Iluka Resources Limited

Transcription

1 Iluka Resources Limited Iluka Getting Set In The Cycle TZMI Congress 2016 Matt Blackwell - Head of Marketing Hong Kong, 8 November 2016

2 Disclaimers Forward Looking Statements Slide 24 Important Notice Regarding the acquisition of Sierra Rutile Limited Slide 25 2

3 Iluka Getting Set In The Cycle 1. Iluka s approach to the market 2. Iluka s outlook for minerals sands and what will drive growth 3. Overview of Iluka s projects preparing for the future 3

4 Approach to Market

5 Some Lessons For Iluka 5 Iluka s quality and reliability Recognize and reward loyalty Desire for stability Zircon reference price Bigger discounts but just for them # Zircon sand 5

6 Service Proposition 6 # Zircon sand 6

7 Technical Marketing Approach Regular technical visits to customer production facilities deepen collaboration Leverage Iluka s resources and expertise in collaboration with customers to improve value proposition Utilise state of the art equipment to optimize Iluka s products in customer formulae Provide quality testing capabilities TECHNICAL COLLABORATION MARKET DEVELOPMENT PROCESS TECHNOLOGY QUALITY TESTING 7

8 Industry Needs better Returns and Stability % Industry EBIT / Capital Employed 50% 8 40% Iluka 30% Peer 1 20% Peer 2 Peer 3 10% Peer 4 0% Peer 5 Peer 6-10% Peer 7-20% -30% # Weighted average Weighted average (HGO) Source: S&P Capital IQ, company announcements, Iluka competitor forecasts sourced from S&P Capital IQ broker consensus * Weightings based on capital employed / operating assets Capital employed calculated as Net Debt + Equity where possible. Zircon sand 8

9 Prices Are Better Today 1980=100 1,400 1,200 Commodity Price History (real, indexed, 1980=100) 9 Zircon Chloride Ilmenite Iron Ore 1,000 Sulphate Ilmenite 800 Copper Zinc 600 Rutile Nickel # Lead Gold Tin - Aluminium Source: TZMI, S&P Capital IQ, CEIC. Zircon sand 9

10 f f Downstream Response = Zircon and Pigment Demand (Indexed to 100) Zircon demand Pigment demand 1990 = Zircon and Pigment Price (2016 real, Indexed to 100) Zircon price World Pigment price # Source: TZMI, Iluka Source: TZMI, Iluka Pigment demand recovered from 2012 levels, zircon demand subdued Iluka calculates demand growth higher than TZMI higher than this chart suggests Zircon sand 10

11 Imbalance in Drivers of Revenue 11 # Zircon sand 11

12 Market Outlook

13 f Materials Are Cyclical US$/t (2016 real) 4,500 4,000 P 3,500 3,000 2,500 2,000 T Zircon and Pigment Price Zircon price World Pigment price P P P T P T T T P P 1,500 1, P P T T Source: TZMI, Iluka 13

14 Macro View Zircon Consumption % of total consumption Short term outlook Medium term outlook Long term outlook Ceramic tiles & sanitaryware 50% Refractories 16% Foundries 12% Specialty chemicals and materials 20% Other 2% TiO 2 Feedstock Consumption % of total consumption Short term outlook Medium term outlook Long term outlook Pigment 90% Ti metal 5% Welding & other 5% Source: Iluka: Red CAGR < -1%, Orange CAGR -1% to 3%, Green CAGR >3% 14

15 Mega Trends Support Our Industry Improve health and Safety Reduce petrochemical exhaust Purify water Cleaner air Stronger, Lighter, More Efficient Transportations Assist health Care Enable Technology Solutions Transform Construction 15

16 Grade and Assemblage Challenges Ahead HM Grade 5% Mineral assemblage in resources RZ Assemblage 15% Trash 4% 12% 12% Sulphate Ilmenite Chloride Ilmenite 3% 9% 9% Rutile and other high grade TiO2 Zircon Combined RZ in HM (RHS) 2% 6% 6% 1% 3% Trash component in Heavy Mineral grade increasing Valuable Heavy Mineral Grades declining 0% Current Operations Active Investigation Limited Information 0% Zircon / high grade TiO 2 assemblages reducing Potential Supply Source: Iluka 16

17 Significant Industry Re-investment Required Capital Spend, US$m, nominal 1,500 Mineral Sands Industry Capital Expenditure (Based on reported capital expenditure) Prices, US$/t FOB, nominal 2,500 1,200 2, , , f f 0 Capital Spend - Others (LHS) Rutile US$/t FOB (RHS) Average Capital Spend (LHS) Zircon US$/t FOB (RHS) Iluka estimates ~US$1.6b to be spent on major projects during the next few years to sustain production this estimate excludes maintenance capital relates to major existing producers, not potential new players Source: TZMI, S&P Capital IQ, company announcements 17

18 Preparing For The Future

19 Sierra Rutile Acquisition Meets Iluka criteria of Strategic rationale and Financial merit Opportunity to build on SRL s strong operating history +80% increase in rutile resources Ensures rutile supply to customers for decades Transaction currently under review by German Antitrust Authority 19

