Key Highlights

• The figures below are from Iluka's quarterly review to 30 September 2026, in Australian dollars unless stated.

• Z/R/SR production was 76.1 thousand tonnes, up from 58.0 thousand tonnes in the June quarter but well below 123.8 thousand tonnes a year earlier.

• Mineral sands Revenue was $219 million for the quarter, against $286 million in the June quarter, and $651 million year to date, down 6.9 per cent.

• The realised zircon sand price was US$1,685 per tonne, while zircon sand volumes contracted during the quarter were priced at US$1,768 per tonne, which is $222 higher than the June-quarter contracts.

What is Iluka Resources building at Eneabba, and why does it matter while its mineral sands Business is in a soft patch? The answer is that Iluka (ASX:ILU) is part-way through a roughly A$1.7 to A$1.8 billion rare earths refinery in Western Australia, funded alongside a zircon and titanium business that is currently earning less than it did a year ago. The September 2026 quarterly review, released on 28 October, shows both stories moving at once.

What Iluka does

Iluka is one of the world's larger producers of zircon, rutile and synthetic rutile, collectively called Z/R/SR. Zircon is used mainly in ceramics, tiles and foundry applications. Rutile and synthetic rutile are titanium dioxide feedstocks, used in pigments, welding products and titanium metal.

Revenue therefore follows industrial demand, particularly in China, and the price of zircon sand. The company also produces ilmenite and holds mineral sands projects in Western Australia, South Australia and New South Wales, including the Balranald operation and the Cataby mine, which is currently idle.

The second leg is rare earths. The Eneabba refinery is designed to process feedstock into separated oxides, including the magnet rare earths neodymium, praseodymium, dysprosium and terbium. These materials are used in permanent magnets for electric vehicles, wind turbines and defence equipment.

The September quarter in numbers

The figures below are from Iluka's quarterly review to 30 September 2026, in Australian dollars unless stated.

Z/R/SR production was 76.1 thousand tonnes, up from 58.0 thousand tonnes in the June quarter but well below 123.8 thousand tonnes a year earlier. Both synthetic rutile kilns remain idle, so synthetic rutile output was nil.

Sales were more encouraging than production.

Mineral sands revenue was $219 million for the quarter, against $286 million in the June quarter, and $651 million year to date, down 6.9 per cent. The realised zircon sand price was US$1,685 per tonne, while zircon sand volumes contracted during the quarter were priced at US$1,768 per tonne, which is $222 higher than the June-quarter contracts.

Unit costs are a pressure point.

Half-year results

Iluka reported its half-year results on 19 August 2026. Mineral sands revenue was $433 million, down 22 per cent, and underlying group EBITDA was $53 million, down 77 per cent. The company recorded a net loss after tax of $24 million, compared with a $92 million profit in the first half of 2025.

Cash generation looked better than earnings. Operating Cash Flow was $247 million, and mineral sands free cash flow was $200 million, helped by inventory sales and lower Capital spending. The Interim Dividend was three cents per share, fully franked, up 50 per cent.

Mineral sands net Debt fell from $473 million at December 2025 to $273 million at 30 June 2026 and then to $249 million at 30 September. Separately, the rare earths business carried net debt of $877 million at 30 June of the July update.

Eneabba and rare earths

Construction of the refinery was 65 per cent complete at 30 September, with $1,237 million of capital spent to that date. The capital estimate of $1.7 to $1.8 billion was unchanged, and commissioning is targeted for 2027.

In July, Iluka announced its first offtake agreement, a take-or-pay contract with a global automotive company for 1,200 tonnes a year of magnet rare earth oxides from 2028. That matters because a refinery of this scale needs committed buyers outside China, which dominates global separation capacity.

Iluka also reported producing dysprosium and terbium metal to specification and buying metallisation equipment with capacity of 200 tonnes a year of those heavy rare earth metals. This would extend the business beyond oxides, though commercial volumes are yet to be shown.

Sector conditions and competition

The review describes weak Chinese zircon Demand and soft titanium dioxide pigment demand. It also notes that feedstock spot prices have fallen and that some producers are curtailing output or seeking lender support.

In rare earths, the competitive question is less about geology and more about whether non-Chinese Supply chains can be built at costs customers will accept.

Near-term guidance and milestones

For the December quarter, Iluka expects to sell about 35 thousand tonnes of zircon sand, roughly 30 thousand of it already contracted, with the rest delayed by shipping. Contracts carry an average increase of US$80 per tonne, and the expected reported zircon sand price is US$1,825 per tonne. It also plans to sell 58 thousand tonnes of synthetic rutile to meet a 110 thousand tonne full-year contracted volume.

Other dates in the review include a Typhoon Mining Lease application targeted for the fourth quarter of 2026, a Typhoon feasibility study due in the first quarter of 2027, and a Wimmera definitive feasibility study scheduled for board consideration in the first half of 2027.

Risks to weigh

The main risks are visible in the company's own disclosures. Shipping delays can move revenue between quarters. Balranald is still being ramped up, with grade and recovery consistency being improved. Cataby's restart depends on market conditions, and zircon and pigment demand could stay weak.

For Eneabba, the risks are construction cost and schedule, the pace of further offtake agreements, and rare earth prices, which can be volatile and policy-driven. Currency also matters, because revenue is largely in US dollars, and the review cited an Exchange Rate of 71 US cents to the Australian dollar.

What to watch

The December-quarter zircon price and delivery timing will show whether the recovery in contract prices is flowing through. Construction progress at Eneabba, further offtake agreements and any funding or cost updates will indicate whether the refinery stays on budget.