Iluka’s Q3: 124kt Production, $150M Cost Cuts, and Rare Earths Refinery Progress

• Q3 production steady at 124kt zircon/rutile/synthetic rutile
• Synthetic rutile (SR2) and Cataby mine to be idled from December 2025
• Year-to-date zircon sales 5% higher than 2024, prices steady at US$1,615/t
• Targeted $150 million net cash cost reduction in 2026
• Eneabba rare earths refinery construction accelerates amid China export restrictions

Steady Production Amid Challenging Markets

Iluka Resources delivered a solid production performance in the third quarter of 2025, producing 124,000 tonnes of combined zircon, rutile, and synthetic rutile. Zircon sand prices remained stable at an average of US$1,615 per tonne, aligning with company guidance. Year-to-date zircon sales were 5% higher than the same period in 2024, reflecting resilient demand despite a challenging global environment.

Strategic Suspension of Operations

In response to subdued market demand and elevated inventory levels, Iluka announced the suspension of production at its SR2 synthetic rutile facility and the Cataby mine starting December 2025. The SR2 kiln will idle for approximately six months, while Cataby is expected to pause operations for up to a year, subject to market conditions. This move aims to conserve cash and optimize working capital, with Iluka confident it holds sufficient inventory to meet customer needs throughout 2026.

Cost Reduction and Capital Deferral

These operational adjustments are projected to yield a net cash cost reduction of $150 million in 2026, including $110 million in operating cost savings and a $40 million deferral of sustaining capital expenditure. Iluka is currently reviewing operational requirements during the Cataby idle period and plans to provide further updates with its full-year results.

Advancing Rare Earths Strategy

Meanwhile, construction at the Eneabba rare earths refinery in Western Australia has accelerated, with key infrastructure milestones reached, including completion of piling and powerline installation. This refinery, set for commissioning in 2027, positions Iluka as a rare earths supplier outside China, particularly for critical heavy rare earths like dysprosium and terbium. This strategic asset gains importance amid China's recent tightening of rare earth export controls, which now extend to foreign-manufactured goods containing Chinese-origin rare earths and related mining equipment.

Exploration and Project Development

Exploration activities continued in Australia and the United States, focusing on geological mapping and geophysical surveys in rare earths and mineral sands targets. The Balranald project in New South Wales remains on track for commissioning in Q4 2025, with mining equipment assembled and process plant construction nearing completion. The Wimmera project in Victoria is progressing through its definitive feasibility study, supported by ongoing technical and environmental assessments.

Market Outlook and Industry Dynamics

Iluka highlighted ongoing macroeconomic challenges, including weak pigment demand and subdued ceramic tile production, especially in China. Competitor price reductions have not yet stimulated demand, and customers remain cautious about inventory. However, Iluka’s disciplined operational approach and strategic investments in rare earths position it to respond swiftly to any market recovery.

Bottom Line?

Iluka’s operational pause and cost-cutting measures signal cautious navigation through a tough market, while its rare earths refinery could redefine its future growth trajectory.

Questions in the middle?

• How long will the Cataby mine remain idled, and what triggers its restart?
• What impact will China’s rare earth export restrictions have on global supply and Iluka’s refinery economics?
• Can Iluka sustain zircon sales growth amid ongoing weakness in ceramic tile markets?