Okay. Good morning, everyone, and welcome to Iluka's 2026 Annual General Meeting. I'm James Mactier, Iluka's Chairman, and on behalf of the company, I would like to thank our shareholders, proxy holders, staff, and guests for attending this meeting, and welcome everyone watching the live webcast. This is an important event in our calendar, and one that the board looks forward to each year, and gives us a chance to hear directly from our shareholders and respond to your questions. Iluka has operations in multiple locations around Australia, with our headquarters located here in Perth on Whadjuk Noongar country. With this in mind, I'd like to acknowledge the Whadjuk people of the Noongar nation as the traditional owners of the land on which we meet today, and pay my respects to elders past and present. I recognize their contributing connection to culture and contribution in this city.
I also recognize the many traditional owners that protect and preserve the rich cultural heritage in areas where Iluka's operations are located, and I extend that respect to Aboriginal and Torres Strait Islander peoples here today. I'm advised that a quorum is present, therefore I formally declare the meeting open. In case you're not able to stay for the whole meeting, to give everyone the best opportunity to vote, I now also declare the poll open on all the resolutions to be considered at today's meeting. You can vote throughout the meeting. I'll give you a warning before closing the poll. Our Company Secretary, Ben Martin, will outline the procedures for voting at today's AGM later in the meeting. I'm joined on stage this morning by our Chief Executive Officer and Managing Director, Tom O'Leary, General Counsel and Company Secretary, Ben Martin.
Also with us here today on stage and via video are my fellow directors. Each director's experience and qualifications are outlined in the 2025 annual report. First is Susie Corlett. Susie is Iluka's longest serving non-executive director who joined the board in June 2019. Susie is an independent non-executive director, Chair of the Sustainability Committee, a Member of the Audit and Risk Committee, and the Nominations and Governance Committee. Next is Lynne Saint, who is attending via video. Lynne joined the board in October 2019. Lynne is an independent non-executive director, Chair of the Audit and Risk Committee, and a Member of the Nominations and Governance Committee. Lynne will be retiring at the end of this meeting. I'll talk more about Lynne in my address. Next is Greg Meyerowitz, who joined the board in April 2026.
Greg is an independent non-executive director, a member of the Audit and Risk Committee and the Nominations and Governance Committee. Greg will assume the chair position of the Audit and Risk Committee upon Lynne's retirement. Like myself, this is Greg's first AGM with Iluka and he is standing for election today. Next is Peter Smith, who joined the board in June 2024. Peter is an independent non-executive director, a member of the Nominations and Governance Committee, the People and Performance Committee, and the Sustainability Committee. Finally, Andrea Sutton, who joined the board in March 2021. Andrea is an independent non-executive director, chair of the People and Performance Committee, and a member of the Nominations and Governance Committee and the Sustainability Committee. Also in attendance today are members of Iluka's executive management team. Finally, Jane Bailey, a partner of our external auditor, KPMG.
Jane is here today and is representative and will be available to answer any questions shareholders may have on the conduct of the 2025 audit, the preparation and content of the auditor's report, the accounting policies adopted by the company in relation to the preparation of the financial statements, the policies adopted by the company in relation to the preparation of the sustainability report, and the independence of the auditor in relation to the conduct of the audit. I will commence today's proceedings with the Chairman's address, which will be followed by the Managing Director's address, meeting procedures, and then formal business. It is a pleasure to address you as Chairman for the first time. When I spoke at last year's meeting, I reflected on what attracted me to Iluka.
A high quality management team and board, a diversified and globally significant asset base, a strong balance sheet, excellent governance, a culture of discipline and accountability, and upside through its strategic exposure to global mega trends. 12 months on, that view has only strengthened. Furthermore, the importance of these qualities has been highlighted during a year of extraordinary geopolitical volatility and tension, industry disruption, and market uncertainty. By any measure, 2025 was a demanding year. While I expect 2026 to present its own challenges, as we've already seen with the war in the Middle East, I continue to be impressed with how such challenges are handled by our team and the progress we are making in executing our diversification strategy. When I joined, there was plenty of skepticism regarding Iluka's rationale for diversification into rare earths.
Today, the sentiment is notably different. The result of trends and events that continue to highlight the vital importance of rare earths and validate the approach we have taken. It's also the product of our visible progress in building the Eneabba Refinery, which will be commissioned next year. We've come a long way, but quite obviously we're not there just yet, and while we're greatly encouraged by the progress we have made, we remain laser-focused on execution. Of course, nothing we do matters if it is not done safely and responsibly. In 2025, total recordable injuries reduced by 10% and serious potential incidents fell from 14 to 3. Delivered during a time of elevated capital intensity, this reflects a sustained effort across the company and a collective commitment to keeping one another safe.
On the environment front, we rehabilitated 272 hectares of land across our portfolio and completed the closure of the former Gin Gin mine here in Western Australia. Further evidence of Iluka's long-standing commitment to stewardship and responsible land management. As Tom and I wrote in the annual report, 2025 was in many respects a tale of two businesses, with contrasting dynamics across the mineral sands and rare earths. The mineral sands business continued to experience difficult market conditions. Demand remains subdued, reflecting weak construction activity in key markets. At the same time, a significant change is taking place in the pigment and feedstock industries, changes that may ultimately prove constructive, but for now have contributed to uncertainty and caution. These developments were felt most acutely by our western pigment customers and in turn by our synthetic rutile operations.
We responded with a series of decisive actions as conditions evolved. In September, we announced the suspension of production at SR2, our primary synthetic rutile kiln, along with operations at the Cataby mine which supplies its feedstock. In October, we withdrew sales guidance under our long-term synthetic rutile contracts. In January we recognized impairments where asset carrying values no longer reflected our market outlook. These were difficult but necessary decisions. Nevertheless, our mineral sands business generated AUD 300 million in underlying EBITDA. That result speaks to our financial strength, the quality of our product offering, our marketing discipline and cost control. The actions we have taken are designed to preserve value and to ensure we are well-placed to respond when conditions improve. From a product offering, the Balranald mine in New South Wales is our most recent addition to this capability.
