ILUKA YOYO

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Iluka Resources LimitedGlobal Zircon Conference, Shenzhen, China May 2010

Robert PorterGeneral Manager, Investor RelationsSydney, 26 May 2010

Information herein derived, in part, from TZ Minerals International and Beijing Ruidow International Global Zircon Conference, Shenzhen, China May 2010

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Disclaimer – Forward Looking Statements

This presentation contains forward-looking statements that are subject to risk factors associated with exploring for, developing, mining, processing and sale of minerals.

These forward-looking statements are subject to a range of risk factors associated, but not exclusive, with potential changes in:

• exchange rate assumptions • product pricing assumptions• mine plans and/or resources• equipment life or capability• current or new technical challenges• market conditions• management decisions

While Iluka has prepared this information based on its current knowledge and understanding and in good faith, there are risks and uncertainties involved which could cause results to differ from projections. Iluka shall not be liable for the correctness and/or accuracy of the information nor any differences between the information provided and actual outcomes, and furthermore reserves the right to change its projections from time to time. Iluka does not undertake to update the projections provided in this document on a regular basis.

All currency referred to is Australian denominated unless otherwise indicated.

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Structure of Presentation

1. Context of the Global Zircon Conference, Shenzhen, China May 2010

2. Zircon Usage in China

3. Iluka’s Market Presence in China

4. Views on Global Zircon Supply / Demand

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Context of the Shenzhen ConferenceMay 2010

• Annual China Zircon Conference- organised by TZMI and Beijing Ruidow- 220 delegates

• Delegates included:- zircon sand consumers, suppliers, project proponents- representatives of major zircon global supplies (with and without facilities in China)- China Ceramics Industry Association- Titanium Zirconium & Hafnium Branch, China Non Ferrous Metal Industry- Beijing Nonferrous Metal Research Institute

• Iluka China Customer Forum- ‘closed door’ meeting of customers – supply and 2010 pricing increases- individual customer meetings

• Main industry conference (organised by TZMI) held in Hong Kong – October

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Zircon Usage in China

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Zircon Usage in China

Jiang DongminGeneral Manager of Zhengjiang Shenghua Biok Biology Co.Vice-Chairman of China Titanium Zirconium Hafnium Association

Speaking at TZMI Mineral Sands Conference (Singapore) October 2009:

“Zircon is an important strategic material for China’s modernization and defense construction and also the import mainstay of China’s new material industry…Chinese government and the business world attach much importance to the construction and development of zirconium materials industry…”

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Chinese Zircon SectorKey Features

• China is the largest global consumer of zircon sands- ~40% of global consumption- historical demand growth of 17.2% pa (1990-2008)

• Predominantly import dependent- less than 10% of supply from Hainan Island- Australia and South Africa constitute 80% of supply

• Main applications – ceramics, floor and wall tiles, sanitary ware

• China has a significant zirconium chemicals industry

• Strategically important (though relatively small zircon sand input) for zirconium metal- used in nuclear fuel rods

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Zircon End Use: Global vs China

Chinese zircon consumption is more heavily weighted towards zirconia and zirconium chemical relative to global consumption

Global Zircon Segments 2008

Ceramics54%

Refractory 14%

Foundry/Casting14%

Zirconia & Chemicals

15%

TV Glass3%

China Zircon Segments 2008

Ceramics53%

Foundry/Casting7%

Zirconia &Chemicals

27%

TV Glass 6%

Refractory 7%

Source: Iluka analysis

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China Zircon Industry

Tianjin Area

Qingdao Area

Zhangzhou Area Shanghai Area

Xiamen Area

Huangpu Area

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Zircon DemandConsumption Accelerated by Developing/Urbanising Economies

Zircon Consumption TrendsRest of World vs China Growth

Global Zircon Consumption CAGR since 1990 is 3.4% while China’s CAGR is 17.2%

Zircon Demand Growth• Demand 3.4% CAGR globally

• China demand CAGR of 17.2%; largest global consumer

- largest producer & exporter of ceramics; - largest producer of zirconium oxychloride;

and- import dependent

• Urbanisation, construction, wealth growth drive demand

• Demand profile strengthening from low base in BRICs and developing Asian economies0.0

