Hundreds of jobs at risk and shares tumble as weak demand forces Iluka Resources to suspend Cataby mine

Contractors are set to bear the brunt of job losses after mineral sands miner Iluka Resources moved to suspend production at its Cataby operations, about 150km north of Perth, within months. Shares in Iluka were down more than 10 per cent in early trade after the company said it would put mining on ice at Cataby from December 1 due to weak global demand for mineral sands and its end products, like pigments in paint. One of the two synthetic rutile kilns at Capel in WA’s South West that processes Cataby’s output will also be switched off temporarily. Cataby employs about 130 in-house Iluka workers and 200 contractors via Piacentini & Son. The West Australian understands most of the in-house workforce will either stay on at site or be deployed to other Iluka projects, including the $1.7 billion Eneabba rare earths refinery currently under construction. But the vast majority of Piacentini & Son’s employees at the Cataby mine will be stood down. Piacentini & Son managing director Andrew Broad told The West Australian his firm was “surprised” by the decision to suspend Cataby. “We thought a reduction in production would be more likely,” he said. “Cataby is about a quarter of our workforce, so there likely be will be flow-on effects at head office, but we will look to minimise those as much as possible. “There’s 70 people on the site who have been with us for more than five years that we’d love to keep on as they are highly skilled.” Piacentini & Son operates at the Thunderbird, Atlas and Cooljarloo mineral sands mines in WA. It also contracts with Alcoa and at Rio Tinto’s shuttered Argyle diamond mine. “Our business has been around 80-odd years, so we’ve been through many cycles.” Iluka’s Capel, meanwhile, sustains about 160 jobs and its headcount is set to be largely unaffected despite the SR2 kiln being switched off. Iluka just weeks ago reported net profit for the first half of the financial year from its core mineral sands business had continued to tumble — dropping to $92 million, down from $134m for first half of 2024 and less than half of the $204m net profit it produced for the same period in 2023. The company on Wednesday flagged that lower levels of global economic activity continued to weigh on both the purchasing behaviour of its customers and their ability to forecast with certainty. Managing director Tom O’Leary said the decision was “prudent” in dealing with the demand uncertainty and would position Iluka for recovery. “It reflects the discipline that is a longstanding feature of Iluka’s approach,” Mr O’Leary said. “The suspension will enable inventory and cash liberation, cost savings and the preservation of balance sheet strength. “Iluka is well positioned to respond to any improvement in demand conditions and retains the ability to restart Cataby and SR2 quickly when that production is required.” The main commodity produced at Cataby is chloride ilmenite, which is processed at Capel to produce synthetic rutile — a high grade titanium dioxide product used predominantly as a feedstock to make pigment. Iluka said it planned to hold sufficient stock of both chloride ilmenite and synthetic rutile to meet customer demand but warned operations would not resume until market conditions improved, which it said could be at least six months. Production at Iluka’s Jacinth Ambrosia mine in South Australia would continue as normal, along with commissioning works at the company’s new mine at Balranald in New South Wales, where mining is scheduled to start later this year. Releasing its first-half results last month, Iluka said it had maintained a “resilient” mineral sands earnings margin of 39 per cent. But it warned discipline would be key to “dealing with the present uncertainty and positioning for recovery”. “In mineral sands, lower levels of economic activity have weighed on customer purchasing behaviour. This has occurred alongside the imposition of US tariffs on zircon; the closure of pigment plants in Europe and China; India enacting anti-dumping duties on Chinese titanium dioxide imports; and production curtailments in Indonesia,” the company said.