It is a very high-grade ore body rich in natural rutile and premium zircon with valuable rare earth credits. It also involves a novel remotely operated underground mining method, the outcome of more than a decade of investment in technical development, making it capable of accessing ore that would otherwise be uneconomic. Mining commenced this year. Commissioning and ramp-up of the operation is continuing, and we expect to reach nameplate capacity across both rigs by mid-year, with first finished product entering the market in the second half. In contrast, rare earths performed very strongly over the past year. China's dominance in rare earths has long been evident. What's changed is the seriousness with which governments and markets are responding. There is now broad consensus among Western and like-minded nations that secure supply of these materials is essential to industrial capability, economic resilience and national security.
Iluka has not been a bystander to that shift. We recognized the strategic importance of our rare earths early, along with the value of our assets and expertise. The rationale for our diversification and for the partnership we formed with the Australian Government in 2022 has only been reinforced by these events. At Eneabba, that vision is now well into execution. Engineering is 99% complete. Construction is over halfway and on track to reach 75% by year-end. We are preparing well in advance for commissioning and operations. When commissioned next year, Eneabba will be one of the few refineries outside China capable of producing both light and heavy separated rare earth oxides, materials essential to modern industry.
It will be a globally significant asset located in a very safe jurisdiction, with the potential to deliver substantial value to Iluka shareholders and Australia over many decades. No one at Iluka is underestimating the work we have in front of us. We've entered the final critical phase in Eneabba's construction. Delivery is our clear priority, and ultimately delivery depends on people. That brings me back to one of the primary reasons I was drawn to Iluka. Without the right people, organizations do not succeed. After 12 months as chairman, I can say with confidence that Iluka's people are its defining strength.
Given the critical phase we are now in, it's imperative that our remuneration framework is appropriately structured to retain and incentivize our highly skilled and experienced team and ultimately reward them for delivering for shareholders. This has been a key focus of Board, as outlined in the remuneration report. We believe we've struck the right balance in aligning financial outcomes of management and shareholders, particularly in relation to the successful construction, commissioning, and ramp up of the Eneabba Refinery, which is vital to our collective future. Before I close, I'd like to make special mention of Lynne Saint, who retires from the Board at the conclusion of this meeting. Lynne has served with distinction for nearly 6 years, including as chair of the Audit and Risk Committee.
This period saw many key developments in Iluka's recent history, including the demergers of Deterra and Sierra Rutile, the development of the Balranald mine, and the final investment decision for Eneabba. Lynn, on behalf of all Iluka, we thank you, and we wish you well for your future. We also welcomed Greg Meyerowitz to the board earlier this month. We look forward to Greg's contribution at what is an exciting and critical time. Lastly, I'd like to thank all of Iluka's shareholders for your continued support. I recognize the patience that many of you have extended our company as we undertake a diversification strategy years in the making. Be assured we are focused on delivery, our progress is real, and our objective is in sight. Thank you. Tom.
Thank you, James. Good morning, everyone. As the Chairman said, 2025 was a demanding year. I think it also brought a measure of clarity in some important areas. Since we last met, geopolitical conditions have worsened and trade settings have become more uncertain. Conflict in the Middle East has again demonstrated the importance of secure supply. When dependence on one region is too great, any disruption will be felt quickly and far beyond the point of origin. That lesson is not new, and it is not limited to oil. You're no doubt familiar with the often-quoted statement from Deng Xiaoping in 1992 that the Middle East has oil, China has rare earths. While it was a statement about leverage, his comparison with oil has been brought to life vividly by the Middle East oil crisis we're in today.
The validity of the comparison was illustrated just as vividly last year when constriction of rare earth supply by China ground Western supply chains to a halt. China has spent the decades since Deng's statement growing its leverage. Today, China accounts for around 90% of global rare earth output. In heavy rare earths, almost 100%. Rare earths have long been a part of everyday life, but the key magnet rare earths, neodymium, praseodymium, dysprosium, and terbium, have become indispensable foundations of the modern world. They're essential inputs in the permanent magnets used in hybrid and electric vehicles, renewable energy technologies, robotics, and defense systems. Critically, part of the response to the Middle East oil crisis, accelerating electrification, moves economies away from one concentrated supply chain and directly into another, given China's dominance in rare earths.
Its leverage was deployed memorably back in 2010 in the context of a dispute with Japan and was again weaponized, as I mentioned, just last year when supply was restricted twice, including in direct response to U.S. Liberation Day tariffs. Export controls on key rare earth elements and permanent magnets disrupted Western manufacturers within weeks. This vulnerability, long discussed in concept, became immediate in consequence. Governments and industry have responded accordingly. Most notably, a landmark agreement between the U.S. government and MP Materials established a floor price for light magnet rare earths, effectively bifurcating the market. This has been reinforced by Lynas' more recent agreement with the Japanese government, and again, only last week, by further support and floor prices from the U.S. administration for USA Rare Earth and its venture with Serra Verde in Brazil.
These steps matter because a durable rare earths industry outside China was never going to be built on the pricing conventions of a monopoly. That has been Iluka's view since conceptualizing our diversification late last decade. While these developments are significant, they're not surprising. Their likelihood, particularly in relation to a price premium for security of supply, informed Iluka's decision to invest in the Eneabba rare earths refinery in 2022 with the support of the Australian government. Recent events have only served to reinforce that rationale. Eneabba is progressing well. Peak construction activity is expected later this year, and it'll come online next year. What strikes me most is how tangible that progress has become. Major equipment is being placed into position, tanks and pipe racks are taking shape.
