Iluka shares slump after suspending Cataby, SR2 production
Shares in Australia's Iluka Resources slumped 13% on Wednesday after the mineral sands producer said it would suspend operations at its Cataby mine and Synthetic Rutile Kiln 2 (SR2) in Western Australia amid subdued global demand for titanium dioxide feedstocks.
The closures, effective December 1, were expected to last about 12 months at Cataby and six months at SR2.
The decision, MD Tom O'Leary said in a statement, reflected "the present demand uncertainty in mineral sands and positioning for recovery".
Iluka cited lower global economic activity weighing on pigment demand, a key end use for synthetic rutile, as customers delay purchases and reduce visibility on future orders. Cataby produces chloride ilmenite, the primary feedstock for SR2.
The Perth-based company said it had sufficient inventories of synthetic rutile and chloride ilmenite to meet customer requirements during the shutdown.
Production would continue at its Jacinth-Ambrosia mine in South Australia, while commissioning progresses at Balranald in New South Wales, where first output is due in the fourth quarter.
“The suspension will enable inventory and cash liberation, cost savings and the preservation of balance sheet strength,” O’Leary said. “Iluka is well positioned to respond to any improvement in demand conditions and retains the ability to restart Cataby and SR2 quickly when that production is required.”
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