SYDNEY - Iluka Resources announced a significant decline in its annual profit, projecting the construction cost of a rare-earths refinery in Western Australia to be at the upper end of its guidance.

Decrease in Profit and Revenue

Iluka recorded a net profit of 342.6 million Australian dollars (US$224.1 million) for the 12 months ending December, marking a 41% decrease from A$589 million in the previous year. The company's revenue also experienced a 20% decline, totaling A$1.29 billion.

Dividend Announcement

The directors of the mineral-sands miner declared a final dividend of 4 Australian cents per share, resulting in a full-year payout of 7 cents.

Challenges in Rare-Earths Refinery Project

Iluka disclosed that the preliminary design work for its Eneabba rare-earths refinery in Western Australia indicated a capital cost ranging between A$1.7 billion and A$1.8 billion. This figure exceeded the revised guidance provided to investors in December of A$1.5 billion-A$1.8 billion.

"Inflation has impacted various major resource projects in Western Australia, including Eneabba," Iluka stated.

Impact of Economic Conditions

The company attributed its challenges to China's sluggish economic recovery post-Covid-19, leading to decreased demand for zircon. Despite policy initiatives aimed at boosting the Chinese housing sector, the economy has not seen significant improvement.

Operational Update

In the titanium feedstock segment, Iluka mentioned that its SR1 asset is expected to remain offline unless there is a surge in demand. Synthetic rutile production at SR1 was halted in October.

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