Iluka Profit Falls, But Signals Improved Rutile Outlook

   By Rhiannon Hoyle 
 

SYDNEY--Australian mining company Iluka Resources Ltd. (ILU.AU) said first-half profit plunged 66% on weak prices for the mineral sands it produces.

Still, the company signaled a recovery may be underway for rutile, one of its key commodities used in paints and plastics.

Perth-based Iluka on Friday reported net profit of 11.7 million Australian dollars (US$10.9 million) for the six months through June, from A$34.3 million a year earlier.

Iluka runs operations in Australia and the U.S. producing mineral sands, including rutile and synthetic rutile-both used to create the pigments that give products like paint a bright white color.

The industry has faced a downturn in prices in recent years, as production outpaced demand at a time when buyer confidence was weak, and after China took steps to cool its property market.

Iluka has been curbing production and mothballing some sites to deal with slowing demand. Still, on Friday the miner lifted its dividend to 6-cents a share from 5 cents at the same time last year.

Iluka said the outlook for its rutile products was brightening, "based on generally healthy demand trends in North American and European pigment and paint markets."

"Iluka recommenced supply of synthetic rutile to some customers in the first half and expects a gradual recovery of demand for this product," it said in a stock-exchange filing.

The company, the world's No. 1 producer of synthetic rutile, said demand was currently being met from stockpiles but, if sustained, could prompt the miner to restart production facilities shuttered when the market cooled.

Iluka is also the world's largest producer of zircon, used by the ceramics industry to make household products such as bathroom tiles and kitchenware. Iluka, Rio Tinto PLC (RIO) and U.S.-listed Tronox Ltd. (TROX) together account for about 70% of global zircon output.

Write to Rhiannon Hoyle at [e-mail]

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