0.2

0.4

0.6

0.8

1.0

1.2

1.4

1980 1982 1984 1986 1988 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008

Zircon (kt)

World China Rest of World

1980-89 CAGR= 2.8%

1990-08 CAGR= 1.3%

1990-08 CAGR= 3.4%

1990-08 CAGR= 17.2%

1980-89 CAGR= 2.8%

1980-89 CAGR= 2.8%

1990-08 CAGR= 1.3%

1990-08 CAGR= 1.3%

1990-08 CAGR= 3.4%

1990-08 CAGR= 3.4%

1990-08 CAGR= 17.2%

1990-08 CAGR= 17.2%

Source: Iluka analysis

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China Zircon ConsumptionCeramics Data

2009 Ceramics

Features of China ceramics production:

- top 5 provinces account for 85% of all ceramics manufacture

- Guandong, Fujian, Shandong account for over 2/3rds of tile manufacture

- Development of ceramics industry is emerging in central and western regions

2009 Production Change Exports Change

Floor & Wall Tiles 6.72 bn sq m 21.8% 6.8 million sqm 2.5%

Sanitary Ware 177 million pieces 12.3% 4.8 million pieces -15.2%

Household ceramics 20.4 billion pieces 30.6% 2.4 million -6.6%

Source: Global Zircon Conference participant data

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Chinese Ceramic SectorChina Industry Participant Observations

• “Hot” property market in 2009

• Real estate closely related to ceramics demand

• China Government has not changed policy re steady/moderate growth

• Industry challenges- world economy- sovereign debt- domestic purchasing power- protectionism (vis Chinese exports)- RMB appreciation

• Macro economic policy setting

• Exports important to ceramics sector

Source: Global Zircon Conference participant data

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Chinese Zirconium Chemicals Sector

• China the largest global manufacturer of zirconium oxychloride chemicals (ZOC)

• Range of applications: ceramics, zirconium products, nuclear grade zirconium material

• 2009 production of 110kt (2008: 140kt; 2007: 176kt)

• China commissioning additional 2kt capacity of zirconium sponge production by 2013 (total capacity of 5kt)

• Zirconium metal demand linked to China’s nuclear power generation capacity- 40 million Kwh capacity to 60 million Kwh by 2020- 34 nuclear power units currently under production- high corrosion/pressure resistance, nuclear absorption- 1/3rd of zirconium material replaced annually

• Need for ZrO2 growing sharply – “as a result the consumption of zircon sand will definitely continue to increase…”

Source: Global Zircon Conference participant data

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Ceramics53.4%

Fused Zirconia9.0%

Refractory12.6%

Other1.4%

Chemicals7.4%

TV Glass3.0%

Foundry13.2%

ChemicalsZOC - Overview

Source: TZMI, Roskill, Iluka consensus

Paper coatings

TiO2 coatings

Paint Dryers

Cosmetics

Gemstones+Technical Ceramics

Nuclear (Metal)

Other

Zirconia has excellent hardness and imparts wear, fracture, impact and corrosion resistance. Zirconium is extremely corrosion resistant at high temperatures. Various other chemical uses.

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Chinese Share of Global Zircon Consumption

China has grown from approximately 16% of global zircon consumption in 1998 to more than 40% in 2009

Global and Chinese Zircon Consumption

0

200

400

600

800

1000

1200

1400

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009

'000 tonnes

0%5%10%15%20%25%30%35%40%45%

China Rest of World China % of World

Source: Iluka analysis

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Mineral Sands Market OutlookIncreasing Importance of China

China’s consumption of zircon expected to continue to grow based on a combination of rising per capita income and urbanisation

• Chinese Government’s stated goal of quadrupling per capita GDP by 2020 (on 2000 levels)• McKinsey Consultants forecast, by 2025:

