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The long-term supply outlook for zircon and high-grade titanium feedstocks is declining with limited new global supply expected in the near term, according to Australian mineral sands producer Iluka Resources.
Iluka, the world's largest zircon producer, increased zircon sales to 355,000t in 2021 from 240,000t in 2020 and has fully contracted sales for the first quarter of 2022, reflecting ongoing supply tightness.
"Customer inventories of zircon remain low with industry supply constrained," it said in a commentary accompanying its 2021 financial results, adding that the refractory and foundry sectors are contributing to robust demand for zirconia and zirconium chemicals.
Received zircon prices averaged $1,590/t in the fourth quarter of 2021, up by 23pc on year, with an increase of $220/t effective from the beginning of 2022. Zircon output guidance for 2022 is 280,000t from its Australian operations, down from 320,000t in 2021. Subsidiary Sierra Rutile is expected to produce 5,000t of zircon, up from 4,000t in 2021.
Commenting on high-grade titanium feedstocks, Iluka said demand for rutile and synthetic rutile is outstripping supply in various customer regions, with all of its production contracted or allocated for the first half of 2022. Sales increased to 513,000t from 278,000t in 2020 with record sales in the high-value welding market.
Aiming to increase its zircon, rutile and ilmenite pipelines, the firm is undertaking production and economic studies at its Balranald, Wimmera and Atacama growth projects in Australia.
The Perth-based firm continues to advance its three-phase diversification entry into the growing rare earths market after completing a two-year offtake agreement for zircon-monazite in the first phase. Construction of a facility at its Eneabba project to produce a 90pc monazite concentrate as direct feed for a rare earths refinery in the second phase is on track for completion in the second half of 2022. A feasibility study for the third phase — a fully integrated rare earths refinery with cracking leaching, separation and finishing plants — is expected to be completed by the end of March.
Iluka reported revenue of A$1.48bn ($1.06bn) in 2021, up by 57pc on the year, with its underlying profit rising by 108pc on the year to A$315mn.