It no longer takes much imagination to see a completed refinery in place next year. More than AUD 1 billion of capital has been spent or committed, and we remain confident in the overall cost estimate. Our focus extends beyond construction. We're well advanced in operational and readiness work, securing key sources of reagents, establishing operating systems and controls, and building the internal and external capabilities to run the refinery safely and reliably. We have evidence-based confidence in the separation process. Eneabba's flow sheet is based on proven technology from Rhône-Poulenc's original refinery at La Rochelle in France. Our technology partner, Carester, has direct operating experience in that process, including in treating Eneabba monazite at La Rochelle itself up until the early 1990s. Critically, we're not dependent on a new mine to feed our refinery.
The Eneabba rare earth stockpile alone will supply effectively free feedstock for around seven years of operations. That's a tremendous starting position from a commissioning and a cost perspective. Post Eneabba's commissioning in 2027, Iluka will be a material producer of both light and heavy separated rare earth oxides. Our heavy rare earths capability is a meaningful point of difference among current Western suppliers. We can offer the full suite of magnet rare earth oxides in material volumes. Discussions with a range of potential customers are ongoing. We continue to target our first offtake agreement around the middle of this year. Beyond the stockpile, we continue to take steps to secure the refinery's longevity. Our supply agreement with Lindian Resources for concentrate from the Kangankunde deposit in Malawi adds an external feed source.
That is significant because, like the offtake we have with Northern Minerals, it reinforces the industry-building potential of a strategic infrastructure asset like Eneabba. Our agreement with Lindian is also noteworthy in that it represents an inversion of the traditional dig-and-ship economic model that has characterized the Australian resources sector. Here, we have rare earth concentrates being imported to Australia for value addition domestically. Within our own portfolio, the definitive feasibility study for Wimmera in Victoria is advancing. Wimmera is a deposit with the potential to become a multi-decade source of both light and heavy rare earths, and one that is also rich in zircon, a key export of our mineral sands business. That's a good point to turn to mineral sands more broadly. Demand was subdued through 2025, particularly in titanium feedstocks.
Macroeconomic uncertainty, changes in the pigment industry, and the ongoing consequences of China exporting deflation into that market have all weighed on conditions. These are difficult circumstances, but they're not unfamiliar, and they have not changed Iluka's approach. Protect value, preserve flexibility, and keep the company well-positioned for recovery. That discipline is in our DNA. The alternative, continuing to produce into a weak market, consuming cash while waiting and simply hoping for improvement, does not serve shareholder interests. There are developments playing out, though, that may in time prove constructive. Rationalization of global pigment capacity, consolidation, anti-dumping tariffs on Chinese pigment exports, as well as Rio Tinto's review of its titanium business. We'll continue to monitor each of these intently and be deliberate about our response or, where appropriate, engagement in these industry dynamics. There is a broader point worth making that links our commodity suite.
For years, Western economies were content to cede rare earths processing capacity to China, and we are at present living with the strategic dependence that followed. Policy makers in Europe and the United States, where major pigment industries have operated for decades, as well as those in South Asia, South America, and the Middle East, which have ambitions for the same, are being forced to confront a familiar question. How much industrial capability do they wish to retain domestically? That's not a hypothetical question. It's the very question the West answered with acquiescence for 40 years in rare earths and is now belatedly seeking to rectify. Stripped back, that is the geopolitical backdrop to the industries Iluka operates in and supplies. We are of course focused on what we can control, and in that respect, the commencement of mining at Balranald is an important milestone for the company.
Beginning with the COVID pandemic and accelerating since 2022, Iluka moved to prioritize technical development in Australia over the pursuit of new discoveries in Africa. Balranald is emblematic of that shift and the result of 15 years' investment in research and development. This is a critical minerals deposit that since its discovery in the late 1990s had historically been regarded as too deep to access economically. Today, we're extracting the premium zircon, natural rutile, and the light and heavy rare earths that will feed our processing facilities and supply our customers for the next decade or more. Iluka is evolving into a diversified critical minerals company positioned for long-term growth and the delivery of sustainable value for shareholders. 2025 was demanding.
It also brought clarity about what supply security actually requires and about the merits of decisions Iluka has made over a number of years. We have more to do, and we're in a strong position to do it. Thank you, and I look forward to your questions.
Thank you, Tom. Transcripts of both my address and that of Tom's are available on the company's website and the ASX company announcement platform. I'll now ask Ben Martin, our Company Secretary, to walk through the procedural matters for asking questions and voting at today's AGM.
Thank you, James. I will start with the procedure for asking questions and then move on to the voting procedure. Only shareholders or their proxy, attorney, or authorized company representative holding a green or yellow admission card are entitled to ask questions or make comments at today's meeting. All questions should be addressed to James Mactier as chair of the meeting. When the floor is open to questions if you wish to ask a question or make a comment on a resolution or management of the company, please make your way to the microphone with your admission card. If you are unable to make your way to the microphone, please raise your hand and a microphone will be passed to you.
Please state your name and indicate whether you are speaking on behalf of a shareholding you own directly or beneficially and/or whether you are speaking as a proxy or representative for another shareholder or group of shareholders. Please also state your affiliation if you are not here today in your personal capacity. It is important that we give shareholders as a whole a reasonable opportunity to ask questions or make comments if they wish to do so. Therefore, I ask that speakers restrict themselves, at least initially, to no more than two questions at the microphone. If you have two questions, please ask them together and limit your questions to no longer than two minutes. Anyone wishing to speak more than once will be given a subsequent opportunity to do so if time permits and in the meantime should kindly resume their seat.
As no questions or comments were submitted before the meeting, the chair will commence with shareholder questions or comments from the room. Now for the voting procedure. For shareholders and proxy holders at the time of registration for this meeting, those persons eligible to vote at today's meeting were given a green admission card. The voting boxes are on the back of this green card. If you are a proxy holder, a summary of your voting instructions has been attached to the green card you have received. By lodging the voting card, you'll be taken to have voted in accordance with the instructions you have been given. The summary also shows any open votes that you have been given to vote as you consider appropriate. The chair has already opened the poll. You can vote at any time.
