Iluka to re-start mining at Eneabba

Mineral sands miner Iluka Resources says it will resume mining at Eneabba in the Mid West by the end of the year to capitalise on strong demand for titanium dioxide and zircon products.

Iluka also said it planned to prepare its idle processing plant at Eneabba, the synthetic rutile kiln 3, for a three-year commercial campaign, kicking off next year.

The company said it had approved capital expenditure of $35 million to restart operations, approximately half of which will be applied for major maintenance work on the kiln.

Operations at Eneabba were placed on halt midway through 2010, because of declining ore grades and low margins.

Iluka managing director David Robb said the resumption of mining activities at Eneabba reflected improving industry profitability.

He said the restart and operation of the synthetic rutile kiln would also create significant value from a modest capital expenditure.

“The Eneabba mining and processing project is able to be delivered in six months from approval utilising existing experienced personnel and operational equipment still on site,” Mr Robb said.

“Subject to further evaluation, these mining and synthetic rutile operations may extend well beyond the initial three years.

Mr Robb said the economics behind the decision to restart mining were “compelling”.

“Despite the fact the mining and concentrating activities will display a higher cash cost per tonne than Iluka’s existing mining and concentration operations in the Murray Basin and at Jacinth Ambrosia, the investment returns are very attractive,” Mr Robb said.

Iluka shares closed up 4.5 per cent, to trade at $19.25.