*Excludes Sierra Rutile, which had a TRIFR of 2.2 for 2017

Iluka aspires to achieve high levels of sustainability performance. 

Sustainability at Iluka means integrating economic, environmental and social considerations into business practice and ensuring safe and responsible conduct underpins everything we do.

Welcome to Iluka’s annual Sustainability Report. Following a year of transition across the business, Iluka reported substantially higher revenues in 2017 achieved on the back of improved prices and volumes for the company’s products. This enabled Iluka to deliver a solid dividend to shareholders and reduce net debt significantly post the acquisition of Sierra Rutile in December 2016. Sustainable economic outcomes and sustainability performance are mutually reinforcing and the company has a positive outlook for the period ahead.

Key developments at Iluka during the year included:

  • the integration of the Sierra Rutile operation;
  • a substantial improvement in mineral sands market conditions;
  • changes in operational settings – reflecting both improved markets and a detailed review of Iluka’s production portfolio and projects following the Sierra Rutile acquisition; and
  • project approval of the Cataby development in Western Australia.

With the company’s transition largely complete, delivery is Iluka’s core focus for 2018. This includes delivery on operational excellence; delivery on expansion projects; and, as always, delivery on sustainable development, particularly in the areas of safety and environmental performance.

Protecting the safety and wellbeing of Iluka’s people remains a core focus for the business. Twenty-six people sustained recordable injuries while working for the company in 2017. Eight of these injuries had the potential to be severe permanent disabling injuries or fatalities. This is unacceptable and we will continue to drive safety programs to protect Iluka’s most important asset – our people. We similarly strive to maintain a workplace where we protect and promote the health of workers and the community. In 2017 Iluka achieved a reduction in potential occupational exposure to noise and airborne contaminants at Australian sites relative to baseline. Community health is an important aspect of our Sierra Rutile operations, where Iluka has a role in supporting malaria and typhoid control in the region.

Sierra Leone represents a new operating jurisdiction for Iluka and in 2017 the company commenced introducing its group-level sustainability frameworks to Sierra Rutile. Initial focus areas were safety, anti-bribery and corruption and alignment to Iluka’s Code of Conduct. On safety, Iluka has adopted a ‘back to basics’ approach, emphasising personal accountability, understanding risks, incident and hazard reporting and the wearing of appropriate personal protective equipment. We have also commenced a large capital upgrade of infrastructure which, once completed, will improve the safety of working conditions.

Iluka’s approach to environmental management is based on understanding and minimising the potential impacts of its operations on the environment. In December, Iluka announced a US$90 million increase in the rehabilitation provision for our closed operations in the United States. This is a particularly disappointing outcome in the context of the company’s strong rehabilitation performance over recent years. Iluka continues to engage proactively with regulatory agencies to assess the nature and extent of any change to its proposed rehabilitation program. As the nature and extent of any rehabilitation program remains uncertain, the provision increase has been calculated on a probabilistic basis across a range of scenarios. Land rehabilitation is an essential part of Iluka’s operating model and I can assure you of our ongoing focus in this area.

During 2017 Iluka embedded social performance standards and procedures and continued a human rights work program, with the Executive undertaking human rights training. Work was also undertaken to prepare for the introduction of proposed modern slavery legislation by the Australian Government, including the development of a human rights vendor screening and assessment process.

Iluka’s workforce in 2017 comprised more than 2,600 staff, with around three quarters of them located at Sierra Rutile, where the workforce is over 95% Sierra Leonean. Iluka has continued to work towards its diversity targets and, in 2017, female participation at executive level was 33%. This was supported by the consistent practice and process of annual succession planning and employee development.

Finally, I am pleased to report that Iluka has made considerable progress towards aligning the company’s activities with the International Council of Mining and Metals (ICMM) Sustainable Development Framework. This has resulted in the company being recognised as a leading sustainability performer through listing on the Dow Jones Sustainability Index (DJSI) Australia.