- urban population to reach 926 million people- floor space built per year to rise to 3.06 billion square metres (up from 1.18 billion sqm in 2005)Both factors are positive for zircon as demand linked to GDP per capita and construction

• Zircon’s largest end use is in ceramic tiles• Usage increases with rising incomes

China’s Urban Population

254

926

601

China’s Urban Floor Space

Source: McKinsey Consultants Source: McKinsey Consultants & BHP

People (Millions)

0100200300400500600700800900

1000

1990 2007 2025

Square Metres (Billions)

• 9

• 18

• 24

• 33

0

5

10

15

20

25

30

35

2000 2008 2015 2025

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China Ceramic Tiles Growth

• By the end of 2008 China accounted for 40% of global ceramic tile production and close to 35% of consumption

• The proportion of production of medium to high quality grade tiles in China continues to increase

Source: Ceramic World Review 2009

Chinese Ceramic Tiles

0

5001000

15002000

2500

30003500

4000

2003 2004 2005 2006 2007 2008

million sqm

Production Internal consumption

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CeramicsChina Tile Production Trends

0

0.04

0.08

0.12

0.16

0.2

1980 1983 1986 1989 1992 1995 1998 2001 2004 2007

Zirc

on k

g / T

ile

15%

20%

25%

30%

35%

40%

Chi

na T

ile P

rodu

(% o

f Tot

al)

• China’s new tile production during the 1990s used less zircon that the rest of world

• Ceramic segment zircon consumption expected to grow in China as affordability for good quality floorings increases in China and China increases exports to compete with western producers

*Note: Global Intensity of Use = Global Tile Production (m2) / Global Ceramic Grade Zircon Consumption (kt)Source: Ceramic World, TZMI

% Chinese Tile Production (RHS)

Global Zircon Intensity of Use (LHS)

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2010 China Zircon Imports Comparison

Source: Iluka interpretation of Chinese import statistics

2010 imports of zircon to China are at record levels

Monthly China Import Comparison

50,000100,000150,000200,000250,000300,000350,000400,000450,000500,000

Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

tonnes

07 Cum 08 Cum 09 Cum 10 Cum

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Iluka’s Market Presence in China

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Importance of China to Iluka

• China represented more than 23% of Iluka’s total revenue in 2009: Iluka’s biggest single market

• China represents more than 40% of global zircon consumption and will continue to grow more rapidly than other zircon markets.

• Iluka now has a zircon market share of more than 35% in China.

• Iluka Shanghai Representative Office has now been extended to a regional office for all of Asia (with increasing staff levels)

• Increasing level of direct sales of products

• Use of strategic mainland warehousing locations to better service customers

• Firm plans to further expand Iluka’s presence in China

• Continued focus on improving our service to the Chinese market: reliability, convenience, stream-lined supply chain, stronger relationships, communication

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Iluka’s Global Zircon Sales

In 2009 China represented 55% of Iluka’s global zircon sales

Source: Iluka data

Iluka Zircon Sales to China

0

100000

200000

300000

400000

500000

600000

2004 2005 2006 2007 2008 2009

mt

0%

10%

20%

30%

40%

50%

60%

% of Iluka Sales

China Other Iluka Sales % China Sales

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Iluka Market Share in China

Iluka’s market share in China averaged ~35% in 2008 and 2009

Source: Iluka analysis

Iluka China Zircon Market Share

0%5%

10%15%20%25%30%35%40%45%50%

2004 2005 2006 2007 2008 2009

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-100

0

100

200

300

1H 2008 2H 2008 1H 2009 2H 2009 Change (2H 2008 to 2H 2009)

kt

Asia China Europe Americas Other

Zircon Sales

Iluka Sales - Zircon

• Severe reduction in 1H 2009 sales, including China

• China imports recovered in 2H 2009

• European market slow to recover over 2009

Sales Volumes k tonnes

1H 2008

2H 2008

1H 2009

2H 2009

Change (2H 2008 to 2H

2009)

Asia (ex. China) 33 41 11 36 (5)

