Iluka Resources boss Tom O'Leary likes US rare earths price floor as Australia mulls following suit
Tom O'Leary made the comments as net profit from Iluka's core mineral sands business continues to wane.
The company's bottom line for the first half of 2025 fell to $92 million, down from $134m for first half of 2024 and less than half of the $204m net profit it produced for the same period in 2023.
But talk of the mineral sands hardship has been overshadowed by the $1.7 billion taxpayer-funded development of the Eneabba refinery, which is set to be commissioned in 2027.
The US government last month agreed to pay a minimum of $US110 a kilogram for MP Material's neodymium and praseodymium for a decade, as part of a landmark deal struck between Uncle Sam and MP.
'The US government's floor price of $US110 a kilo is very close to Adamas Intelligence's long term view of $108 a kilo over the next 10 years, which formed the basis of the (Eneabba) project economics we published back in December,' Mr O'Leary said on Wednesday.
Federal Resources Minister Madeleine King earlier this month said Australia may follow the lead of the US and establish a rare earths price floor baked into government offtake agreements with domestic producers of the elements.
This offtake could feed into a $1.2 billion critical minerals strategic reserve announced by Ms King in April that will be focused on rare earth elements.
Other Australian industry players, like Arafura Rare Earths, have also given their thumbs up to the price floor by the US.
Shares in Iluka were down 8.7 per cent to $6.02 by 12.10pm as investors digested the profit fall and bleak mineral sands market outlook.
Iluka stated it had maintained a 'resilient' mineral sands earnings margin of 39 per cent. But it warned discipline would be key to 'dealing with the present uncertainty and positioning for recovery'.
'In mineral sands, lower levels of economic activity have weighed on customer purchasing behaviour. This has occurred alongside the imposition of US tariffs on zircon; the closure of pigment plants in Europe and China; India enacting anti-dumping duties on Chinese titanium dioxide imports; and production curtailments in Indonesia,' the company stated.
Operating cash flow retreated 39 per cent for the period to $115m. The board declared an interim dividend of 2¢ share.
Citi analyst Paul McTaggart noted Iluka's key zircon earnings stream is facing growing margin pressures this quarter.
'Iluka did not provide guidance for third quarter zircon sales volumes or price, but today noted the average quarter three zircon price contracted to date in the September quarter is about $US80 per tonne lower than June quarter,' he said.
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