Times get tough for Iluka again

THE economic green shoots that boosted Iluka Resources' hopes of a recovering mineral sands market earlier this year have shrivelled.

The miner's sales revenue of $147 million in the three months to the end of September was down 39 per cent from the preceding three months.

Iluka's revenue in the nine months to September was 40 per cent lower than in the previous year, at $528.7 million.

The miner's share price dropped 46 cents, or 4.4 per cent, to $10.00.

The fall in September quarter revenue came despite higher production in that period of Iluka's key products: zircon - used to make ceramics - and rutile - a paint and plastic pigment.

It said fragile business conditions had caused market conditions to soften, reflected in a more cautious approach to ordering by customers.

Mineral sands prices have also fallen, which Iluka said was due to some producers not waiting for a recovery in demand.

There has been past tension between Iluka and Rio Tinto - together the world's two largest mineral sands miners - over pricing.

Rio has tended to keep on producing even when demand falls while Iluka responds by reducing production.

Iluka warned it did not expect zircon demand to greatly improve in the last three months of 2013, while rutile might even take longer.

However, conditions are right for a recovery in the paints market, with customer inquiries about rutile supply for 2014 at their highest level in more than a year, Iluka said.

The company is pushing ahead with growth plans at a range of possible new mines, including a pre-feasibility study for its recently bought Sri Lankan project.

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