You do not need to wait for the resolution to be discussed before casting your vote. Computershare staff will collect the voting cards after all resolutions have been put to the meeting. Alternatively, you may drop your completed voting card in one of the ballot boxes located at the exit if you need to leave the meeting early. There will be an opportunity for you to ask Computershare staff any questions about the completion of your voting card prior to the closing of the poll. Thanks for your attention.
Thanks, Ben. Voting today will be conducted by way of a poll on all items of business. Each shareholder present, either in person or by proxy, attorney, or corporate representative, has 1 vote for every ordinary share owned. All resolutions today are ordinary resolutions requiring approval by a majority of the shares held by shareholders who vote on the resolution. The vote on resolution 2 for the adoption of the remuneration report is advisory only. All items of business are endorsed by the board. There are also voting restrictions for some resolutions out, as outlined in the notice of meeting, which apply to those who have an interest in the resolutions and certain of their related parties. Rod Soames from Computershare Investor Services has agreed to act as Returning Officer for the poll. Thank you, Rod.
As of the proxy close date, we have received proxies representing 301.8 million shares or 70% of the company's issued shares. Details of the proxies received is on the screen and will be shown again at each item of business before any discussion commences and just before closing of the poll. I'm holding open proxies in my capacity as chair of the meeting, and it's my intention to vote all available proxies in favor of all resolutions. The result of the poll will be announced later day, today on the Australian Securities Exchange and will be posted on the Iluka website. The notice of meeting for this year's annual general meeting was distributed to shareholders on the ASX on the 20th of March 2026, and I propose that it be taken as read.
We now come to the formal business of the meeting. Each of the items of business will be considered in turn with an opportunity for shareholders to ask questions on each item. We'll now proceed to the first item of business. The first item of business is receive and consider the annual financial report, sustainability report, director's report, and the auditor's report for the company and its controlled entities for the year ended 31st of December 2025. During this item of business, we will also give shareholders as a whole, a reasonable opportunity to ask questions or make comments about Iluka and its management. Shareholders may ask questions of the auditor.
Such questions must be relevant to the conduct of the audit, the preparation and the content of the auditor's report, the accounting policies adopted in preparing the financial statements, the policies of the company in relation to the preparation of the sustainability report and the auditor's independence. Please note that no resolution or vote is required on this item. I'll open the meeting to any questions or comments from shareholders. If you have a question that relates to the other items of business, including director election, remuneration, or the grants of securities to the managing director, I'd ask that you hold your questions until we reach those items. As there were no questions submitted in advance of the meeting, are there any questions or comments on this item of business from the floor? Yes.
Hello.
Hi.
Yes, John Campbell from Australian Shareholders.
John Campbell from the Australian Shareholders Association.
Hello, John.
Thank you for your time a couple of weeks ago for discussing the annual report. It was most useful. I've got a couple of questions on it. Firstly, actually more on the quarterly report than on the annual report. The quarterly report indicated that there were no synthetic rutile sales in the 3 months to 31st of March. Sorry. I should have said that I'm representing 70 shareholders and 440,000 shares today from the Australian Shareholders Association members. Chairman, it was a bit of a shock to see that there were no sales synthetic rutile.
I don't understand the market situation that you have with it, and I would be grateful if I could have some explanation of a rough idea of the number of customers you've gotten. If Mr. O'Leary has got any information as to why they didn't draw down any stocks in the quarter. I'm reminded of the Venator situation in the annual report that's mentioned the failure of a UK pigment refiner and the situation that you had consignment stocks with them, whether that's a common practice with other customers and just a bit broad background as to why the industry picks up in the second half of the year and not the first half.
Sure. Tom, you happy to respond?
Yeah, sure. Thanks for the question. Back in the at the time of our annual results, we gave some guidance about our synthetic rutile sales this year, and I think we guided about 135,000 tons for the calendar year. That was a consequence of arrangements that we struck with our range of pigment customers through the course of the latter part of last year and early this year. Those sales are second half weighted. There was no expected deliveries in the first quarter, and they're all contracted in accordance with our customers' requirements. In terms of the in terms of scheduled, in terms of our customers' requirements and their inventory holdings and the like, so it wasn't a surprise to us that there were no sales in the first quarter.
As we noted, they're second half weighted. Turning to your other question, the number of customers in the pigment space, it's really the western chloride pigment producers that we supply, and there's, you know, less than half a dozen of them.
Oh, okay. That's small. Well, I guess it was concerning to me that there were nil sales. You've got marketing offices around 4 continents, I think. I was surprised that the efforts there were not productive. I guess if they're all scheduled sales, then that's probably the answer to the question.
I'll pass on your concern. Yeah, that's right.
My second question, Chairman, relates to the RE plant and the funding for it. You mentioned that there was about I think it was AUD 240 million of further funding required if including the ramp up to full production when you'll need to be providing working capital. Presumably you're also on the line for any budget overruns. A couple of questions arise. First of all, if you are you confident that you'll have the cash flow, operating cash flow this year to be able to service the requirements for this year and 2027? Secondly, are you confident that you'll be able to beat budget or come in within budget on the capital cost?
thirdly, do you think you'll have to resort to selling your Deterra shares to be able to fund the contribution to the RE?
Thanks, John. Look, in short, we're very confident. In terms of budget overruns, there's nothing, we're not seeing any overruns at this stage, and anything will be communicated to the market, of course, if that ever does happen. No, we're not seeing any overruns. As we've talked about, our, the next contribution, our equity contribution is forecast not till the end, towards the end of this year or early next year. We're confident in that, the cash flows that we have, the undrawn and available facilities under our debt facilities, the various inventories we've got, the receivable, et cetera. Yes, we're confident that we can meet those payments.