We are an international mineral sands company with expertise in exploration, development, mining, processing, marketing and rehabilitation.

The company is a major producer of zircon globally and a large producer of the high-grade titanium dioxide products, rutile and synthetic rutile. Iluka’s products are used in an increasing array of areas including home, workplace, medical, lifestyle and industrial applications.

Iluka has operations in Australia and Sierra Leone; projects in Australia, Sierra Leone and Sri Lanka; rehabilitation programs in the United States, Sierra Leone and Australia; and a globally integrated marketing network.

The company also has a royalty over iron ore sales revenues from tenements of BHP Billiton’s Mining Area C province in the north west of Western Australia.

Iluka is listed on the Australian Securities Exchange and is headquartered in Perth, Western Australia.

Production settings

The following chart presents Iluka’s production activities in 2017 and expected activities for 2018.

  2017 2018
Australia
Jacinth-Ambrosia mining
South Australia
Mining and concentrating activities recommenced December 2017, following a 20-month suspension to allow inventory draw down 100% utilisation
Murray Basin mining
Victoria
Processing of existing concentrate until stocks were exhausted in October 2017 Rehabilitation and closure of Kulwin, Douglas and WRP
Hamilton mineral separation plant (MSP)
Victoria
Idled from October 2017 Idle
Tutunup South mining
South West Western Australia
100% utilisation 100% utilisation, until mining completion (February 2018)* followed by rehabilitation and closure.
Cataby mining
Mid West Western Australia
Mine development approved December 2017 Construction of mine and wet concentrator ongoing for full year
Narngulu MSP
Mid West Western Australia
Utilisation based on market demand and inventory considerations 100% utilisation
Capel dry plant
South West Western Australia
Ilmenite circuit operational for full year Ilmenite circuit operational for first half
Synthetic rutile (SR) kiln 1
South West Western Australia
Idle Idle
SR kiln 2
South West Western Australia
100% utilisation 100% utilisation
North Capel separation mill
South West Western Australia
100% utilisation 100% utilisation
Sierra Leone
Lanti Dredge Mine
Sierra Rutile
100% utilisation 100% utilisation
Lanti Dry Mine
Sierra Rutile
100% utilisation 100% utilisation, capacity expansion underway
Gangama Dry Mine
Sierra Rutile
100% utilisation 100% utilisation, capacity expansion underway
Sierra Rutile MSP
Sierra Rutile
100% utilisation 100% utilisation, upgrade planned for 2018
Sembehun, mining project
Sierra Rutile
Pre-feasibility study Definitive feasibility study
United States 
Stony Creek MSP
Virginia
A small amount of remnant zircon concentrate stocks were shipped in 2017 and recognised as zircon production (16kt) when sold Idle

* Cataby will be the next source of ilmenite feedstock to maintain kiln operations, forecast commencement of mining is 2019.

Iluka is a company which aspires to achieve high levels of sustainability performance. To us, that means integrating economic, environmental and social considerations into business practice, and ensuring safe and responsible conduct underpins everything we do.

Iluka’s sustainability approach is governed through a series of policies and management systems that span across six key elements.

Economic Responsibility

Iluka pursues sustainable economic outcomes allowing us to share economic benefits with the communities in which we operate, whilst creating and delivering value to shareholders.

Governance

Iluka conducts its business in accordance with the highest standards of corporate governance

People

Iluka seeks to attract and retain the best people while building and maintaining a diverse, inclusive and high-achieving workforce.

Health and Safety

Iluka strives to maintain a fatality-free workplace, eliminating injuries and prtotecting the health and wellbeing of its people.

Social Performance

Iluka respects human rights, engages meaningfully with stakeholders and seeks to make a positive difference to the social and economic development of the areas in which it operates.

Environment

Iluka seeks to manage its impact on the environment, use resources efficiently and leave positive rehabilitation and closure outcomes.

Iluka is involved in all of the main stages of the mineral sands process, from resource development through to delivery of products to customers.

