The mineral sands industry produces two main raw products, zircon and titanium dioxide ores. The latter includes rutile, leucoxene, chloride and sulphate ilmenite. Ilmenite, in some cases, is able to be upgraded to higher grade titanium dioxide feedstocks, including synthetic rutile and slag. Iluka produces synthetic rutile through the upgrading of chloride ilmenite.

Mineral sands deposits typically contain both titanium dioxide mineral and, usually a minor proportion of zircon. The two product suites have different properties, prices and distinct end use markets. The relative weighting of each mineral (known as assemblage) varies by deposit.

Assemblage can have an influence on the financial characteristics of mineral sands deposits. Unlike other minerals, where financials are typically influenced by the cash cost of production, in mineral sands projects revenue to cash cost (or margin) characteristics are important and often a better indicator of financial returns.

The industry is relatively consolidated in terms of producers, with the main three producers (Rio Tinto, Exxaro and Iluka) accounting for approximately two thirds of global production, dependent on market conditions and production settings.

Mineral Sands Information


Zircon is an opaque, hard wearing, inert mineral. In 2014, approximately 1.1 million tonnes of zircon was produced globally. It is primarily used in the production of ceramic tiles. Other applications include use in refractories and foundry casting and a growing array of specialty applications in the form of zirconia and zirconium chemicals, including in nuclear fuel rods, catalytic fuel converters and in water and air purification systems. Zircon's unique properties include a high refractive index, opacity (whiteness), wear and chemical resistance and thermal stability.

Zircon usually occurs in lower quantities (lower assemblage) than titanium dioxide in mineral sands deposits. The historical average ratio between the two mined product streams has been 1:4 to 1:5. Iluka's Jacinth-Ambrosia mine in South Australia is the exception with zircon representing for approximately 50 per cent of the assemblage of valuable heavy mineral.

Ceramics is the largest end use market of zircon, accounting for around 50 per cent of demand. Applications include tiles, sanitary ware and table ware. Regional tile demand is influenced by factors such as culture, climate, relative cost and personal taste. Regional tile demand is influenced by factors such as culture, climate, relative cost and personal taste. Traditionally Europe (Italy and Spain) and the Middle East have been the largest tile producers, however recently China and other developing economies have shown a strong preference for tiled floors and tile production has grown strongly.

Zircon is also the primary input to zirconia and a wide range of zirconium-based chemicals. China is the major global producer of zirconium oxy chloride and derivative products. These products are used in a multitude of manufacturing and consumer applications, including auto catalysts, fuel cell technology, electronics and abrasives.

Zirconium metal is used in nuclear fuel rods and in specialised metal alloys, due to its high melting point and chemical resistance. A small amount of zirconia is converted into the synthetic gemstone and cubic zirconia. The zirconia and zirconium-based chemicals end use segment is the fastest growing zircon end use with average annual growth of over 10 per cent since year 2000.

Zircon is also used in refractories, foundry and casting applications, such as for high precision casting of jet turbine blades.

Zircon demand is influenced by three main factors: urbanisation in developing economies, and the attendant increase in floor space under construction (much of which will be associated with ceramic tiling); consumption based growth which is expected to influence the intensity of use of zircon as well as titanium dioxide pigment; and the increasing array of end applications of zircon, particularly in zirconia and zirconium-based chemical applications.

The regional demand profile for zircon is also influenced by regional preferences for flooring type, including ceramic tiles. Generally, developing countries such as China, other parts of Asia and Central and South America, have the highest proportional use of tile flooring.


Titanium dioxide is mined as ilmenite, rutile or, in lesser quantities, leucoxene. It is a dark coloured mineral which, with processing, becomes white and opaque. It is primarily used as a whitening pigment in paints, plastics and paper. Other uses include the manufacture of titanium metal and welding flux wire cord.

Titanium dioxide feedstocks are graded by their titanium dioxide content, which ranges from around 50 per cent for sulphate ilmenite to 95 per cent for natural rutile. Feedstocks are either sold as raw minerals (rutile and chloride or sulphate ilmenite) or as processed or upgraded feedstocks, whereby ilmenite is processed to increase its titanium dioxide content. Upgraded feedstocks are synthetic rutile, chloride and sulphate slag and upgraded slag.

In 2014, around 7.25 million tonnes of titanium feedstocks were produced. The feedstock market is split into two product streams: chloride and sulphate. In recent years, there has been an approximate equal supply of chloride and sulphate feedstocks.

Titanium dioxide feedstocks are used predominately for the manufacture of pigment due to its opacity, UV resistance and non-toxic properties. This pigment is in turn used in paints, paper and plastics. Use in pigment accounts for approximately 80 to 90 per cent of total global demand for titanium feedstocks. Titanium metal and welding flux cord wire jointly account for the remaining 10 to 20 per cent of demand. Historically, demand for titanium feedstock has grown broadly in line with global GDP growth.

