What is your long-term vision of the mineral sands
market?
It’s a positive one, reflecting price and
demand over time [that are] consistent with global economic
growth. The market is benefiting from improvements in
emerging economies in particular, as well as from increasing
urbanisation.
We see a good demand outlook in the medium to long term,
and we also feel there are some supply challenges that the
industry will face over the same time frame.
With Iluka being involved in potentially
disruptive technologies such as those out of Metalysis, what
role do you see emerging technologies playing in the
company’s future plans?
I think they’re very important, as this is an
industry that generally relies on quite old technologies
– as do many minerals sectors. In our case, many of
the technologies that are in use have been around for a long
time and we think that the role of innovation and new
technologies could be a powerful one.
Besides Metalysis, are there any other
developments in mineral sands technology that you find
particularly interesting?
We’ve said that we’re investing
in innovative solutions to mineral sands mining and
processing challenges that we see in ore bodies. We expect to
spend around $35m in that area in the first half of 2016
alone.
 |
| David Robb, CEO at Iluka.
Source: Iluka |
Iluka is serious about putting money behind our views on
the benefits of fresh approaches and new technologies
– innovative solutions to certain mineral sands
mining and processing technical challenges.
We can’t say much more than that at this
stage, as much of what we are doing is commercially sensitive
– however, it is a much broader approach than just
the Metalysis investment.
After Iluka halted operations in the US in 2015,
is the company still interested in mining there?
Absolutely. We think that the deposits we currently have
available to us will be mined at some stage. We just need
commercial landscape returns to our shareholders to be
sufficient.
We are aware that Iluka is looking at origins such
as Brazil, Sri Lanka, Kazakhstan, and Denmark. What role will
these areas play in Iluka’s future
production?
This industry is in need of new-high quality ore body
discoveries, tier one ore bodies. We haven’t
really seen a significant new discovery since Jacinth
Ambrosia in South Australia in 2004. Before
that, the industry relied heavily on mineral sands provinces
in South Africa, Western Australia and Canada, and we
haven’t discovered their equal. We think
it’s necessary for us to continue to explore on
a broad front, so that’s what we’re
doing.
Iluka lowered its zircon prices recently, but said
that it doesn’t believe that price cuts will
help with industry demand. What then needs to be done? Are
further price cuts expected?
We don’t make any forecasts on pricing. We
did make an adjustment to our zircon reference price, which
is just something that happens from time to time in response
to competitive pressures.
I think the industry is looking for a period of relative
stability. All the feedback we had from customers was that
that stability was welcome and was building confidence around
future demand and future orders.
We will see how long it takes for that confidence to
return. We are very confident in our belief that there will
be a recovery of zircon volumes in the second quarter, after
the hiatus which was price-related in the first quarter.
We are pleased with the demand we are seeing, and we
don’t think there is a demand problem in this
industry other than the one that is related to global growth
and global economic prices – which is something out
of our control.
Iluka said it was cutting its zircon production
this year to help the market to rebalance. Does Iluka have
plans to do the same with ilmenite, as your sales are
continuing to decline? Do you see ilmenite prices getting
lower than their current levels?
Ilmenite is not an important product for us.
We’re a demand follower, we adjust our
production to suit the demand that we see. We’re
very happy with the trends we see in high-grade ores, rutile
and synthetic rutile, which are more important to us than
ilmenite.
Last year ended with the announcement that Iluka
had terminated discussions with the board of Kenmare for a
potential acquisition. Is there another Kenmare out there for
Iluka?
We look at everything in our industry. We try to have a
good understanding of everything that moves in our
industry.
There are two tests that everything we do has to satisfy:
one is there has to be strategic rationale, and the second
one is financial merit – has to be good for our
shareholders. We are always thinking about opportunities.
What are the main challenges lying ahead for the
sector?
I think this is an industry where clearly there are cash
flow pressures affecting some participants. There are
ownership uncertainties surrounding some assets, there is
balance sheet distress and, set against all that, Iluka has
no debt, reasonable margins generating positive cash flow,
and therefore we are looking for opportunities at this time.
We’re looking to act counter-cyclically at a
time when many others cannot.
I think it’s really important not to follow
the herd. The resources industry is herd-like: everyone gets
excited at the same time and pessimistic at the same time. I
think it’s important that you have an
independent view if you’re going to do the right
thing by all of your stakeholders. At a time when many others
are simply looking at survival, we are looking at creating
options for growth.