China 81 81 15 104 23

Europe 74 98 5 17 (81)

Americas 38 33 9 20 (13)

Other 0 1 2 4 3

Total 227 254 42 181 (73)

Excludes CRL

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Iluka’s Zircon Production

Declining production from Iluka’s traditional ore bodies will be off-set from new production at Murray and Eucla Basins

Most production from new projects:

Murray and Eucla Basins

Note: All production figures exclude CRL

Iluka Zircon Production

0

100

200

300

400

500

600

2006 2007 2008 2009 2010 2011

kt

Other MB Eucla

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Views on Global Zircon Supply / Demand

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2005 – 2010 Global Supply and Demand

• A tight market through to 2008 resulted in escalating zircon prices

• Decline in production from major producers and Indonesia resulted in the zircon market falling into short supply through the course of 2008

• The Global Financial Crisis resulted in an over supply in 2009 despite significant reductions in production

• Demand in 2010 is fast out-pacing production causing significant tightness

Source: Iluka analysis

500

750

1,000

1,250

1,500

2005 2006 2007 2008 2009 2010

Supply Demand

Supply and Demand (kt)

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China Zircon Market 2010

Demand- Jan + Feb ~ 40-50kt/month consumption (normally a very quiet period)- Mar + Apr ~ 40-50kt/month consumption- expect H1, 2010 to be near 250kt consumption- expect H2, 2010 to also be close to 250kt consumption

Supply- total supply to end of March ~ 150kt

China recovered from the Financial Crisis by Q3, 2009 and is now far exceeding all consumption expectations

Iluka expects monthly consumption in China to stay firmly in the range of 35-50kt per month and in the range of 450-500kt for all of 2010

Source: Iluka estimates based on market data

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2010 Supply

The global zircon market in 2010 will be tight:

- a very strong end to 2009

- lower than expected production from major new projects

- further declines in Indonesia production

- limited Hainan production

- demand far exceeding expectations at the start of 2010

- Europe and North American markets recovering very rapidly

- production of zircon from new projects much lower than expected

- production of zircon from all suppliers very slow to recover

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Indonesia Zircon Supply

Source: Iluka interpretation of Chinese import statistics

Indonesia zircon supply remains constrained by resource depletion and increased government control of mining activity

Chinese Zircon Imports from Indonesia

• -

2

4

6

8

10

12

14

16

Jan

Feb

Mar Ap

r

May Ju

n

Jul

Aug

Sep

Oct

Nov

Dec

Tonnes ('000)

2007 2008 2009 2010

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Mineral Sands Market ConditionsZircon – 2010

• Zircon demand across all main markets rebounded strongly in first quarter

− uncontracted bulk shipments to Europe

− steady improvement in North American market

− continued strong demand in China

• Iluka advised customers of 1st of at least 2 price increases in 2010 (April and July)

• If realised, average prices well above prices prevailing at commencement of 2010

• Iluka’s zircon supply constrained by project ramp up in 2010

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Zircon Supply/DemandTZMI Perspective from Conference - Data not reproduced

• Future growth in demand (ceramics and specialty applications) driven by China and emerging economies

• No further decline in demand expected from developed economies but recovery expected to be gradual

• 2012-2020 CAGR in global demand of 3.8%

• Not a large number of new projects to be commissioned, plus time to market for new projects may take longer than expected

• New supply will fill the gap & perhaps lead to short term excess- short term surplus (“not currently a surplus”)- expect discipline on part of suppliers

• Worrying trend is “highly unlikely” to be matched to 2020 by new supply- “flat supply equation”- onset of deficit in supply between 2012-2014- potentially large deficit; could be upside to their demand scenario

• “Large concern” is the rate of new project development

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Zircon Supply / DemandTZMI Perspective from Conference - Data not reproduced

• Zircon prices still have not surpassed real high in 1975

• TZMI view that Q2 price increases of US$20-50/tonnes have been passed through

• 2nd half price increase they expect to be a similar magnitude to the high end of this range (although they are “hearing higher numbers”)

• TZMI view that price increases are justified

• See a continuing trend in prices over next 5 years

• Matter of when prices increase above US$1,000/tonne – would be above US$1,000/t if not for GFC

• TZMI view on prices doesn't reflect demand (on which they are bullish) but supply

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Zircon Supply Iluka’s View - Supply Crunch Near Term?