1. Exploration

Finding the next generation of mineral sands deposits involves a systematic process of research, licence application and access negotiation, a variety of surveys, drilling, sampling and analysis, resource estimation and financial evaluation. This process which can take years to complete, is the foundation data on which future feasibility studies may be considered initiated.

2. Mining approach

Mineral sands mining involves both dry mining and wet (dredge or hydraulic) operations. Mining unit plants and wet concentrator plants concentrate and separate the heavy mineral sands from waste material.

3. Mineral separation

The heavy mineral concentrate is transported from the mine to a mineral separation plant for final product processing. The plant separates the heavy minerals from each other in multiple stages by magnetic, electrostatic and gravity separation.

4. Synthetic rutile

Iluka also produces synthetic rutile, ilmenite that is upgraded by high temperature chemical processes.

5. Rehabilitation

As mining progresses, the mining pit is backfilled and covered with stockpiled soils that were moved at the start of the process. Rehabilitation is progressively undertaken to return land to a form similar to its pre-mining state and suitable for various uses including agricultural, pastoral and native vegetation.

6. Marketing

Iluka transports the final products of zircon, rutile, synthetic rutile and Ilmenite to customers around the world.

From everyday applications in the home and workplace, to medical, lifestyle and industrial applications, the unique properties of titanium dioxide and zircon are utilised in a vast array of products.

Iluka is an established global supplier of zircon and titanium minerals, providing a range of high-grade titanium dioxide feedstock as well as zircon products for end markets. Iluka also recovers and markets activated carbon and iron concentrate, both of which are by-products of the synthetic rutile process.

Through its sales and marketing network, the company supplies over 50 products to more than 250 direct customers with sales in more than 40 countries.. We are committed to product quality and reliable supply, and we offer technical support to our customers.

 

The 2017 Sustainability Report has been published for our stakeholders to share information on our sustainability approach, performance and key material issues for the 12-month period ended 31 December 2017.

The report is reviewed by Iluka’s executive team and Board of Directors and complements Iluka’s 2017 Annual Report, available on our website www.iluka.com. It has been prepared to align with the core option of the Global Reporting Initiative (GRI) Standards, including the Mining and Metals Sector Disclosure Supplement.

There are no material re-statements of the 2016 Sustainability Report data or content. The previous year’s reporting data can be found on our website www.iluka.com and contained within the 2016 Sustainability Report.

All dollar figures in this report are in AUD currency, unless otherwise stated.

Iluka expects any entities it is associated with to operate and act with the same degree of care and standards as Iluka does. However, it will not have direct control over the operations of those companies and must rely on their separate boards and management teams to meet appropriate standards including compliance with all health, safety and environment regulations. If Iluka was to become aware of failings by an associated company in this respect it would endeavour to insist on changes so that Iluka’s expectations were met.

In this publication, the collective expressions “Iluka” and “Iluka Group” may be used for convenience where reference is made in general to those companies. Similarly, the words ‘we’, ‘us’, ‘our’ and ‘ourselves’ are used in some places to refer to the companies of the Iluka Group in general. These expressions are also used where no useful purpose is served by identifying any particular company or companies.

This report covers our operations globally, comprising exploration, project development, mining, processing and rehabilitation activities.

The acquisition of Sierra Rutile Limited (Sierra Rutile) has changed Iluka’s reporting boundary when compared to the 2016 report.

Integration priorities at Sierra Rutile have included the introduction of Iluka’s health, safety, environment and community (HSEC) and risk mitigation frameworks, as well as the Code of Conduct, to ensure alignment and integration of Group level procedures and processes.

Where possible and practical, performance measures and reporting are combined across the Iluka Group. There are, however, some aspects where different reporting metrics are required due to different risk profiles or local requirements.

Operating in Sierra Leone

Sierra Rutile became a part of the Iluka Group in December 2016. The acquisition of an operating mine in West Africa has changed Iluka’s risk profile since the previous reporting period, given the company previously operated primarily in Australia and the United States.

