Iluka’s zircon: The importance of the Eucla Basin, Kazakhstan’s potential

By Cameron Perks
Published: Thursday, 07 June 2018

As zircon prices continue to rise, what is Iluka, the world’s most significant zircon producer, doing to alleviate tight global zircon supply, and how significant is the Eucla Basin in terms of supply security? Industrial Minerals’ Australia correspondent, Cameron Perks, takes a look at the company’s expansion efforts, and explorations that could have an effect on zircon supplies.

The Eneabba region in Western Australia has been exploited for its high-quality zircon since the 1970s. The industry’s 'DE’ measurement, which measures the whiteness of a tile glaze that an opacifier produces, was named after the deposit: Delta to Eneabba.

And from the creation of Iluka in 1998, the company was reliant on Eneabba for its zircon supply. This lasted until 2006, when a combination of deposit depletion and declining grades meant, for Iluka, the beginning of the end of the importance of the West.

The company’s geographic center shifted to the Murray Basin, in Australia’s south-eastern state of Victoria. But it has more recently shifted again to the company’s Jacinth Ambrosia deposit in the Eucla Basin in South Australia.

Iluka Australia finished zirconproduction

Jacinth Ambrosia came online in 2009 at the tail end of declining global zircon supply, which gave it a strong global economic situation during a period of steady growth in zircon demand.

Jacinth Ambrosia produced 151,000 tonnes of zircon in its first year, and doubled this in the following year. A production increase in 2011 coincided with record high zircon prices, exceeding $2,000 per tonne and approaching $3,000 per tonne.

The soaring prices were blamed on increased Chinese demand, static global supply, and a lack of new projects that was blamed on the difficulty of finding funds.

Zircon supply switched from deficit to surplus some time in late 2011, following end-use substitution and thrifting. This change in global supply and demand fundamentals would mean that output from Jacinth Ambrosia would fall below 2010 levels, to just under 140,000 tonnes of zircon.

But as zircon prices stabilized after 2013, supply from Jacinth Ambrosia increased, and so did the deposit’s significance. Meanwhile, the Murray Basin’s zircon output was already falling before 2015, and that year mining operations were closed, and stockpiles began to be drawn down.

Despite a 20-month idling of the Jacinth Ambrosia deposit between April 2016 and December 2017, output has remained a high proportion of the company’s overall production.

It was estimated by TZMI and Iluka Resources, in the latter’s presentation on May 17 this year, at the Bank of America Merrill Lynch conference in Miami, that global zircon supply was around 1.2 million tonnes in 2017. This means that Jacinth Ambrosia accounted for nearly 18% of global supply (213,500 tonnes), and about 70% of Iluka’s total zircon output that year (a further 100 tonnes of zircon was produced across the whole company).

Today, Jacinth Ambrosia’s role in Iluka’s business is as important as ever. In the company’s 2018 annual report, it described it as the world’s largest zircon mine, and outlined plans to increase throughput by about 30% to offset any decline in ore grades, such as those experienced in Eneabba earlier in the company’s life.

Plans for expansion at Jacinth Ambrosia, at a cost of A$40 million ($30.49 million), include the installation of a second mining unit to increase the amount of ore pulled out of the ground, as well as an upgrade for the wet concentrator plant, where ore is first processed.

The expansion will allow the company to keep up with current global demand, with a definitive feasibility study due in mid-2018, and project completion due in 2019.

Jacinth Ambrosia is made up of two parts of a continuous deposit. Mining is set to commence at the Ambrosia side of the mine, and will progress alongside the Jacinth side of the mine for several years beginning in 2019. This is likely to further increase zircon production, but it must be noted that overall production is limited by the amount of processing capacity that the project possesses.

The company also hopes that the addition of its Western Australian Cataby mine in the first half of 2019 will also help to alleviate some supply tightness. The mine is set to produce an average of 50,000 tonnes per year of zircon, which is some way short of the 200,000-300,000 tpy that Jacinth Ambrosia can produce.

Cataby and Jacinth Ambrosia are key projects for Iluka if it wishes to maintain its zircon market share, and they are major components of Iluka’s broad strategy to mitigating extreme price increases for zircon.

Iluka is also planning to exlarge its operations in Sierra Leone, with expansions at its Lanti Dry and Gangama deposits, as well as a proposed new mine at Sembehun. Commissioning of both expansions is planned for 2019, while the new mine at Sembehun is planned for a commissioning date of 2021.

These operations have historically been insignificant in terms of zircon production, however, with just 3,000 tonnes of zircon produced in 2017.

Simarily, Iluka’s exploration in Sri Lanka is focused on sulfate ilmenite production. Here, work is currently being undertaken in technical and community engagement areas.

And Iluka continues to explore in Canada, targeting deposits rich in rutile and ilmenite, in conjunction with Vior Inc.

Can Kazakhstan be the next Murray Basin?

Perhaps more important for Iluka’s future zircon production than its operations in Australia is the exploration taking place in northern Kazakhstan for 'WIM style deposits’. WIM deposits are characterized by low-grades and high volumes, and are typically fine-grained.

WIM deposits also exist extensively in Australia’s Murray Basin, where they have yet to be exploited.

While their coarse-grain strand-line counterparts have been developed by both Cristal Mining and Iluka in the past, fine-grain deposits have yet to be economically extracted due to technological limitations in processing and separating minerals.

But recent research into fine-grain deposits, such as that carried out by Klingner and Standing in 2016, and Bruckard in 2015, suggest that fine-grain Murray Basin WIM deposits can be processed to +20 μm. In the Murray Basin, fine-grained material (20-38 μm) contains more than 40% ZrO2 and CeO2 (assumed to be contained in zircon and monazite, respectively).

It may be this relationship that Iluka is looking for in Kazakhstan, where the company boasts 76,192 square kilometers of exploration licenses, with programs currently being headed by experienced mining engineer Tony Thornton.
Iluka commenced its first major drilling program in 2017 and, pending successful laboratory analyses, a targeted drilling campaign may take place later this year.

More like this