Market ignores tariff noise as Iluka Resources emboldened by Uncle Sam's move to fix rare earths prices
The listed miner recovered from a weaker quarter by delivering 150,000 tonnes of zircon and rutile from its Cataby operations in WA and the Jacinth-Ambrosia project in South Australia, it reported on Wednesday.
But citing 'ongoing uncertainty and the broad range of potential outcomes on market dynamics', Iluka told investors it would not be providing guidance in terms of expected production, or pricing, for its zircon products.
The commodity is among many caught up in sweeping tariffs imposed by the US and is set to be levied at 10 per cent from August 1, though Iluka noted that about 50 per cent of Uncle Sam's zircon imports come from South Africa.
'Titanium dioxide feedstocks and rare earth oxides remain exempt from tariffs,' Iluka said.
Amid geopolitical tussles to secure rare earths supplies the United States Government bought more than $600 million worth of shares in California miner MP Materials, and inked an offtake to buy its product at a set minimum price.
Iluka has long been pushing for rare earths prices 'independent pricing mechanisms that are not linked to the Asian Metals Index', in a bid to break China's stranglehold on the in-demand ingredient used in magnets for high-tech applications.
And it told investors the agreed price of $US100 per kilo of rare earths products set between MP and the US Department of Defense was encouraging for its own rare earths refinery build at Eneabba.
'Iluka has previously provided a range of possible scenarios for utilisation of the Eneabba refinery at long-term forecast NdPr prices of $108/kg.'
The group said locking in a price floor was 'an acknowledgement by the US government that higher prices for separated rare earth oxides are essential to building a sustainable Western and like-minded supply chain.'
As part of its $1.65 billion funding deal with the Australian Government, the Eneabba rare earths refinery being built near Jurien Bay has strict restrictions imposed on future output being sold to China.
So far $570 million has been spent on construction, with earthworks completed and concrete contractors making 'good progress'. Equipment has also started to arrive on site.
Iluka shares closed the day up 4 per cent to $5.39.
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