And, and-
Equity contributions
without selling Deterra?
Without selling Deterra.
Yes. Okay. Good. Thank you.
Yes. Tom, anything you want to add?
No, that's fine.
Okay.
Yeah. Yeah. Yeah. Good morning, the board. I'm Chun Kit Tan, a very small shareholder, but I've actually retained this stake after taking a big loss through the volatility of the share price because I believe this company is very strategic to Australia. Very strategic.
Strategies.
Strategic.
Yes.
To Australia.
Yes. To Australia.
Yeah.
Okay. Yes.
Also to the Western world.
Absolutely.
Yeah. Actually, I've been following Tom's message for quite a fair bit. I know your stance, and I'm with you. That's why I'm still here. Second year here. Okay. Thank you guys for judicially and steadfastly guiding this company, transforming towards a critical minerals resources company. Obviously, I share your confidence that you guys are on track to deliver the plan. This is very important in the context of Australia whereby where you have big investments, we have a lot of narratives, then we never deliver, you know, on course, on time. Obviously, I think you have addressed that. I think around here, all the shareholders are confident because we are ticking down towards the timeline. Just a little big ask, you can ignore me.
Before you commission, is there a possibility that you can organize a tour for interested shareholders to see this particular shiny plant before it actually go into production? Because once it goes into production, I think it's going to be a very sensitive plant. Something to consider, but you can always ignore me because this is my small man request.
Thank you very much. We will take that request on note, and I'll pass it on to Luke Woodgate, who manages investor relations and does tremendous tours. Just with all seriousness, whether you're a small shareholder or a large shareholder, institutional shareholder, you're all treated the same in terms of how we value your investment as an owner in our company. Never sort of be apologetic for only having a few number of shares. I referenced people such as yourself in my address. People who've been very patient over quite a few years as we've embarked on this diversification strategy, a very strategic and conscious strategic shift for the company, and which we believe is being validated and will be vindicated.
Thank you very much for your patience, and we are all working for the best interest of shareholders. Every decision we make is framed around what's in the best interest of shareholders, be they small or large. Thank you very much.
Yep. Okay. I think to add on to the excitement, obviously we've got a lot of noise throughout the whole year. There's a lot of narratives. Tom rightly pointed out that increasingly we are getting, you know, underwriting from the West in terms of the offtake price. I note that previously you have indicated that without all this underwriting, the plants, refineries outside China is not going to be viable. My question next is at AUD 110, which is increasingly become sort of like the norm, you know, in terms of offtake. Obviously with AUD 110, you have your costs, you have your volumes, you have your phase volumes ramping up. Could you sort of like share how lucrative it is going to be for shareholders? Because we are 1 year away.
You're indicating just now, and I heard that you are looking forward to sort of like getting some sort of offtake agreement by the middle of this year, which is really exciting, you know. I think I asked this question last year, maybe you can refresh us again. I don't want to be a broken record, I think this question is valid. You know, how does this refinery compare to our incumbent Lynas, which is, you know, everybody knows about it. Lynas is also having a plant in Kuantan, in Kalgoorlie. Obviously, we have our historical feedstock that is sitting right in Eneabba, which is literally free, you know. That will start us off. You have your strategic, you know, agreement from Malawi. Not that I'm very excited because ideally we should be getting our feedstock locally to prevent further disruptions.
Definitely we have local feedstocks. Unfortunately, the one that you have actually inked, Northern Minerals, they are marked with a lot of controversies right now. However, I take comfort in that our company has got resources coming through over the east. Obviously, I think we have a lot of things in the works, in the pipelines. Ideally, it should be coming within this company. Because if it is coming within this company, we have control. Strategic alliances are strategic alliances.
Yeah,
it's good to have strategic alliances to line up, you know, how should I say, you know, the resilience of our supply pipeline. No doubt about that. I think, okay, I think that should be all. The other thing, okay, one last thing, which you guys have actually done before. Your core operations are in a bit of a long winter.
Unfortunately, because, you know, with Chinese dominance across all the minerals that you are actually producing, the Chinese will pursue dominance at all costs. That is something which I think if we follow the Chinese business practices, we know is dominant at all costs. In fact, I just realized this particular term over the last two, three days when I tracking across a lot of industries like EVs and every other thing. That brings me to the other question is there anything that is actually synergistic with your current core operations of rutile, titanium dioxide, and your transformation into a critical mineral resources company? If not, is there a possibility down the road that we could actually expect some sort of demerger so that investors can actually zoom in on the focus on what they like? Mineral resources, supply chain company. Thank you.
Okay. Thank you very much. There's probably more than 2 questions in there, but we'll do our best. There were some accolades, and thank you for those. Tom, you happy to respond?
Yeah, sure. I'll try and take them in order a bit, but the first question was around the value of the Iluka rare earths refinery and how that was looking at AUD 110. Back in April 2022, when we announced FID, we published the prospective returns using a price deck that centered around AUD 106. You can look back from April 2022. Much more recently, at the end of 2024, after we endured and refunded the cost overrun in 2023, at the end of 2024, we published a really significant piece of work, I think, which shed a lot of light on return on returns generally under a number of scenarios. The fuller the refinery is, obviously the greater the returns.
It illustrated that we will be making very attractive returns, very favorable net present value of future cash flows, on scenarios where the refinery was, you know, merely a third to a half full. You know, at higher levels of throughput, very attractive returns. You just made the comment that also that without underwriting support, refineries couldn't be profitable. You know, I think in the past, people viewed the rare earths industry on the basis of Chinese dominance, in particular of pricing. The Asian Metal Index is the kind of instrument of Chinese government policy in the rare earth space.
