LSE-listed mineral sands producer Kenmare Resources produced 377 900 t of heavy mineral concentrate (HMC) in the second quarter ended June 30, a 5% increase on the 359 200 t produced in the first quarter of the year, in line with expectations.
Ilmenite production for the second quarter was 238 500 t, down 4% year-on-year, but up 13% quarter-on-quarter.
Primary zircon production decreased by 9% year-on-year, but increased by 4% quarter-on-quarter to 11 700 t in the second quarter.
Total shipments, meanwhile, increased by 15% year-on-year, setting a new quarterly record.
Kenmare on Tuesday reported that average product prices had also increased, resulting in strong cash flow generation for the first half of this year.
MD Michael Carvill said this strong cash flow was achieved in spite of planned spending on capital projects to expand mining capacity.
The company’s focus remains on its drive to increase production and reduce unit costs by 2021, which are funded by internally generated cash flow.
In terms of the market, a strong demand for Kenmare ilmenite continued into the second quarter, with record volumes shipped for the quarter and halfyear, resulting in a further drawdown of inventory at Moma.
This, Kenmare explained, was driven by steady sales to the China spot market, as well as some accelerated shipments to contracted customers as Western pigment plants maintained high utilisation rates.
As in previous years, the company pointed out that it is seeing some seasonal weakness in the Chinese ilmenite market over the summer months, which is coupled with ongoing disruption to pigment plant operating rates driven by the implementation of environmental regulations.
This, Kenmare explained, is leading to a slowdown in ilmenite purchasing activity. Domestic ilmenite production in China has increased, as has the supply of ilmenite concentrates from Africa, which has rebalanced the market and led to some softening of prices in recent weeks, the company said.
Global pigment demand growth, however, was favourable in the first half of this year, driving increased feedstock demand, but there are some signs of demand growth slowing outside North America, Kenmare noted.
Further, the zircon market continues to benefit from steady demand and constrained supply, driving higher prices.
Further price increases were achieved in the second quarter and are being implemented in the third quarter of this year, in line with the prevailing movement in the market.