor is developing economy demand through urbanisation. On the supply side, we can expect some scarcity of the sand resource as a function of production lead times and the unevenness of the geographical markets.
Last year Shane Tilka, then Mine Manager for Jacinth Ambrosia, spoke about Iluka’s ability for operational flexibility and tailoring production to suit market conditions. How is Iluka responding to these challenges in 2014 and beyond?
Dan McGrath: Iluka has demonstrated its willingness to flex production in the context of market demand response to demand cycles. Where we have changes, we make adjustments to asset utilisation and fixed cost structures to preserve margins and focus on the secondary objective of cash conservation. Idling our synthetic rutile kilns and concentrators is a key element of this response, examples of this are SR2 and SR3 kilns and Tutunup South and Eneabba mining operations last year. This year, we have ramped up HMC treatment rates at Hamilton and Narngulu in response to the recent recovery in zircon demand, and we have preserved our capacity to ramp up further to respond quickly to demand recovery.
Iluka is undertaking a number of different exploration and development projects in the mineral sector. Which two projects stand out for you?
Dan McGrath: Iluka currently has an international exploration effort in over 11 countries, including Australia as well as progressing five potential news sources of production.
Two projects that I would mention are our efforts in Sri Lanka. Iluka has re-acquired and been granted tenements and a large resource in the country. It provides Iluka with an exposure to a potential large, long life sulphate ilmenite operation, with the ability to supplement the company’s historical approach to the chloride market, by also supplying the sulphate pigment market.
In terms of potential development, the Balranald rutile and zircon mine in NSW is an example. With a mine life of up to 10 years, a high value mineral assemblage with excellent mineral quality, this development – if progressed with – should generate significant shareholder return over the life of the mine.
From an operations perspective, what are the biggest challenges in getting mineral sands project into production?
Dan McGrath: Purely from a mining operational perspective, the challenges in getting mineral sands projects into production are relatively common to minerals industry. It is fair to say that processing and achieving appropriate recoveries and product quality is the major challenge. It is an area where those without the in-house expertise and experience can struggle. Bringing new workforce and contract structures into alignment with existing business expectations around sustainability, engagement and performance is also a worthy leadership challenge. Getting all players pulling in the same direction is the key to successful operational ramp up.
Last year, Iluka commenced a five-year partnership with the University of Western Australia to study and rehabilitate areas of kwongan heathland at the Eneabba mine in WA. How did the partnership develop? What insights are you hoping to gain from the collaboration in terms of your operations?
Dan McGrath: Iluka has sponsored the Chair in Vegetation Science and Biogeography at the University of Western Australia. The partnership is seeking to both improve rehabilitation outcomes in the Eneabba region and build upon the existing body of scientific knowledge in the area of biogeography. With relatively little known about the plant traits which are most important to creating plant communities and maintaining diversity, this work will assist mining companies in developing rehab management tools and ultimately meeting restoration targets.
You will be speaking at the AJM Mineral Sands conference in Melbourne this March. What discussions would you like to have with your industry peers at the event?
Dan McGrath: Aside from catching up with a few old friends and former colleagues, I think we all want to discuss general industry developments.