What those transactions I talked to in my opening remarks, the MP, the Lynas, and the more recently, the USA Rare Earth Serra Verde deal, demonstrated the underwriting from government. Over the course of governments, but over the course of the last year, the rare earth pricing has, you'll have seen, bifurcated into a kind of a Western price and a China price. I think customers are increasingly cognizant of the fact that they won't necessarily be able to access the domestic China price. What the government's actions have done has been an effective bifurcation of the pricing model, which is what we had contemplated many years ago. That's been a pleasing development.
You know, in terms of feedstock from the refinery, you touched on our deal with Lindian and Malawi and the preference to have homegrown Australian feedstock. Look, I, you know, I share that. You know, we're very much looking to foster homegrown feedstocks and, you know, that was the intent of the Australian Government in supporting our refinery proposal. We're building the refinery so it's capable of feeding a range of feedstocks, not just our own Eneabba monazite, but a range of feedstocks, including the Northern Minerals one or feedstocks from the East Coast, from Victoria, the Wimmera Basin, and so on. It's very versatile, and we're continuing, as I touched on, the Wimmera feasibility study, and that, you know, could be a really important, you know, multi-generational supply of feedstock for the refinery.
A really important one, and we're continuing to pursue that. You also touched on the potential synergies between our various business and the possibility of demerger in due course. You know, there are some synergies between our businesses in the sense of where we have a mineral sands deposit, there's invariably a rare earths element in that. In Balranald, for example, you know, a pretty significant part of the value for Balranald will be coming from the rare earths that we're extracting there, and that is true of the Victorian mineral sands deposits as well, lots of rare earths with them.
That, those sort of contributions can be dealt with contractually, so you know, I wouldn't want to have a takeaway that, you know, that any possibilities in future are precluded because of that. They're certainly considerations for years down the track. I think that's probably it.
Cover thing? Great.
Thanks.
Thank you. Are there any other questions? Well, a comparison with Lynas.
Oh, yes. Sorry. Okay, I'll give that one to you, James.
Lynas has obviously got a couple of different facilities. I guess, they certainly don't have a stockpile of materials and that was the, I think one of the keys you were driving at, in terms of profitability and the fact that, for the first many years we could be operating on Eneabba monazite alone and therefore be, you know, extremely profitable. Look, I, all I'd hasten to add there is that, you know, we're looking to build a multi-generational rare earths business, we're looking to be funding future capital for developments such as the Wimmera and others. Thank you.
Yes, sir. Can we get a microphone over? There is a microphone coming down if you like. Thanks .
Let's wait till it stops then.
No, no, Paul.
Just make sure.
My name as a shareholder, Paul Slythe, my question is, at the last meeting I raised the issue of Image, which is transporting rare earths direct to China. Is it possible that in the light of what's been said quite recently that if Iluka could buy them out, then maybe that amount of this rare earths going to China could be rediverted in Australia? I just wondered if, is there any answer to that particular question? The second one would be liquid hydrogen was to be developed here and operational by 2027, now it's deferred to 2031, right?
The Cook Government has advised that the hydrogen is now going to be produced here in Perth, in operation, so it can be used in Perth, which means that hydrogen would be readily available for the processes that would be currently fed by coal, as I was told at the last meeting. I wonder, is there any consideration to that? Also, I attended the meeting of Woodside and they have now produced 5 MBOE per day of ammonia, and that ammonia is of course to be used for transport of the hydrogen. Those subjects are just ones you could maybe possibly answer those.
Tom, you happy to respond re, Image and also replacement of coal that we're using down in, Capel, I guess with either hydrogen or ammonia or some.
That's right.
some alternative
That's correct.
greener fuel.
Sure. Thanks, James. Thanks, Paul. Good to see you. The first question around Image, you know, we are always very keen to engage with potential suppliers of rare earths concentrate byproducts or frankly, any intermediates, mineral sands with rare earths that we can process in our own facilities. In fact, the person responsible for that, Barry Murphy, is sitting behind you. I'm sure he's listened carefully to your question and will be keeping all ears open for any possibilities.
On the second one around, liquid hydrogen, yeah, we touched on last year, Paul, that the alternative to coal in our synthetic rutile process would be to use hydrogen, and the company actually developed a process to use hydrogen a couple of decades ago, in fact, in a different context. It was actually to process a particular type of mineral to convert to synthetic rutile. So we have a process, flow sheet if you like, to use hydrogen. It would require material capital to be spent to utilize hydrogen. Nonetheless, it's one that we'll continue to consider and watch as the state advances down the path towards having hydrogen available.
Thank you, Tom. Yeah.
Finally, on ammonia and Woodside, again, you know, we will be using ammonia and related products like nitric acid and so on in our Eneabba refinery. We'll, again, we'll watch Woodside's progress with interest. There are other producers of ammonia in Western Australia that we're very engaged with as well.
Thank you very much, Tom.
Thank you.
Yes, sir. This guy. Hi. Please state your name first.
My name is Graham Stevens. I'm a very small shareholder, quite recent. Looking forward, my two questions are about raw materials. One, Tronox produce titanium dioxide here. I've heard that they are currently stockpiling their monazite. Have you looked at them and had discussions with them as a raw material supplier? Secondly, I understand that sulfuric acid is used. There was a problem with Lynas recently that, like, the sulfuric acid plant there was closing down because nickel was closing down. Do you use sulfuric acid, and where are you gonna source it from?
Tom?
Thank you, Graham. On the Tronox, yes, I believe that Tronox is now stockpiling its monazite rather than selling it to China, which it has been doing for the last while. You should assume that we talk to everyone in the market who potentially has monazites available. On the sulfuric acid, we don't use sulfuric acid at the moment in our processes, but we will be using sulfuric acid in the refinery in the front end of the refinery. That's an internationally traded commodity, as I'm sure you know, sulfuric acid, and it is produced as a byproduct in the nickel refinery.
As you also probably know, that supply is potentially coming to an end. Nonetheless, there are significant tankage facilities in Western Australia for import of sulfuric acid. As I say, it's an internationally traded commodity. The trade has become very tight in recent times, and price has gone up a lot as a consequence of the Middle East crisis, but nonetheless, you know, acid is available. Thank you.