• Few material new zircon sources- primary contribution from existing suppliers

• Even with advent of Jacinth-Ambrosia, relative industry zircon:Ti02 production ratio remains stable at ~0.2 (over period 1990-2013)

• Majority of mooted / planned TiO2 projects have low zircon assemblage

• Iluka’s assessment is zircon market comes into balance into 2011/2012

• Given zircon typically a co-product in mineral sands developments, higher TiO2 prices also required to realise associated zircon production

• Given zircon demand growth historically greater than TiO2, zircon availability may come under further pressure if projected TiO2 volumes do not materialise

• Even with advent of 50% price increase, zircon supply to 2015 increases only marginally relative to 2011 levels; significantly higher pricing required to support new supply

Zircon Supply Induced New Projects at 0%, 25% and 50% Zircon

price rises (on 2008 levels)

Iluka’s analysis of mineral sands supply is based on inducement analysis of known projects, at varying zircon and Ti02 prices, with a risk weighting applied based on: sovereign, environmental, regulatory approval, funding and technical risks.

Source: Iluka analysis of company announcements

0

200

400

600

800

1000

1200

1400

1600

1800

2000 2002 2004 2006 2008 2010 2012 2014

ktpa

Current Producers No price rise

25% price rise 50% price rise

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Industry Zircon:TiO2 RatioDespite Advent of Jacinth-Ambrosia, Industry Z:TiO2 Ratio Remains Stable

• Decline in zircon:TiO2 ratio forecast from existing producers (excluding Iluka)

• Despite Jacinth-Ambrosia (largest new supply source in 30 years) industry Z:TiO2 ratio stable

• Given zircon demand growth historically > TiO2, zircon availability likely to come under further pressure, particularly if projected TiO2 volumes do not materialise

Source: TZMI and Iluka analysis

Zircon/TiO2 Ratio All Feedstock Producers

(including J-A)

Zircon/TiO2 Ratio Excluding Iluka

0.0

1.0

2.0

3.0

4.0

5.0

6.0

7.0

1990 1995 2000 2005 2010F 2013

mt of TiO2 or Zircon

0

0.05

0.1

0.15

0.2

0.25

0.3

0.35Ratio t Zircon/t TiO2

TiO2 Historical Supply Zircon Historical Supply

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Iluka OutlookConfluence of Positive Factors

• Transition to high quality long life production operations almost complete

• Additional high margin zircon and rutile production over the next 3 years

• Tight industry supply conditions for high grade titanium dioxide and zircon

− Iluka’s inducement analysis suggests prices need to increase appreciably

− Iluka has idled upgrading capacity capable of being re-activated

• Zircon prices increasing in 2010

• Unconstrained pricing environment from 2010 for rutile

• Growing low risk iron ore royalty stream

• Significantly improved financial characteristics expected 2011-2013

Closing Statement

Closing SlideIluka Resources Limited

For further information, contact:Robert Porter, General Manager, Investor Relations [email protected]+61 3 9225 5481Iluka’s website www.iluka.com

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Information has been drawn from the following presentations:

− Huang Xinhong, Secretary General, China Ceramics Industry Association

− Gavin Deiner, Senior Consultant, TZ Minerals International

− Philip Murphy, Managing Director, TZ Minerals International

− Jian Dongmin, GM Zhejiang Shenghua Biok Biology Zircon Valley Branch Company, Director China Nonferrous Metal Industry Association

− Che Xiaokui, Superintendent, Beijing Nonferrous Metal Research Institute

− Yu Ping, Analyst, Zirconium Industry, Ruidow

Copies of the Conference presentational materials can be obtained from TZ Minerals International (www.tzmi.com)