Sierra Rutile has an established operating history spanning 50 years and a project mine life in excess of 20 years. The operation consists of a dredge mine, two dry mines, a mineral separation plant and associated infrastructure in the Bonthe District in south west Sierra Leone. The operation is one of the largest rutile deposits in the world and also produces smaller quantities of ilmenite and zircon in concentrate.

Two previous Environmental and Social Impact Assessments (ESIA) were undertaken in 2001 and 2012, when the primary mining process was dredge (wet) mining. The mining process has since been revised to undertake open cast (dry) mining as the primary method of ore extraction, in conjunction with dredge mining. As such, Sierra Rutile is in the process of completing a comprehensive Environmental, Social and Health Impact Assessment (ESHIA) and developing an Environmental, Social and Health Management Plan (ESHMP) to consider the impacts and subsequent management and mitigation measures relating to the existing and future mining activities within the mining lease.

The ESHIA and ESHMP are being developed in alignment with the relevant Sierra Leonean legislation, Iluka’s policies and standards, and good international industry practice. Various components of the ESHIA are discussed throughout this report. The final ESHIA will be publically available in 2018.

Iluka’s locations and employee distribution

Report approach

Each year, we conduct a materiality assessment to identify the sustainability topics that are most important to the business and our stakeholders. The outcomes of the assessment determine the focus of this report.

Materiality assessment

Iluka’s materiality assessment is in accordance with the GRI principles for defining report content. It is comprised of a four stage process: identification, prioritisation, validation and reporting.

Material issues and boundaries

By identifying and responding to material sustainability issues, we aim to provide transparent coverage of key topics of interest for our shareholders, and deliver on Iluka’s strategy of creating and delivering value.

Material issue

Description

Impact

Internal

External

Governance
Ethics and conduct

MI

Corporate governance, ethics and conduct

Economic responsibility
Contribution to local and regional economies

MI

Economic benefits delivered through jobs created, taxes and royalties paid, public infrastructure built, local procurement spend and social investment.

Tax transparency

MI

Public transparency of taxes paid

People
Diversity

MI

Diverse and inclusive workforce

Attracting, developing and retaining employees

MI

Talent attraction and retention, human capital development (including competency and training) and succession planning

Health and safety
Fatality-free

MI

Focus on activities that have the potential to result in a fatality or permanent disabling injury

Exposure to occupational health hazards

MI

Protection of the workforce from occupational exposures

Community health Protection and enhancement of community health  and employee health

Social performance
Stakeholder engagement

MI

Community engagement, maintain a social licence to operate and grievance management

Human rights

MI

Uphold fundamental human rights and respect cultures, customs and values

Resettlement

MI

Avoid or minimise impacts of project-induced resettlement

Indigenous relations and cultural heritage Cultural heritage and Indigenous engagement

Environment
Land rehabilitation and closure

MI

Process of planning for and undertaking rehabilitation and closure activities including land use design and planning, provisioning, rehabilitation execution and land relinquishment

Mineral waste management

MI

Materials removed from the mine void and separated from the valuable minerals over various process stages

Biodiversity Protection and enhancement of biodiversity

Energy efficiency and greenhouse gas emissions Energy consumption and greenhouse gas emissions contributing to climate change impacts

Water use Water supply, use, management and discharge

Environmental incidents Uncontrolled impacts on the environment

MI Material issue

Commencing in 2017, Iluka set Group level performance targets against each of its material sustainability challenges, informed by the materiality assessment. These targets enable common understanding, both internally and externally, of Iluka’s sustainable development goals and performance.

Progress against these targets is reviewed by the Board mid year and at year end, and performance reported externally on an annual basis in the Sustainability Report.

The majority of the targets are effective for the period 2017-2018, with progress made towards achieving them detailed in the table below.