Okay.
Thanks, Graham. Any other questions? Yes.
Oh, sorry. Just further to the sulfuric-
Just wait for a microphone so everyone can hear. Thanks. Say your name again, please.
Chun Kit Tan. Yeah, just further on to the question about supply of sulfuric acid.
Yeah.
Obviously, supply chain is very critical right now. Would you kind of like enlighten us around this room where this sulfuric acid is actually available, readily available? Everything right now, I tell you head out there, you're gonna hit a brick wall, you know?
Yeah. Yeah. Look, we are not requiring sulfuric acid right now.
Yeah.
I'll preface my comments with that. And we won't be requiring it until we're commissioning next year. Sulfuric acid is typically produced out of China, but also the Middle East. It can also be produced from sulfur out of the U.S. and North America more generally. There are a number of sources of it, and as I say, it's an internationally traded commodity. The shortage of sulfuric acid at the moment is potentially a bit of a tailwind in our titanium dioxide business because the Chinese pigment industry uses a lot of sulfuric acid in their pigment processing of sulfate pigment. With the shortage of acid, they are restricting supply there and diverting it to fertilizer.
That's increased price of Chinese pigment, which has been a bit of a tailwind for pigment pricing generally and global pigment players.
Any other questions? There being no further questions or comments, this concludes the discussion on this item of business. As the next item concerns my own election, I'll ask Andrea Sutton as chair, to take over as chair for this item of business.
Thank you, James. The next item of business is the election of James Mactier as director, which is Resolution 1A in the meeting notice. Details of James's qualifications and experience are set out in the notice of meeting. James was appointed to the board in May 2025 as an independent director. James retires at this meeting in accordance with Article 16.4B2 of the company's constitution. Being eligible, James offers himself for election at this meeting. The board considers James as an independent non-executive director. James is the Chairman of the board and the Nominations and Governance Committee, and is a member of the Audit and Risk Committee and the People and Performance Committee. The board considers James' significant skills and experience in the commodities and resources sectors and global capital markets, in particular project and corporate finance.
Resource project investment and equity investing, coupled with the leadership experience, is a valuable contribution to the board and to Iluka's long-term sustainable success. The board, with James abstaining, unanimously supports his election. Proxies received in relation to this item are shown on the screen. I will now open the meeting to any questions or comments from shareholders in relation to James' election. Are there any questions or comments on this item of the business from the floor? As there are no comments or questions, this concludes our discussion on this item of business. Please cast your vote on this item. I will now hand the meeting back to James. Thank you.
Thanks, Andrea, and thank you, everyone. The next item of business is the election of Greg Meyerowitz as a director, which is Resolution 1B in the notice of meeting. Details of Greg's qualifications and experience are set out in that notice. Greg was appointed to the board in April 2026 as an independent director. Greg retires at this meeting in accordance with Article 16.4B2 of the company's constitution, and being eligible, Greg offers himself for election at this meeting. The board considers Greg as an independent non-executive director. Greg is a member of the Audit and Risk Committee and the Nominations and Governance Committee. If elected, Greg will assume the position of Audit and Risk Committee Chair upon Lynne Saint's retirement at the end of this meeting.
The board considers Greg's significant skills and experience in auditing financial risk and compliance, coupled with his commercial and leadership experience, as valuable to the board and Iluka's long-term sustainable success. The board, with Greg abstaining, unanimously supports Greg's election. Proxies received in relation to this item of business are shown on the screen. I now open the meeting to any questions or comments from shareholders in relation to Greg's election. Since there are no questions or comments, this concludes the discussion on this item of business. Please cast your vote on this item. The next item of business asks shareholders to adopt the company's remuneration report for the year ended 31st of December 2025. It is Resolution 2 in the notice of meeting. The remuneration report is contained in pages 40 to 65 of the company's annual report, which is available on the company's website.
It contains information on the company's remuneration framework, the outcomes for the financial year ended 31st of December 2025 for the chief executive officer, chief financial officer, non-executive directors of the company and other key management personnel. This is a non-binding advisory vote of shareholders, the views and comments of shareholders will certainly be taken into account by directors when further considering remuneration matters. I note that a voting exclusion applies to this resolution as set out in the notice of meeting. Proxies received in relation to this item of business are shown on the screen. I emphasized in my address earlier, and as detailed in the remuneration report, your board is committed to remuneration arrangements that are competitive, support the attraction and retention of executives, and align with company performance and shareholder outcomes.
I now open the meeting to any questions or comments from shareholders in relation to the 2025 remuneration report. Are there any questions? Yes, John.
Chairman John. John Campbell again from Australian Shareholders' Association. I think retail shareholders have some difficulty in accepting the appropriateness of executives receiving bonuses, I guess, at all when such a large loss was incurred by the company, a quarter of a billion dollars. The difficulty we have is in looking at this and I can obviously see that there's been some institutional shareholder opposition to the report as well. I'm very much aware that Tom O'Leary in particular hasn't had a salary increase since 2016, which I think he probably about the only Australian working Australian for that to have occurred.
I have to balance these things out. Our position was on the remuneration report as a whole, that it was a good, clear report and set things out well. I didn't have a problem in terms of the nature of it. It's just the hurdles that are set for the short-term incentive as to whether they're just a bit too generous or whether there should be a threshold on the financial side that the company's got to make a profit before you get financial short-term incentives. Those are the sort of things that I'd like you to consider in the current year as to whether there's any change required. We're gonna support it.
It wouldn't make any difference from those figures if we didn't, because we're only about half of that proxy discretion vote. 0.15%. Not a lot of voting power, but nevertheless, I do recommend that you have a look at the short-term incentive thresholds and see if that should be improved. Our view of it also means that we take into account the fact that you've controlled costs very well during the year. You've made some tough decisions in shutting the plant and shutting the Cataby mine. We understand all of that and we just have to try to take it into balance and I guess the institutional proxy advisors don't always do that.
