Iluka to suspend operations at South Australia zircon mine

JOHANNESBURG (miningweekly.com) – South Australia-based Iluka plans to lay off 33 people at its Jacinth-Ambrosia zircon operation in the Eucla basin, owing to a planned 18- to 24-month suspension of mining and concentrate production activities.

The company reported on Tuesday that 46 personnel from its 79 employees would be retained or redeployed.

Iluka stated that operations at Jacinth-Ambrosia, which had the ability to produce up to 30% of global zircon supply, would be suspended on April 16, owing to the depressed zircon market.

Iluka believed the suspension would increase net cash flow as a result of reduced production costs, which would be offset partially by a continued commitment to progressive rehabilitation and by restructure and idle costs.

A net cash cost benefit of about $30-million was expected for this year, while 2017 would deliver cost benefits of $45-million.

MD David Robb stated the decision to suspend mining and concentrating activities would over time also improve return on capital by accelerating inventory drawdown. “In addition, to the extent that perceptions of an inventory ‘supply overhang’ might impact market dynamics, then Iluka believes its contribution to a reduction in global inventory will impact those dynamics positively,” he noted.

Iluka would continue to supply key customers from its finished product inventory and continue to process existing concentrate inventory – totalling over 800 000 t – into finished product at its mineral separation plants in Victoria and Western Australia.

The company would also maintain the operations at Jacinth-Ambrosia in a manner such that it could be reactivated rapidly in line with global market recovery.