Iluka is a long established global supplier of zircon and titanium minerals, providing a suite of over 40 minerals products, which meet the specifications of specific industry applications and customer needs.
Iluka has established a track record as a reliable supplier of consistently high quality products, with particular focus on maintaining high quality, long-term customer relationships. Iluka has more than 250 direct customers, with sales in more than 40 countries. Iluka’s sales and marketing personnel work closely with these customers to understand and satisfy their technical product requirements. Many of these companies have been its customers for at least ten years and some for over 30 years.
These factors, Iluka’s stable production base in Australia and the United States and a strong global distribution network in close geographical proximity to major markets have meant that it is considered a preferred supplier by most of its customers.
Iluka has also made a major commitment to product development and technical development through the establishment of a separate team, which works in conjunction with the company’s sales and marketing personnel to provide technical and product development solutions to customers.
The company’s marketing approach is to differentiate itself by supplying customers with preferred, high quality products, backed by excellent service. The company is particularly active in emerging and developing markets such as China, India, the Middle East and South America. These are all regions where demand is growing faster than the global average and where the company is building on its existing supply presence with a strong direct sales presence.
Iluka maintains a direct market presence in China, with local staff and three warehouse and distribution facilities. Iluka also has a permanent marketing presence in the USA to support its marketing in the America’s and Europe; and has recently established a permanent presence in the United Arab Emirates to support its marketing activities in India, the Middle East and Eastern Europe.
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Iluka maintains an online sales facility (Iluka’s Online Sales) which operates as a sales portal as well as an auction or tender site for small volumes of zircon and high grade titanium dioxide.
Iluka’s Sales and Marketing teams in Australia, China, Asia and the United States maintain a quality management system for the marketing, sales and order processing of mineral sands.
Iluka also operates a mineral sands trading arm (Trading IMTI).
Global Sales Profile
The customer base for both titanium dioxide products and zircon are distinct, with limited overlap.
The briefing paper provides information on the titanium and zircon customer base for Iluka.
Pricing & Contractual Arrangements
Both zircon and titanium demand surged to record levels following the 2009 Global Financial crisis, resulting in significant price growth after a decade of relatively stable prices (particularly titanium ores). This was influenced heavily by government lead stimulus packages that saw significant spending on housing and infrastructure development.
In the short term, the industry was unable to meet this demand after a prolonged period of underinvestment and as much of the supply was unconstrained by multi-year “cap and collar" long term contracts, this resulted in significant price growth.
Subsequently, investment in housing and construction has cooled as the world has entered more uncertain economic times. Iluka maintains a positive view on the medium term supply/demand fundamentals for both the zircon and titanium market, notwithstanding periods of market demand softness and inventory build and drawdown.
Like most mineral commodities, zircon and titanium prices vary depending on supply demand fundamentals. However, prices are set directly between a small pool of producers and consumers and are not influenced by external speculative positions as is often the case with LME metals. Iluka has therefore been able to adjusting production in line with demand to support more stable pricing outcomes.
Indicative Industry Pricing for Mineral Sands Products, March 2012
Historically high grade titanium feedstock was sold on multi-year CPI based “cap and collar” long term contracts. Following the uncertainty caused by the Global Financial Crisis in 2009, Iluka started to move to shorter term contracts that provided more flexibility. Most high grade titanium feedstock is now sold to major pigment or titanium metal customers on six month contracts with unconstrained price and volume negotiations. Smaller volumes to the welding sector are usually sold on a shorter basis, usually monthly to quarterly contracts.
Iluka sells all of its zircon under contracts with a maximum duration of three months. An increasing proportion of volume is sold on a shorter dated basis, including spot sales.