Welcome to our 2019 Sustainability Report.
 
I would like to begin by acknowledging the efforts of all Iluka employees and contractors in 2019, a year which saw the company deliver a resilient business performance in the face of global economic uncertainties, uneven market
conditions and a significant programme of internal activity.

While Iluka’s reported financial results were impacted by the write down of the
Sierra Rutile investment, the company generated $616 million of underlying EBITDA, our fourth highest on record. This was achieved against a backdrop of softening business sentiment generally; cautious purchasing behaviour on the part of Iluka’s zircon customers; and the company delivering five key projects across its portfolio. Our ability to adapt flexibly to changes in our key markets, both of which display strong fundamentals over the long term, was central to this performance.

I emphasise the resilience of Iluka’s business because it is a key aspect of economic responsibility, which is in turn our primary means of achieving positive community outcomes – providing local employees the financial means to make decisions regarding their own lives.
 
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Furthermore, it is clear that that this resilience – albeit applied in very different circumstances – will again be critical to the sustainability of Iluka’s business in 2020. At the time of writing, the COVID-19 pandemic has continued to escalate, matched by the responses from governments, businesses, communities and individuals around the world. While Iluka is well-placed to withstand the economic impacts of the pandemic, our first and enduring priority is the safety of our people, their families and the communities in which we operate.

I am most pleased that in 2019 our operations in Sierra Leone surpassed one year without a lost time injury. Since acquiring these operations in 2016, we have worked hard to develop a strong safety culture; and this result is a terrific outcome.

At the Group level, over the last year we improved both our number of recordable injuries and our total recordable injury frequency rate, the latter decreasing from 3.5 to 2.9. However, we have recorded an increase in serious potential incidents, which include near hits with the potential to result in fatality or a serious injury. This is unacceptable, and we are addressing this aspect of our safety performance via a number of ‘back to basics’ initiatives, such as the re-launch of Iluka’s Safe Production Leadership programme. 

The company’s stewardship of the environment is based on understanding and minimising our potential impacts. The largest of these is our disturbance footprint, and in 2019, we rehabilitated 686 hectares of disturbed land as part of our commitment to effective mine closure. We are also building capacity for the understanding and application of revegetation science across the resources industry. July 2019 marked the launch of the Iluka Chair in Vegetation Science and Biogeography, embedded within the Harry Butler Institute at Murdoch University in Western Australia. This will deliver research-led outcomes geared towards improving our future rehabilitation outcomes.

Climate change presents potential risks and opportunities for our business and we are working to identify and realise these respectively. Iluka is committed to the Paris Agreement objectives and accepts the Intergovernmental Panel on Climate Change (IPCC) assessment of climate change science. The company has taken steps to implement the recommendations made by the Task Force on Climate-related Financial Disclosures (TCFD) over a three-year period which, during 2019, included assessing potential physical climate risks and opportunities. In 2020, Iluka will evaluate the risks and opportunities related to the transition to a lower-carbon economy.

Of course, Iluka’s activities are already central to a range of sustainable development outcomes that are proving increasingly important. Our core products – zircon, rutile and synthetic rutile – have a variety of end-use applications, including in renewable energy technologies, lightweight metal alloys and photocatalytics. Furthermore, by operating exclusively in the very high grade segment of the titanium dioxide feedstock market (rutile and synthetic rutile), Iluka’s customers in the pigment industry are able to run their production plants with greater efficiency – both in terms of lower utilisation of other inputs and lower waste – with associated environmental benefits.

Similarly, Iluka has long regarded the circular economy as a source of commercial opportunities. By producing activated carbon and iron concentrate, which are co-products of the synthetic rutile production process, we maximise our resource efficiency, eliminate waste at source and increase our contribution to a lower carbon economy. The company also has a burgeoning interest in monazite, from which rare earths elements are derived, and in 2020 will commence production from a strategic stockpile stored at our historic Eneabba province. End-use applications for rare earths include permanent magnets for use in electric motor vehicles and wind turbines.

We are committed to providing enhanced levels of transparency and disclosure, particularly in relation to our tax payments. In 2018 we published our Approach to Tax Statement and have followed this with the publication of our 2019 Tax Transparency Report, outlining the $206.8 million in income taxes, royalties and other payments to national, regional and local governments on a country-by country basis.

Finally, 2019 marked a significant step in the promotion of the continued sustainable development of our Sierra Rutile operation, aiming to deliver mutual benefit to Iluka, the International Finance Corporation (IFC) and the people of Sierra Leone. Iluka and IFC entered into an investment partnership, which includes a three-year advisory services agreement between IFC and Sierra Rutile to implement a community investment and engagement strategy, improve the transparency and use of community managed mining revenues, and develop a women and youth social and economic empowerment programme.

This report sets out our approach, our 2019 performance and our targets for 2020 and beyond. These targets consider our material sustainability risks. Iluka remains committed to reporting transparently to our stakeholders and to the continual improvement of our sustainability performance. To this end we will continue to participate in external sustainability indices such as the Dow Jones Sustainability Index and FTSE4Good Index to benchmark our progress.


Tom O’Leary
Managing Director and 
Chief Executive Officer

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