Leading mineral sands producer Iluka Resources Ltd (ASX: ILU) has been a strong performer so far in 2025.
The company's shares climbed from $5.11 apiece at the start of January to $6.59 per share at yesterday's close of trading.
This represents a healthy 29% return for shareholders in less than eight months.
For context, the All Ordinaries Index (ASX: XAO) increased by 8.4% over the same period.
However, today's results for the first half of 2025 (H1 FY25) appear to have spooked investors.
Shares in the ASX 200 mining stock are trading at $6.06 each at the time of writing, marking an 8% fall from yesterday's close.
So, what caused today's sharp decline in the share price?
Let's dive into the numbers to see what happened during the half year.
Earnings take a hit
Iluka's numbers for H1 FY25 don't make the best of reading.
Revenue of $558 million dipped by 8% from the same time last year.
Underlying operating earnings (EBITDA) from mineral sands mining also came in 13% lower at $218 million.
And the EBITDA margin from mineral sands mining slipped by 3%.
However, Iluka's 20% stake in fellow ASX-listed outfit Deterra Royalties Ltd (ASX: DRR) helped to lift total underlying EBITDA to $233 million.
Nevertheless, net profit after tax (NPAT) of $92 million tumbled by 31% from the twelve months prior.
Operating cash flow also deteriorated, falling by 39% to $115 million.
And at the end of June, the ASX 200 mining stock reported net debt of $164 million – its first half year without a positive net cash position since 2019.
Pricing pressure
It appears that Iluka's subdued performance was largely driven by lower pricing for mineral sands and broader economic uncertainties.
For instance, let's look at the production numbers for H1 FY25.
The ASX 200 mining stock produced a combined 280,00 tonnes of zircon, rutile, and synthetic rutile, up 23% from the same time last year.
Meanwhile, Iluka's cash production costs remained steady over this period.
However, management noted that zircon sand prices in H1 FY25 dropped by 10% from the previous corresponding period. Synthetic rutile prices also slipped year on year.
And despite the 23% production boost, the company only generated a 3% increase in zircon, rutile, and synthetic rutile sales in H1 FY25.
Iluka's managing director and CEO, Tom O'Leary, said:
In mineral sands, lower levels of economic activity have weighed on customer purchasing behaviour. This has occurred alongside the imposition of US tariffs on zircon; the closure of pigment plants in Europe and China; India enacting anti-dumping duties on Chinese titanium dioxide imports; and production curtailments in Indonesia.
Growth projects in focus
Iluka continues to advance its key growth projects despite the softer half-year performance.
The group's Balranald mineral sands and rare earths project in New South Wales remains on schedule to commence mining later this year.
And construction of the company's Eneabba rare earths refinery in Western Australia is motoring along, with commissioning pencilled in for 2027.
Management sees both projects as central to the long-term strategy for this ASX 200 mining stock.
