15/10/2008 - 10:24

Iluka lifts profit forecast

15/10/2008 - 10:24

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Iluka Resources Ltd, the world's biggest zircon producer, has increased its profit outlook for the full year after a fall in the Australian dollar and higher commodity prices as it plans to take one of its kilns out of production.

Iluka lifts profit forecast

Iluka Resources Ltd, the world's biggest zircon producer, has increased its profit outlook for the full year after a fall in the Australian dollar and higher commodity prices as it plans to take one of its kilns out of production.

The mineral sands miner has increased its net profit forecast to about $50 million for calendar 2008, up from the $20 million estimated in August.

"Iluka's current performance is a good outcome relative to initial expectations for the second half," managing director David Robb said in a statement.

The company cited a depreciation in the Australian dollar, higher zircon prices in the second half of 2008 and continuing strong sales for the profit revision.

Iluka said demand for its products has remained strong, with zircon and rutile sales year-to-date exceeding production.

"For mineral sands products most important to Iluka we see evidence of significant supply tightness, continuing strong demand and the prospect of appreciable product price increases in 2009," Mr Robb said.

Iluka said it was too early to predict the effects of global financial conditions on industry demand, although a slowing in the European and United States economies may have an effect.

Mr Robb said Iluka's focus was orientated to the Chinese domestic economy, with the company confident demand fundamentals are "robust", based primarily on massive urbanisation trends.

Iluka has mineral sands operations to the north and south of Perth in Western Australia, along with an operation in the Murray Basin of Victoria and New South Wales.

Iluka said also that intended to shutdown one of its two synthetic rutile kilns in the midwest region of WA for an indefinite period in the absence of an economic feed source.

The company will shutdown the kiln in mid 2009 and book a total non-cash charge of $6 million over the next two years.

Iluka said a number of employees would be affected by the decision, but the company would endeavour to redeploy personnel elsewhere within the group.

Meanwhile, the company said it plans to take one of its two synthetic rutile kilns out of production in the Mid West by mid-2009.

Iluka said the decision to stand down the kiln, located at its Narngulu processing facilities, is due to the absence of technically suitable and economic ilmenite feed source.

The mineral sands miner also operates two kilns in the South West region of the state.

Iluka said total synthetic rutile production in 2009 is expected to be similar to the 2008 level, with improved throughputs expected from other kilns and in the absence of disruptions and major maintenance outages experienced in 2008.

Shares in Iluka gained 17 cents to $3.86 by 1322 AEDT.

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