The other aspect of it that I'm not surprised to see an institutional vote against and it's one that we had some difficulty in accepting as well. There's the one-off strategic award that you've made on the basis of the achievement of budget and other factors in relation to the RE plant. I think we've been much preferred to have seen that incorporated in the past few years, LTI, long-term incentive arrangements, rather than coming in as a one-off in this current year. I think that's possibly the reason that you've got a bit of a vote against that. That's my view.
Okay. Thank you for those comments, John. We certainly, as we do all the time, we look at feedback we receive from year to year. Most importantly, we look at the year as it's evolved, and all the factors that have gone into the performance for the company and the executives performance themselves. Each year we look at that and what we try to do is what we think is fair, what is balanced. You used that word, I'm glad you did. Ultimately what aligns in the best interest of shareholders. Then we also need to be looking at what our peers are paying. We have a very experienced and skilled team.
We are entering a critical, we're in a critical phase in terms of the Eneabba construction in particular, and then commissioning and ramp up. As I said in my address, that is critical for our, and vital for our collective future. The board takes all of this into account. Impairments we took into account. They were exogenous macro events driven by that. In fact, our executives did a great job in responding to those, trying to get ahead of it as fast as we could. As Tom says, there was no point continuing to, as many companies would, because it's easy just to keep going and not make the tough decisions. As I said, they were tough and necessary decisions and the board applauds management for the actions they took.
That's why we, whilst we took into account, the impairments, we elected not to use any discretion, downward discretion, as some would suggest that we should have. As we talk to shareholders, particularly when we get that, as owners of the company, when we talk to shareholders directly, generally they understand that and they understand the importance of this team and having a balanced remuneration framework, which should be taken as a whole. Your point is you looked at it and you voted in favor, recommended voting in favor of the remuneration, report itself. There's always little bits that you could say, "Well, is that hurdle, tough enough, challenging enough," et cetera, et cetera. You balance it off with the likes of Tom hasn't had a pay rise for, since 2016.
He also hasn't sold a share other than for tax planning purposes since 2016. The board takes all of this into account when it comes up with the remuneration outcomes and the framework we set going forward. We strongly believe this is in the best interest of the company. We will be very, very happy if our executives hit every one of those hurdles and gets 100% of all their STIs and LTIs, because I think the shareholders will do exceptionally well if we can deliver on that. Thank you for your comment. We'll take it all on board. Any other questions or comments? There being no further comments or questions, please cast your vote on this item.
The next resolution is Resolution 3A, which is the grant of 2025 STIP award to the Managing Director. The next item of business asks shareholders to approve the grant of restricted shares to the Managing Director, Tom O'Leary, as his incentive award under the company's 2025 short-term incentive plan, or STIP for short, on the terms summarized in the notice of the meeting. The board considers the grant of restricted shares to the Managing Director to be appropriate for the performance delivered during 2025, and with Tom abstaining, unanimously recommends the shareholders vote in favor of Resolution 3A. I note that a voting exclusion applies to this resolution as set out in the notice of the meeting. The proxies received in relation to this item of business are shown on the screen. I open the floor to any comments, questions. Okay, no questions.
This concludes our discussion on this item of business, and please cast your vote. The next item of business asks shareholders to approve a one-off grant of performance rights to the Managing Director, Tom O'Leary, as his incentive award under the company's Long-Term Strategic Award for the year ended 31st of December 2026 on the terms summarized in the notice of meeting. The board has determined to grant the Managing Director an additional one-off long-term incentive award for 2026 to reward long-term value creation for shareholders during this period, which is critical to executing on Iluka's long-term strategy, and in particular, delivering and commissioning the Eneabba Rare Earths Refinery effectively. The board considers the one-off grant of performance rights to the Managing Director to be appropriate, and with the Tom abstaining, recommends that shareholders vote in favor of Resolution 3B.
I note that a voting exclusion applies to this resolution as set out in the notice of meeting. Proxies received in relation to this item of business are shown on the screen. I now open the meeting to any comments or questions. Since there are no questions or comments, this concludes our discussion on this item of business, and please cast your vote. The last item of business asks shareholders to approve the grant of performance rights to the Managing Director, Tom O'Leary, as his incentive award under the company's Long-Term Incentive Plan on the terms summarized in the notice of meeting. The Board considers the grant of performance rights to the Managing Director to be appropriate, and with Tom abstaining, recommends that shareholders vote in favor of Resolution 3C.
I note that a voting exclusion applies to this resolution as set out in the notice of meeting. Proxies received in relation to this item of business are shown on screen. Are there any questions or comments from shareholders? No questions or comments. This concludes our discussion on this item of business. Please cast your vote. We've now concluded all items of business at this AGM. On screen is a reminder of the proxies received for all resolutions at the closed date. If shareholders have any questions regarding the green voting card, please raise your hand and someone from Computershare will come over and assist you. Computershare staff will now walk around. Can all persons voting please place your green voting card in one of the Computershare voting boxes. Thanks, Rod. Please raise your hand if you're yet to place your green voting card.
Whoa, I'm getting ahead again.
Rod, this one.
There's still one up that side as well. Has everyone who intends to vote voted now, given their green card to Rod? Okay, thank you. As the voting process is now complete, I therefore declare the poll closed. That concludes the proceedings of today's annual general meeting. I'd like to thank you all for your attendance and participation today. I now formally declare the meeting closed, subject to finalization of the poll. Detail of the results of today's meeting will be posted on both the company's website and the ASX platform. A recording of the meeting webcast will also be made available on our website. Light refreshments will be served outside, and I hope shareholders take the opportunity to come and meet with company directors and members of our executive team and other staff. Thank you for joining us and travel safely.