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PERTH (miningweekly.com) – Mineral sands miner Iluka on Friday reported markedly lower profit of A$18.5-million for 2013, compared with A$363.2-million in 2012, and said demand for some of its products was lower than usual.
Group earnings before interest, tax, depreciation and amortisation declined 60.6% year-on-year to A$295.3-million and revenue from mineral sand sales declined 28.7% year-on-year, to A$763.1-million.
The miner had previously warned shareholders that profits for the full year would decline to A$18-million, reflecting a write-down of A$28-million on assets during the year, and a A$13-million increase in rehabilitation provisions.
MD David Robb on Friday highlighted the improved environment in which Iluka operated during the full year ended December, saying that market conditions reflected a cyclical low in business conditions, influenced by global and country-specific economic performances and political uncertainties, as well as fragile business confidence levels, inventory drawdown dynamics and the transition of the mineral sands sector away from legacy contract arrangements.
“In these circumstances, Iluka’s approach has been to flex production down to lower levels while balancing this objective with production efficiency considerations. Priority has been given to drawing down finished goods inventory progressively and to conserving cash through lowering overall production costs and reducing capital expenditure, while maintaining the capacity to respond quickly to market demand recovery.”
Iluka posted a 42% year-on-year decline in zircon, rutile and synthetic rutile production for the year ended December.
The decrease in production was in line with guidance, and reflected production constraints consistent with Iluka’s preferred approach to a period of low market demand.
Meanwhile, Robb noted that Iluka’s balance sheet had allowed the company to protect its project development pipeline, and has allowed the company to act in a counter-cyclical manner to capture potential growth opportunities.
“Iluka’s investment to re-acquire exploration tenements in Sri Lanka, and the associated material increase in the company’s resource base, is a case in point, as is the investment in Metalysis Limited, and its potentially industry-changing titanium powder production process.”
The company also maintained the ability to reactivate production capacity quickly, and Robb predicted a demand recovery over 2014 and into 2015.