Iluka sits on handy iron ore stockpile

Tag : iron
Iluka sits on handy iron ore stockpile Jamie Freed August 21, 2008
THE mineral sands miner Iluka Resources, which already owns alucrative royalty over production from BHP Billiton's Mining Area Ciron ore mine, is quietly advancing plans to sell its own iron orestockpiles.
Iluka produces about 300,000 tonnes of iron oxide a year from itsmineral sands operations and has about 4 million tonnes of ironoxide stored in tailings dams, which eventually will have to berehabilitated if it cannot dispose of the product in another way.
It had once planned to build a $250 million pig iron plant toprocess the iron fines but abandoned the idea after the capitalcosts 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 itsiron 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. Theprice of the product would not be the same as the fines pricesreceived by BHP and Rio Tinto, but it could represent a healthyrevenue stream for Iluka. It would have the bonus of loweringIluka's future mine rehabilitation costs.
Iluka said yesterday its full-year earnings - including $30 millionfrom the sale of its stake in the Narama domestic coalmine - wouldbe about $20 million. In February, it had given a range of $10million to $20 million.
The revised figure includes the negative effects of the loss of gassupplies from Varanus Island - meaning it would have exceeded itsoriginal guidance had it received continuous supplies of gas atnormal prices.
"It's fair to say we are being cautious when we communicate $20million," Mr Robb said.
The price of Iluka's main product, zircon, is expected to riseduring the second half because of lower global production.
Iluka shares closed 31c lower at $4.12.