Target By when Status 2017 progress

Governance

Targeted training on anti-bribery and corruption for employees working in higher risk areas is maintained at greater than 90%

Annually

Classroom training provided to >90% of relevant Sierra Rutile employees
Alignment to the ICMM sustainable development principles is completed by 2020, including reporting in accordance with the GRI framework

2020

  • Annual Sustainability Report published
  • Gaps in alignment integrated into the sustainability annual work plan

Next steps

  • Review climate change strategy
  • Continue work plan for alignment

Economic responsibility

Integrate Sierra Rutile into Iluka’s annual Tax Transparency Report (published 2018) and ensure reporting requirements are met under the Extractive Industries Transparency Initiative (EITI) in relevant jurisdictions

2018

  • Decision made to address Iluka’s tax transparency reporting through this report and Iluka’s Annual Report 2017
  • Integration of Sierra Rutile’s taxes paid into Iluka reporting framework (this report)

Next steps:

  • Continue public tax transparency reporting
  • Reporting requirements in Sierra Leone under discussion with government

People

Continue to improve female and Indigenous participation in the Australian workforce to meet diversity targets of 30% female and 8% Indigenous participation by 2018

2018

For the Australian workforce:

  • Female participation was 27%
  • Indigenous participation was 5%

Next steps

  • Review Diversity Policy
  • Review of recruitment strategy to promote female and indigenous participation in operational and technical roles

Health and Safety

Zero fatalities and total permanent disabling injuries across the Iluka Group

Annually

There were zero fatalities or total permanent disabling injuries across the Iluka Group
A year on year reduction in annual Total Recordable Injury Frequency Rate (TRIFR) at Australian, United States and exploration sites

Annually

TRIFR increased from 4.4 to 4.8, with one less injury in 2017 and a reduction in hours worked
Drive an improvement in reporting culture at Sierra Rutile targeting a 5% month on month increase in new hazards reported

2017

Achieved

  • Hazard reporting increased by an average of 34 per month in the March quarter to 342 per month in the December quarter

2018

NEW

Next steps

  • 2018 target set at 10% increase each quarter on the previous quarter in new hazards reported
A reduction in potential occupational exposure to noise and airborne contaminants at Australian sites relative to baseline

Annually

  • There has been a reduction in the number of similar exposure groups with potential exposures above relevant occupational exposure standards of 23% compared to baseline

Social Performance

Implement new Iluka standard for social performance and develop alignment plans at all sites and projects

2017

Achieved

  • Social Performance Group Standard and Procedure released
  • Gap assessments and alignment plans completed for all relevant sites and projects
Local-level grievance mechanism established for all sites and projects by 2018, that enables effective capture and resolution of complaints

2018

Grievance Procedure released in 2017

Next steps

  • Implement training on grievance management
Develop and implement human rights work program by 2018

2018

  • Human rights work program established
  • Integration of human rights into impact assessments in Sierra Rutile and Sri Lanka
  • Training completed on human rights for executive team

Next steps

  • Continuation of human rights work program

Environment

All sites to have closure plans in accordance with Iluka Group standard and legislative requirements by 2018

2018

73% of sites have completed closure plans

23% partially completed

4% (Sierra Rutile) to be updated

Next steps

  • Improvement of Sierra Rutile conceptual closure plans
All sites have up to date surface water management plans and site water balances by 2018

2018

  • 90% of sites have up to date surface water management plans and site water balances in place

Next steps

  • Continue to develop and review management plans for remaining sites
Drive an improvement in reporting culture at Sierra Rutile targeting a 5% month on month increase in new environmental incidents reported

2017

Achieved

  • Incident reporting increased by an average of 23 per month in the March quarter to 64 per month in the December quarter

2018

NEW

Next steps

  • 2018 target set at a 10% improvement each quarter on the previous quarter for reporting environmental incidents

Complete

NEW  New target set, commencing 1 January 2018
In progress and expect to meet target
In progress but target may not be met
Target not met
Not commenced