Iluka Sits On Handy Iron Ore Stockpile
Sydney Morning Herald
Friday August 22, 2008
THE mineral sands miner Iluka Resources, which already owns a lucrative royalty over production from BHP Billiton's Mining Area C iron ore mine, is quietly advancing plans to sell its own iron ore stockpiles.
Iluka produces about 300,000 tonnes of iron oxide a year from its mineral sands operations and has about 4 million tonnes of iron oxide stored in tailings dams, which eventually will have to be rehabilitated if it cannot dispose of the product in another way. It had once planned to build a $250 million pig iron plant to process the iron fines but abandoned the idea after the capital costs leapt.But after reporting half-year earnings of $15.6 million yesterday, Iluka's managing director, David Robb, told the Herald it had received approaches from parties interested in buying its iron oxide.The iron oxide - in the form of a product as fine as talcum powder - contains grades of 60 to 66 per cent iron. A Chinese company has taken samples for processing trials. The price of the product would not be the same as the fines prices received by BHP and Rio Tinto, but it could represent a healthy revenue stream for Iluka. It would have the bonus of lowering Iluka's future mine rehabilitation costs.Iluka said yesterday its full-year earnings - including $30 million from the sale of its stake in the Narama domestic coalmine - would be about $20 million. In February, it had given a range of $10 million to $20 million.The revised figure includes the negative effects of the loss of gas supplies from Varanus Island - meaning it would have exceeded its original guidance had it received continuous supplies of gas at normal prices."It's fair to say we are being cautious when we communicate $20 million," Mr Robb said.The price of Iluka's main product, zircon, is expected to rise during the second half because of lower global production. Iluka shares closed 31c lower at $4.12.
© 2008 Sydney Morning Herald