20 Cataby Cataby Deposit Discovered in the 1970s 150km from Perth Conventional mine development with 2.1:1 strip ratio Re-use of existing wet concentrator to lower cost/risk HM grade ~7% (10% zircon, 4% rutile, 62% ilmenite) Ilmenite sufficient to sustain 200ktpa SR production Zircon/rutile production ~50ktpa & ~30ktpa respectively estimated economic life of 8.5 years Progress DFS completed in early 2015 Pre-execute activities currently underway 20

21 Ti Metal Market and Metalysis > 50% Embodied Energy Saving for Titanium Production* Kroll Process kwh/kg Metalysis kwh/kg Global titanium metal demand strong with estimated growth of 5.2% CAGR Disruption will come from broader adoption of lower quality Ti based metals Iluka s suite of high grade chloride feedstocks ideal for the titanium metal sponge market Natural Rutile high TiO2 content and low impurities Synthetic Rutile high TiO2 content and performance in molten salt reactors Metalysis Strong global Ti metal market Tapira Source: Metalysis, *Metalysis Management Estimates 21

22 Iluka Getting Set In The Cycle 1. We will continue to evolve to serve our customers 2. We are positive for the future 3. We are focused on the activities that will deliver over the longer term 22

23 Supplementary Slides

24 Disclaimer Forward Looking Statements Forward Looking Statements This presentation contains certain statements which constitute forward-looking statements. These statements include, without limitation, estimates of future production and production potential; estimates of future capital expenditure and cash costs; estimates of future product supply, demand and consumption; statements regarding future product prices; and statements regarding the expectation of future Mineral Resources and Ore Reserves. Where Iluka expresses or implies an expectation or belief as to future events or results, such expectation or belief is expressed in good faith and on a reasonable basis. No representation or warranty, express or implied, is made by Iluka that the matters stated in this presentation will in fact be achieved or prove to be correct. Forward-looking statements are only predictions and are subject to risks, uncertainties and other factors, which could cause actual results to differ materially from future results expressed, projected or implied by such forward-looking statements. Such risks and factors include, but are not limited to: changes in exchange rate assumptions; changes in product pricing assumptions; major changes in mine plans and/or resources; changes in equipment life or capability; emergence of previously underestimated technical challenges; and environmental or social factors which may affect a licence to operate. Except for statutory liability which cannot be excluded, Iluka, its officers, employees and advisers expressly disclaim any responsibility for the accuracy or completeness of the material contained in this presentation and exclude all liability whatsoever (including in negligence) for any loss or damage which may be suffered by any person as a consequence of any information in this presentation or any error or omission there from. Iluka does not undertake any obligation to release publicly any revisions to any forward-looking statement to reflect events or circumstances after the date of this presentation, or to reflect the occurrence of unanticipated events, except as may be required under applicable securities laws. Non-IFRS Financial Information This presentation uses non-ifrs financial information including mineral sands EBITDA, mineral sands EBIT, Group EBITDA and Group EBIT which are used to measure both group and operational performance. A reconciliation of non-ifrs financial information to profit before tax is included in the supplementary slides. Non-IFRS measures have not been subject to audit or review. Mineral Resources Estimates The information in this presentation that relates to Mineral Resources estimates previously announced to ASX. Iluka confirms that it is not aware of any new information or data that materially affects the information included in the original market announcement and that all material assumptions and technical parameters underpinning the estimates in those announcements continue to apply and have not materially changed. Iluka confirms that the form and context in which the Competent Person s findings are presented have not been materially modified from the original market announcements. 24

25 Important Notice IMPORTANT NOTICES This presentation contains information regarding Sierra Rutile Limited (SRL) and its business, assets and operations (SRL Information) which SRL has provided to Iluka. Whilst steps have been taken to review that information, no warranty, expressed or implied, is made as to its fairness, accuracy, correctness, completeness or adequacy. This presentation should be read in conjunction with the joint announcement made by Iluka and SRL in relation to the proposed acquisition of SRL by Iluka dated 1 August This presentation is not intended to, and does not, constitute or form part of any offer, invitation or the solicitation of an offer to purchase, otherwise acquire, subscribe for, sell or otherwise dispose of, any securities whether pursuant to the Announcement or otherwise. The distribution of the Announcement in jurisdictions outside Australia may be restricted by law and therefore persons into whose possession the Announcement comes should inform themselves about, and observe such restrictions. Any failure to comply with the restrictions may constitute a violation of the securities law of any such jurisdiction. In proceeding with this transaction, Iluka will assume a number of risks to which it is not currently subject. This includes the fact that this is a material investment in Africa (with associated political and other risks). Whilst Iluka has under taken due diligence on the assets and associated risks and has taken and will continue to take steps which it considers appropriate to manage and mitigate such risks, they cannot be eliminated entirely. A copy of the announcement is available on the Iluka website 25