Iluka Resources shares tumble on softening zircon demand
Make us a preferred source
Make us a preferred source on Google
More news: Iluka Resources was one of the worst performers on the ASX 200 after the critical minerals company warned that global uncertainty is continuing to impact demand for zircon in key markets.
Shares were down 9% to 6 cents at 12:10pm AEST, paring 12-month gains to 5.6%.
Citi analyst Paul McTaggart noted that Iluka's first-half net profit of $92 million was "right in-line" with consensus estimates and 10% ahead of Citi's forecasts, despite marking a 31% decline year over year.
He noted that the miner's update provided "little new" commentary and "should be neutral for shares".
Iluka Resources posts 31% slide in first-half profit amid 'subdued' conditions
The news: Critical minerals miner Iluka Resources reported a 31% decline in first-half net profit after tax to $92 million as managing director Tom O'Leary flagged that economic uncertainty during the period led to "subdued" conditions in the mineral sands market.
The numbers: The net profit result is lower than the $133.7 million generated in the previous corresponding period, but roughly in line with the market consensus estimate of $92.4 million.
Mineral sands EBITDA came in at $218 million, 13% lower than the $252.2 million reported in the first half of 2024. The market consensus estimate was $228.9 million.
An interim dividend of 2 cents per share was declared, half of last year's payout of 4 cents per share, and below consensus estimates of 3 cents per share.
The context: O'Leary said "shifting trade patterns and geopolitical conflicts have affected Iluka's business in different ways, with mineral sands market conditions subdued and the rare earths industry evolving rapidly".
He noted that lower levels of economic activity have weighed on customer purchasing behaviour in the mineral sands market. He said this is being driven by new US tariffs on zircon, the closure of pigment plants in Europe and China, India enacting anti-dumping duties on Chinese titanium dioxide imports, and production curtailments in Indonesia.
O'Leary added that new Chinese export controls on rare earths have led to a greater emphasis on the need to diversify supply. He noted that the subsequent agreement between the US government and MP Materials represented an acknowledgement by the Trump administration that higher prices for separated rare earth oxides are required to build a "sustainable Western and likeminded supply chain".
The sources: ASX, Citi research
