Iluka Resources enjoyed a steep rise in half-year profits – a direct reflection of the buoyant mineral sands market.
The company’s net profit after tax (NPAT) was $369 million across the six months, a 186 per cent jump from the first half of 2021 ($129 million).
Iluka’s mineral sands revenue was up 30 per cent to $955 million and mineral sands EBITDA (earnings before interest, taxes, depreciation, and amortisation) was up 69 per cent to $505 million.
Iluka managing director and chief executive officer Tom O’Leary said the company had delivered a strong financial performance in the first half of 2022, along with progressing its strategic priorities.
“In a macroeconomic environment characterised by inflation and uncertainty, we increased margins and strengthened our balance sheet,” he said.
“This was the result of strong demand for Iluka’s products, industry supply constraints and resultant pricing traction.”
O’Leary said that supply-side dynamics remained the dominant feature for mineral sands markets across the six months.
“For both zircon and high-grade titanium feedstocks, scarcity has been exacerbated by the war in Ukraine and challenges in South Africa, with little by way of new production coming online. Global inventories of these products are low,” he said.
“In these circumstances, customers are prioritising security of supply, and Iluka is well placed.
“Our Australian operations are configured at maximum settings and sales over the second half are likely to continue to be constrained by production. Furthermore, the second half will see first production from the restart of synthetic rutile kiln 1 (SR1) at Capel.”
SR1 at the Capel operation in WA has been on care and maintenance since 2009 and its restart represents a low-capital-expenditure, low-risk opportunity to produce an additional 110,000 tonnes per annum of synthetic rutile.
O’Leary said Iluka was also advancing its Eneabba rare earths refinery, with the ground works to commence shortly, while the completion of a definitive feasibility study (DFS) for the Balranald mineral sands project in New South Wales was also progressing.
Iluka declared an interim fully franked first-half dividend of $0.25 ($0.12 at December 31 2021).