The suspension, which will start on April 16, will be for 18-24 months, depending on market conditions.
Jacinth-Ambrosia, in the Eucla Basin, was commissioned in 2009 and has the capacity to supply 25-30% of global zircon demand.
The decision will result in the loss of 33 jobs, with 46 personnel to be retained or redeployed.
The company said the decision would improve cashflow at a time of subdued market demand, while contributing to an improvement in supply-demand dynamics.
This year, Iluka expects a net cash cost benefit of around $A30 million after $16 million in idle, restructure and rehabilitation costs, increasing to $45 million next year after costs of $25 million.
Iluka managing director David Robb said the company remained focused on generating shareholder returns through the cycle.
“Iluka has in the past altered the mine path to reduce production at the mine and has, conversely, in recent years been operating the mine at capacity to maintain operating efficiency,” he said.
“In balancing its finished product supply to demand, Iluka has been prepared to build and hold stocks of heavy mineral concentrate with a view to drawing that inventory down over time.”
There is existing inventory of more than 800,000 tonnes at Jacinth-Ambrosa, which will be processed through the company’s mineral separation plants in Victoria and Western Australia.
As a result, the SA government will continue to receive royalties.
“The company will maintain the operations at Jacinth-Ambrosia in a manner such that they can be reactivated rapidly in line with global market recovery,” Robb said.
“Jacinth-Ambrosia has a justifiably high reputation in terms of the benefits it has brought to the local community and its operational and environmental performance. Iluka intends to protect the operation’s reputation during the suspension period.”
Iluka is set to release its full-year results on Friday morning, where it will provide more details.
The company said last month it remained cashflow positive in 2015, despite tough conditions in mineral sands.
Shares in Iluka rose by 2.8% to $6.865.
