Unlawful Strike Action Halts Major Projects Of Iluka Resources

Sierra Rutile which focuses on the production of rutile, ilmenite and zircon from mineral sands is responsible for one of the world’s largest rutile deposits, and it operates through three dredge and dry mines in the Moyamba and Bonthe districts of the small West African country. Sierra Rutile got merged with Iluka Resources Limited (ASX:ILU) which is involved in the exploration, project development, operations and marketing of mineral sands. The company is a major producer of zircon globally and a large producer of the high-grade titanium dioxide products rutile and synthetic rutile. The merger took place in Dec-2016 and the merged entity is focused on rutile mining operations.

Iluka Resources Limited’s (Iluka) subsidiary Sierra Rutile Limited (SRL) faced challenges with its operations getting temporarily halted on account of unlawful strike action taken by a contingent of its 2000-strong operating workforce at the site on account of which the company had been forced to suspend mining to ensure the safety of employees and the integrity of its assets. Though the industrial strike action has been peaceful; but in order to ensure the continued safety of SRL employees and safeguarding and maintaining integrity of its assets, mining activity is temporary placed at halt.

Management is in talks with striking employees and other union officials to understand the root cause of the strike action and what are their terms and conditions and when are they going to resume normal work. Management is continuously taking the assistance from ministers along with senior officials of the government of Sierra Leone in dispute resolution and intend to get the solution at the earliest. Though the strike is not in accordance with the law (Sierra Leonean law) and there is clear grievance method in existence under SRL which has not been utilized prior to such industrial strike action being initiated by the striking workforce. Under SRL request, the Ministry of labor Adekunle King has personally visited the site on 22nd October and had a conversation with the striking employees to understand the condition, the cause and a further progress to return to work.

The strike action will have an impact on full year rutile production for 2018 which was 93.4 thousand tonnes by 30th September 2018 and SRL has the capacity to achieve a maximum of 135 thousand tonnes of rutile production for 2018 depending on strike resolution at the site. However, a broader production projection update will be seen when quarterly review is released which is scheduled to be released on Wednesday - 24th October after which an investor call is scheduled. The company is in talks with all the concerned officials and striking employees for the earliest resolution to the strike action and it will keep the market informed about the progress update on the issue. All eyes are on quarterly review and projections on production which is due on Wednesday 24th October, and with earliest resolution of strike action, the production will be in line with the projected figures as proposed by the company.

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