PERTH (miningweekly.com) – Mineral sands miner Iluka has reported a 61% increase in sales revenue for the half-year to June, with net profit after tax up 14%.

Iluka on Wednesday reported that revenue for the half-year reached A$735.6-million, up from the A$456.6-million reported in the previous corresponding period, with mineral sands earnings before interest, taxes, depreciation and amortisation increasing from A$177.1-million to A$299.2-million.

Net profit after tax for the half-year was up to A$129-million, from the A$113.2-million reported in the previous corresponding period, while operating cash flow increased by 217%, from A$96.7-million to A$306.4-million.

The miner told shareholders that it started 2021 in a strong position and has built on that platform to deliver an excellent first-half result.

“The company demonstrated discipline during 2020, including our initial response to the Covid-19 pandemic. That discipline continues to underpin our broader approach, albeit now in different and evolving circumstances.

“In the zircon market, we have seen tile manufacturers in many geographies rebound to pre-pandemic levels of production, with associated benefits in terms of demand and pricing. Iluka announced a $70/t price increase effective April 1, and a subsequent $125/t price increase effective July 1. Consistent with our efforts over several years, the company remains focused on fostering a sustainable price environment for its products.”

In titanium dioxide feedstocks, Iluka noted that already robust demand for rutile and synthetic rutile was amplified throughout the half, with concerns regarding future industry supply over both the near and longer terms increasing.

That increasing concern stemmed chiefly from the production interruption experienced at diversified miner Rio Tinto’s Richards Bay Minerals operation, in South Africa, which was the subject of a restart announcement earlier this week, the potential suspension of operations at Sierra Rutile from late 2021, and constrained chlorine supply in the US impacting pigment producers.

In response, pigment producers are seeking to boost head grades to maximise throughput and, in the US, also consume less chlorine, Iluka said, adding that the high grade nature of its titanium dioxide feedstocks facilitates both objectives and is in high demand.

“Our Australian sites have returned to maximum operational settings. Both the Narngulu mineral separation plant and Synthetic Rutile Kiln 2 at Capel are at full capacity and sales over the second half are likely to be constrained by production.

“This production response has been matched by important progress across our major projects. From a mineral sands perspective, we have taken decisions to execute the restart of Synthetic Rutile Kiln 1 at Capel, commence a definitive feasibility study for the Balranald development in New South Wales, and move to larger scale piloting in relation to the Wimmera development in Victoria. Each of these decisions is indicative of the range of portfolio options at Iluka’s disposal to address industry supply over the nearer and longer terms,” the company told shareholders.

“Equally, our emerging position in rare earths continues to mature. Construction has commenced for Phase 2 of the Eneabba development and we remain on track for completion in the first half of 2022. Iluka’s feasibility study for Phase 3 – a fully integrated rare earths refinery – is progressing in parallel, with most work scheduled for completion by the end of 2021, in advance of finalisation of the feasibility study in early 2022.

“During the half we received a letter of support from the Australian government outlining the nature of the risk sharing being considered as part of this exciting opportunity. Those discussions are positive and ongoing, as is our extensive work on technical and engineering considerations, environmental studies and customer engagement.”

At Sierra Rutile, Iluka has been focused on returning the operation to sustainable financial performance. This has included engagement with the government of Sierra Leone on Sierra Rutile’s fiscal regime, with the company saying on Wednesday that the government had agreed to a number of positive measures in this regard.

“As a result of these changes and recent productivity improvements at site, the potential suspension of operations at Sierra Rutile has been deferred until January 2022. Iluka’s third party investment process for the Sembehun development remains in progress.’

The company had initially planned to suspend operations at Sierra Rutile on November 19, as the operation was facing a number of business challenges, particularly since the onset of the Covid-19 pandemic, which resulted in its operational performance being below expectations and meaning that its financial performance was unsustainable.

“As we look to the second half and beyond, Iluka is positioned to lead in the response to market and industry conditions by deploying its operations, product suite and development pipeline.”