Combined rutile, zircon and synthetic rutile production year-on-year totalled 811,800 tonnes, down from 1.6 million tonnes in the previous corresponding period.

Breaking down the result, zircon production for the 12 months to December 31 was 343,200t, down from 601,500t in 2011.

Iluka said the major reduction occurred in finished product sourced from the Eucla Basin, which dipped 51%.

Meanwhile, rutile production totalled 220,300t, versus rutile output of 281,300t in 2011, with the reduced output put down to the planned move from three mining operations in the Murray Basin in 2011 to one operation in 2012.

Synthetic rutile production also fell, down from 285,700t to 248,300t in 2012.

Iluka said lower production reflected the reduced demand environment for ceramics and Iluka’s exercise of production flexibility in light of subdued market conditions, which saw it trim back output.

Meanwhile, combined sales dipped 52.9% year-on-year to 488,900t.

Low demand associated with global economic conditions and fragile business confidence levels were blamed for the lower sales volumes.

Meanwhile, mineral sands sales revenue for the 12 months was about $A1.07 billion, a 30.4% decline year-on-year.

Iluka said its total cash costs of production for the full-year of $583.5 million were below its guidance and represented a 6.3% dip from 2011 cash production costs of $628.9 million.

Unit cash costs were 33.9% higher year-on-years at $719/t, reflecting materially lower production in 2012.

During the Christmas and New Year period, Iluka further reduced production levels by idling the Virginia mining and processing operations, the Hamilton and Narngulu mineral separation plants, operations at Eneabba in Western Australia and the Tutunup South mine.

As a result of the decision to idle Eneabba, up to 65 people will be made redundant.

“Actions taken are in the context of what Iluka believes is a cyclical low for mineral sands production demand exacerbated by large price disparities in the market for the same or similar products in 2012/2013 as remaining legacy contracts unwind,” Iluka said.

The company has outlined plans to reduce costs across the business, which include returning to higher-grade mining at Jacinth-Ambrosia in next month, rather than the low-grade option pursued in 2012.

In addition, Iluka will reduce capital expenditure in 2013.

Meanwhile, Iluka’s production for the December quarter was mostly lower as market conditions remained relatively subdued.

Zircon production for the three-month period totalled 56,500t down from 77,700t in the September quarter, while rutile production dipped from 202,100t to 165,900t.

Meanwhile, synthetic rutile production was reduced from 64,000t to 52,700t.

On the non-production front, a pre-feasibility study was progressing at the Balranald and Nepean rutile deposits in the Murray Basin, as is a PFS on the Cataby mineral sands deposit 150km north of Perth.

Shares in Iluka gained 6.7%% to $10.01.