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Iluka shuts its zircon mine in South Australia

Hagen Hopkins/Getty Images

Iluka Resources is suspending zircon mining and processing at its Jacinth-Ambrosia operation in the Eucla Basin, South Australia, and laying off 33 staff.

The mine, which can supply 25% to 30% of global zircon demand when in full production, will be suspended from April 16 for 18 to 24 months, depending on market conditions.

A short time ago, Iluka shares were up 2.39% to $6.85.

Prices for zircon, used in the production of ceramics, sanitary ware and tableware, have been falling with other commodities.

Iluka will continue to supply customers by using its stockpile.

Managing director David Robb says the decision will increase the company’s free cash flow at a time of low industry returns.

A net cash cost benefit of $30 million is expected in 2016 after costs of $16 million. In 2017 the cost benefit is expected to be $45 million after costs of $25 million.

“Iluka recognises the significant impact the decision to suspend mining and concentrating operations will have on employees and their families and on local communities,” Robb says.

“The company will work closely with state government agencies and regional bodies to co-ordinate transition arrangements.”

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