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Industrial Minerals Inside Edge – 14 December 2012

By Mike O'Driscoll
Published: Friday, 14 December 2012

China bags vermiculite, lithium; new route to ceramic proppants, refractory bauxite

Welcome to approximately 60 seconds of reading Mike O’Driscoll’s take on this week’s news highlights in the industrial minerals world.

Vermiculite supply veers to China...

What’s the similarity between the leading commercial sources of vermiculite and those of refractory grade bauxite? They are now both owned by Chinese concerns.

This year the world of vermiculite followed 2011 – its most active year for 30 years – with another landmark event as the world’s leading producer, Palabora Mining Co., at some 200,000 tpa production capacity, was sold by Rio Tinto Plc to a Chinese-dominated (80%) joint venture company.

As indicated a few weeks earlier ( IM Inside Edge – 30 November 2012), Rio Tinto was expected to divest its vermiculite operation. Like its recently divested talc business ( Luzenac Group to Imerys) and its retained (so far!) borates business, the Palabora vermiculite producer was the leader in its field, although production had fallen to 163,000 tpa in 2011.

Although there was speculation just over a year ago that Imerys might strengthen its Zimbabwean and Australian vermiculite interests with Palabora, the Chinese have yet again nailed another industrial mineral supply market.

Just as in refractory bauxite, when Guyana was the only game in town outside Shanxi and Guizhou provinces until Bosai Minerals Group of Chongqing snapped it up to give China 100% control of refractory bauxite supply, China’s previous 22% vermiculite supply market share has now shot up to 57% with Palabora.

This leaves pretty much just the US, with 17% market share or 100, 000 tpa, as the world’s only other major source of vermiculite outside Chinese-owned supply.

It remains to be seen how new and emerging vermiculite players, such as Brasil Minérios Ltd (Brazil) and Gulf Industrials (Uganda), will react to this move, but they may well be wary.

Certainly, Gulf Industrial’s Namekara vermiculite project might be spurred on with news that Uganda is inviting Russian interests to exploit its natural resources, which include vermiculite.

However, until construction markets improve – where vermiculite finds a primary market as lightweight aggregate material and in insulation – any vermiculite developer will face a tough time right now.

...as does Australian lithium

If you want something enough, you often have to pay for it. That’s just what the Chinese have done with Talison Lithium Ltd, the world’s main hard rock lithium source – although newcomer Galaxy Resources Ltd, also in Western Australia, is emerging onto the scene. Both companies are exploiting spodumene.

The initial buyer for Talison Lithium, Rockwood Holdings Inc., was this week blown out by Windfield Holdings Pty Ltd, an Australian wholly-owned subsidiary of Chengdu Tianqi Industry (Group) Co. Ltd.

Chengdu Tianqi upped its offer for Talison Lithium to C$848m ($855.4m), or a cash consideration of C$7.50/share, which was well over Rockwood’s earlier offer of C$6.50/share.

Even though the initial Rockwood offer was considered respectable, the fact is, Chinese lithium raw material consumers remain geared up to utilise spodumene concentrate rather than brine-sourced material. Clearly they were on a mission to ensure that China would not want for their preferred lithium feedstock.

And, while we’re on Chinese interests in Australia, state-owned oil producer PetroChina has agreed to pay $1.6bn for a 10% stake in Browse LNG Development, a major offshore Australian liquefied natural gas (LNG) project.

This underlines Chinese interests in natural gas development (as well overseas natural resources in general) and also reminds us of proppant demand potential in Australia as a range of shale gas interests are evaluated to feed the country’s ambitious LNG aspirations.

New technologies break ground in proppants and bauxite

There’s just enough time for me to acknowledge a couple of intriguing news items on two separate technological breakthroughs on mineral processing. And what timing!

If you were to ask me, which two mineral products are in demand, I’d say refractory grade bauxite and ceramic proppants.

Interestingly, this week we saw announcements of processing innovations to convert low grade bauxite into refractory grade bauxite by the Central Glass and Ceramic Research Institute, Kolkata, India as well as news that ceramic proppants “utilising suitable clay minerals” (not including kaolin nor bauxitic clays apparently) could be manufactured by Brownwood Clay Holdings LLC.

The announcements were short on detail, but watch this space for more.

Mike O’Driscoll is Global Head of Research and Consultant Editor at Industrial Minerals, previously he was Editor of IM 1995-2012.

For the latest trends and developments in oilfield mineral supply and demand don’t miss Oilfield Minerals Outlook: Middle East, 21-23 January 2013, Dubai.



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