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Iluka Resources Limited (ASX:LYC)

Top Performing ASX Rare Earths Stock!

ILU 28 June 2023

Iluka Resources limited (ASX:ILU) is the largest global producer of zircon and the high-grade titanium feedstocks rutile and synthetic rutile, used for making paint, ceramics and various high-tech applications. In CY22, Iluka produced 330k tonnes zircon and 246k tonnes synthetic rutile, representing global market shares of 39% and 28%, respectively.

Importantly, Iluka Resources produces a large amount of Rare earth elements as a byproduct in its mineral sands, and is aiming to start processing, refining and selling it with the Eneabba project in WA, currently under construction.

Current operations

Iluka Resources currently operates the worlds largest zircon mine, the Jacinth-Ambrosia operation in South Australia, which also includes its own concentration plant. The heavy mineral concentrate produced there is transported to its Western Australian operations. Iluka resources currently maintains 3 other major projects; 2 mineral processing plants at Narngulu and Capel; and the Cataby mining operations, producing zircon and rutile.

Future Iluka Projects

Currently under project development is the Eneabba rare earths refinery, located in Western Australia. It aims to become a rare earths hub in Australia, partially financed by the Australian Government's Critical Minerals Facility, aiming to start production and processing in 2025. An advantage and motivator for Iluka Resources is the diversification and reuse of its mines rare earth rich byproduct, which will be the primary feedstock for this facility.

Future mineral sands projects have been planned in Balnarad, NSW, Atacama SA, and Wimmera, VIC.

International critical minerals company

However, this miner’s potential in rare earths is starting to be priced in. Lynas Corp (LYC) is currently the only rare earths producer in Australia, but Iluka Resources is one of the leading developers, with arguably more certainty than the other developers, being better funded and having an existing feedstock from ILU’s existing mines. The company is in the final phase of its programme, building a rare earth processing hub in Western Australia, to be in production in 2025.

Investment Summary

As an established miner, the company has a strong balance sheet, with a diversified portfolio of stocks and Iluka resources consistently pays dividends. It is diversifying its already large portoflio of operations and projects in, and its future projects are well supported financially.

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