16/02/2016 - 09:47

Iluka to suspend mine, cut workforce

16/02/2016 - 09:47

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Mineral sands miner Iluka Resources will make about 33 redundancies when it suspends activities at its Jacinth-Ambrosia operation in South Australia.

Iluka managing director David Robb says the suspension will result in about 33 employees being made redundant.

Mineral sands miner Iluka Resources will make about 33 redundancies when it suspends activities at its Jacinth-Ambrosia operation in South Australia.

In a statement today, the Perth-based company announced mining and production activities at the zircon mine would be suspended from mid-April for up to two years, depending on market conditions.

“The suspension will, regrettably result in about 33 Iluka employees being made redundant out of Iluka’s direct workforce of 79 (at the site),” Iluka managing director David Robb said, adding there inevitably would be more losses associated with contractors and support services to the operation.

“About 46 personnel will be retained or redeployed.

“Some employees will be retained on the site to manage continuing activities such as concentrate handling and transport, asset maintenance and environmental rehabilitation work and a small number of employees will be relocated to other Iluka operations.”

Iluka has a workforce of about 450 in WA, according to BNiQ data.

As the suspension will reduce production costs, Iluka, which produces zircon and rutile used in paints, ceramics and other products, expects to realise about $30 million in savings from the shut down this year, followed by another $15 million next year.

“The decision now to suspend mining and concentrating activities at Jacinth-Ambrosia will increase the company’s free cash flow at a time of low industry returns,” Mr Robb said.

“Over time, it will also improve return on capital by accelerating inventory drawdown.

“Iluka will continue to supply key customers from both finished product inventory and via the continued processing of existing concentrate inventory into finished product at its mineral separation plants in Victoria and Western Australia.

“The company will maintain the operations at Jacinth-Ambrosia in such a manner such that they can be reactivated rapidly in line with global market recovery.”

Iluka will release its full year results later this week.

Shares in Iluka were 2.5 per cent higher to $6.86 each at 9:40am.

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