MINERAL-SANDS producer Iluka has warned that a combination of economic factors has put a lid on China's love affair with ceramic tiles, knocking demand in the fourth (December) quarter for zircon in a country that lays more than 2.8 billion square metres of shining tiles a year.
Iluka, the world's biggest zircon producer, has flagged a production-sales response in expectation of a ''soft sales'' period for zircon.
It was a different story in the December quarter for the sales of titanium dioxide, used in the pigment and welding industries. Demand for the product was ''robust'' throughout last year, with only a slight moderation in the December quarter.
Either way, Iluka is sitting pretty thanks to the substantially higher prices expected this year for zircon and titanium dioxide, due in part to Iluka's attention to matching sales and production to demand.
That attention will see Iluka reduce production from its zircon-rich South Australian operations in the months ahead, while leaving the titanium dioxide-rich operations in Victoria to hum along.
Iluka noted that while lower production and sales for zircon for a ''period'' in 2012 could occur, the revenue impacts would be mitigated by higher volumes of titanium dioxide at prices in the first of 2012 that will be 100-145 per cent more than last year's average prices.
Zircon prices are also expected to be more than 30 per cent higher than the 2011 average and 270 per cent higher than the 2010 average. Iluka shares closed 20¢ lower at $16.70, which is double its 52-week share-price low of $8.32.
Meanwhile, Rio Tinto's 68 per cent-owned listed uranium subsidiary, Energy Resources of Australia, has posted slightly higher than forecast production for (calendar) 2011 of 2641 tonnes. But ERA's Ranger mine, inside Kakadu National Park, continues to be dogged by heavy rains and resultant water-handling issues.
Output for the year was up from a previously forecast 2600 tonnes of uranium and led to a 7.5¢ share-price gain to $1.255. Processing was suspended between January 28 and June 15 last year because of water-handling issues caused by above-average rainfall.
The issue returned in December due to record monthly rainfall, preventing planned dewatering of the open cut. Access to the high-grade ore at the bottom of the pit has been delayed as a result. The length and severity of the wet season will determine when that ore can be accessed.