Titanium pigment is produced by one of two processes:

  • chloride process, which involves the chlorination of titanium feedstock and then a process of purification and oxidation; and the
  • sulphate process, which involves the digestion of titanium feedstocks in sulphuric acid and then a process of clarification, hydrolysis, filtration and calcination.

Globally, approximately 50 per cent of pigment is produced by the chloride process. China produces pigment predominantly by the sulphate process, although the country is increasingly adopting chloride pigment technology.The US and Europe predominantly utilise the chloride pigment process.

Revenue to cash cost ratio

For most commodities, unit cash cost is used to benchmark the relative economics of projects. Key factors influencing unit costs are the grade of valuable mineral, scale and mining method, and associated costs. In mineral sands, heavy mineral grade provides a good indication of the cost of mining – how much ore needs to be moved to capture heavy mineral. However, most mineral sands mines produce several product streams – predominantly ilmenite, with lesser quantities of the more valuable minerals of rutile and zircon. The weighting of each of these minerals (referred to as assemblage) varies significantly by deposit, but with ilmenite typically dominating the assemblage and zircon a minor component. Consequently, the economics of mineral sands' projects is influenced as much by assemblage – which shapes the revenue per tonne characteristics – as the deposit grade or cost of mining. As such, the attractiveness of mineral sands deposits are not typically ranked by cash cost quartile but by revenue to cash cost ratio or margin methodology.

Customer Structure

The customer structure for both titanium dioxide products and zircon are distinct, with limited overlap. The customer structure for zircon is relatively fragmented, reflecting China’s predominant global demand for zircon (approximately 50 per cent of global consumption). The customer structure for titanium ore is more consolidated, reflecting the predominant end application for the manufacture of chloride pigment (approximately 90 per cent of Iluka’s end demand), with high grade material also supplied to titanium sponge manufacturers and manufacturers of flux wire cord, used mainly in the welding market.

Customer numbers has changed significantly for the company in recent years and reflects its strategy to grow its customer base by capturing and growing the "long tail". Iluka's titanium dioxide customers has grown from less than 20 in 2006 to approximately 80 in 2013 and the number of its zircon customers for the same period, has grown from approximately 30 to approximately 115.

Mineral Sands Prices

Mineral sands sales and purchasing is typically a technically-based decision, involving metallurgical specifications and product value-in-use considerations. As a result, Iluka's sales are overwhelmingly direct to customers. Minimal amounts of product are sold via agents and distributors. There is not a significant 'traded' component of mineral sands products, nor an established industry wide or exchange traded equivalent 'benchmark' price. Iluka has recently established for the purposes, of sales to its customers, a zircon benchmark price based on its most commonly sold product.

Most high grade titanium feedstocks are sold to major pigment or titanium metal customers on contracts of varying periods, typically less than 12 months. Volumes to the welding and titanium metal sectors are usually sold on a shorter basis, usually monthly or quarterly contracts.

In 2015 Iluka introduced a new zircon pricing and payments framework. The approach entails distinct spot and contract pricing arrangements. In the spot market, Iluka will seek to maintain an absolute tonnage in order to react to short-term changes in the company's operations and/or to participate in the spot market as a price discovery mechanism.

For customers purchasing zircon via contracts, the price model involves a regional reference or benchmark price and clear, pre-defined customer price logic for price variation. From an initial 'gross' price, Iluka will differentiate the 'net' price for customers based on volume, share and cost-to-serve. The framework will also reward customers' loyalty and reflect payment and other commercial terms. Price setting is expected to be on a quarterly basis.

More information on Iluka's marketing approach can be found at and in Iluka's Briefing Paper "Marketing and Market Development, May 2015" in Further Information below.

The following table provides weighted average received prices for Iluka's main products on an annual basis between 2010 - 2015. Prices are influenced by product specifications and quality, lot size sold, contractual and customer arrangements.

Iluka Price US$/tonne FOB 2010 2011  2012  2013  2014  2015 
 Zircon  880  1,886 2,080  1,150  1,033  986 
 Rutile  550  1,174 2,464  1,069  777  721 
 Synthetic rutile  450  878 1,771  1,150  750  Not disclosed 
 Average AUD/USD (cents)  92.0  103.2 103.6  96.8  90.3  75.2 

Iluka's synthetic rutile sales are, in large part, underpinned by commercial off take arrangements. The terms of these arrangements, including the pricing arrangements are commercial in confidence and as such not disclosed by Iluka. Synthetic rutile, due to its lower titanium dioxide content than rutile, typically is priced lower than natural rutile.

Zircon prices reflect the weighted average price for zircon premium and zircon standard, also with a weighted average price for all zircon materials, including zircon in concentrate and zircon tailings. The prices for each product vary considerably, as does the mix of such products sold period to period. For example, Iluka sold more zircon standard and zircon in concentrate in the second half of 2015 compared with the first half of 2015 and more in 2015 than 2014. In the case of rutile, Iluka sells a lower titanium dioxide product, HyTi.



Further information