Iluka Resources Ltd. said first-quarter output of its core mineral sands products -- zircon, rutile and synthetic rutile -- was weaker than the three months immediately prior, but higher than the same period a year ago. Here are some remarks from its quarterly operations review.


On titanium dioxide feedstock market:

"Pigment demand was robust in Q1 2022 as pigment inventories remain below seasonal norms. The war in Ukraine has caused disruptions throughout the titanium feedstock and titanium finished goods supply chains, with bulk exports of ilmenite for pigment manufacture and rutile used in welding consumables significantly impacted. Ukrainian producers in aggregate comprise the largest source of rutile to the global welding market. The production and export of titanium metal has also been impacted. A continuation of disruption to mining and processing of titanium feedstock and finished goods will further constrain supply into what is already a tight market. Demand for synthetic rutile is very strong with Iluka's feedstock production fully committed for H1 2022. Iluka is encouraged by the interest from both existing and new customers to secure offtake from the SR1 kiln restart."


On titanium dioxide prices:

"Spot prices for rutile and synthetic rutile are both at 10-year highs. Pigment pricing increased in Q1 2022, with pigment producers focused on maintaining margins in the face of rising input costs including energy, process chemicals, feedstocks and logistics."


On zircon market:

"Iluka continued to experience strong demand for its zircon products. China's production of tiles increased after the Chinese New Year despite raw material and energy inflationary pressures. Towards the end of the quarter, supply chain disruptions resulting from recent Covid outbreaks began to impact industrial productivity. In Europe, elevated gas prices have forced some smaller tile and frit makers to reduce production. Larger companies with the ability to pass cost increases through to customers have maintained production levels. In what are smaller markets, Iluka's customers in India reported production was maintained at approximately 80% of capacity despite higher raw material prices, with some producers benefitting from lower fixed gas prices. In North America, demand for zircon from the foundry and fused zirconia sectors continues to be strong."


On zircon price:

"Iluka has increased the price of zircon sand by US$100 per [metric] ton, effective from 1 April 2022. The company's Q2 2022 zircon sales are fully contracted, reflecting tight supply despite a number of challenges facing the market."


On its mineral sands production:

"Australian operations performed in line with expectations. Jacinth-Ambrosia in South Australia produced 71,000 tons of heavy mineral concentrate (HMC), up 11% compared to Q4 2021. Higher production was due to the mining of higher grade ore and higher treatment volumes. Jacinth-Ambrosia continues to operate at full production settings, with mining to continue at the Jacinth North deposit before moving to Ambrosia in August 2022. Cataby in Western Australia produced 117,000 tons of HMC, in line with the mine plan. The Narngulu mineral separation plant in Western Australia produced 76,000 tons of zircon, reflecting lower zircon assemblage within the HMC processed. Synthetic Rutile Kiln 2 in Western Australia continued to operate at full capacity, producing 54,000 tons of synthetic rutile."


Write to Rhiannon Hoyle at rhiannon.hoyle@wsj.com


(END) Dow Jones Newswires

04-26-22 1928ET