Sri Lanka deposit counter-cyclical investment for Iluka
ECONOMYNEXT – Australian mineral sands miner Iluka Resources Ltd. has listed its Sri Lankan ilmenite deposit as one of its future options for ‘counter-cyclical’ investments during a market downturn.
The company said in a stock exchange filing that it has spent an estimated $10 million on pre-feasibility studies on the mineral sands deposit in Puttalam on the island’s northwest coast, 170 kilometres north of the capital Colombo.
The company is one of the world’s biggest producers of minerals sands and produces zircon and rutile used in paints, ceramics and other products.
“Investing counter-cyclically by its nature involves investing at a time when current cash flows are depressed,” Iluka’s statement to the stock exchange said.
“To do otherwise is to fall into the resources industry trap of investing pro-cyclically. The timing of investment, as well as the nature of investment, is central to the creation of value in mineral resources, as is a through-the-cycle commitment to exploration, innovation and technology.”
Iluka said its current options include:
• the Cataby project (Western Australia), where industry conditions are aligning for a potential development decision around the end of the year;
• a largely completed definitive feasibility study for an economically viable conventional development of the large Balranald deposit in New South Wales;
• the trialling of an alternative, innovative, less capital intensive and more flexible development path for Balranald (New South Wales);
• a pre-feasibility programme for the development of a large sulphate ilmenite deposit in Sri Lanka (Puttalam); and
• the Metalysis investment (an increased equity stake in a UK technology company)
Iluka acquired access to the Puttalam deposit before the ethnic war, left when the war intensified, and resumed exploration after the war ended in 2009.
(COLOMBO, Sept 12 2016)