From a revenue perspective, ILU is still a mineral sands business but its shifting from exposure to rare earths as a by‑product to building a fully integrated rare‑earth supply chain, which over time could become a material part of its business.
- Iluka is building a dedicated rare earths refinery in Eneabba, Western Australia, which will process both light and heavy rare earth oxides for the first time in Australia
- It has executed a 15-year feedstock supply agreement with Lindian Resources, under which Lindian will supply approximately 6,000 tonnes per annum of rare‐earth concentrate (about 10% of the refinery’s capacity).
ILU has been weighed down by persistently weak demand for its traditional products, primarily from China, where the embattled property market has dampened industrial activity. China remains the world’s largest consumer of zircon and titanium feedstock, used in ceramics, paints, and specialty chemicals. However, it is ILU’s future exposure to rare earths that has driven the stock higher in recent months. Investing in ILU for rare earths remains a leap of faith compared to Lynas (LYC), though the risk is smaller than it was a few years ago.
- We like ILU but prefer purer rare earth plays at this stage of its evolution, but if the Chinese property market does turn, this dynamic is likely to change.
MM is cautiously bullish towards ILU
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