The global economic crisis has hit South America. Brazils
huge economy has been severely impacted while Argentinas
is on the verge of worsening. These countries are the driving
force behind the continents end markets that power
industrial minerals demand.
|Clouds engulf the Christ de Redeemer statue
in Rio de Janeiro, Brazil, as the economic gloom descends
on the continent.
Meanwhile, the significant mineral production base of Chile
is suffering owing to the market fortunes of its biggest
customers in North America, Europe and Asia where construction
and automotive industries, in particular, have been
We are calling for rationality, responsibility and
understanding that the world is going through a very important
crisis that Argentina isnt removed from, said
Argentinas Interior Minister Florencio Randazzo.
While not in a situation as critical as Brazil, Argentina
has cause for concern; its economy is in double digit inflation
(estimated 20%) and the drying up of job opportunities have
been compounded with major cuts in the automobile sector.
As Randazzo stressed: Maintaining economic activity
and preserving jobs will be our biggest challenge.
Industrial minerals opportunities look ominous. On the
upside Argentina is blessed with some of the richest minerals
reserves in the world and investment is still finding its way
to these deposits.
Despite having the mineral feedstock for fertiliser
production, Argentina imports 100% of its finished product. Its
main agrimineral is potash which has been the subject of recent
takeover activity involving the worlds largest mining
The most significant South American potash deal to come out
of the global financial crisis was Rio Tinto Plcs sale of
its 2.3m. tpa Argentine potash brine operation, Potasio Rio
Colorado (PRC), a Canadian potash asset, and the Corumbá
iron ore project to Vale (formerly Companhia Vale do Rio Doce -
CVRD) for $1,600m. (see p. 6 & 7).
As Rio Tinto seeks to reduce its mounting debt from its
$36,000m. Alcan purchase, many of the groups industrial
minerals are up for grabs. Rio Tintos principal advisor,
Nick Cobban, told IM: This is very much
to do with reducing the overall debt of Rio Tinto by $10,000m.
by the end of 2009. The [potash] deposits are potentially very
good, which is why we got a decent price.
Rio Tinto has invested over $136m. in the pre-feasibility
PRC project in Mendoza, central-east Argentina, since acquiring
it in 2003, with the plan only a few months ago to increase the
capacity at its minerals terminal at Bahia Blanca to handle
4.3m. tpa potash.
In the potash business Vale appears the most committed of
the mining giants involved in agriminerals, including Rio Tinto
and BHP Billiton. Vales potash focus is undoubtedly in
South America, predominately Argentina and Brazil, while the
bulk of world production is presently from Saskatchewan, Canada
and the Urals, Russia.
This fall in potash interest is not surprising since market
demand has declined quite significantly since September 2008
and the start of the financial crisis (see Market Monitor,
Fertiliser: a growing problem, p. 24 & 25).
Agriminerals tends to be a fashion said Michael
Freeman, potash analyst at British Sulphur Consultants,
and potash is a very expensive business. Although
brine extracting potash salts from the South American salars,
as is done by Chiles SQM SA (see Chile section),
is proven to be a cheaper option to underground and pit mining
operations mainly in Canada and Russia.
This is where Vale could, eventually, gain an operational
Potash exploration in Argentina is also pushing ahead with
Marifil Mines Ltds activities in the Neuquen Basin,
Borates & lithium
Argentina is one of the largest borates producers owing to
Rio Tintos 100,000 tpa Tincalyu Borax in north-west
Argentina. Incidentally, this operation is up for sale as part
of Rio Tintos desire to offload its borates and talc
Processadora de Boratos Argetinaos (PBA) also mines borates
(ulexite) from the north-west Argentina in Jujuy province with
a processing plant at Ruta in the province.
From the same salar in north-west Salta province is FMC
Corp.s Li operations. At IMs
Lithium Supply & Markets event in Santiago, Chile last
month FMCs global commercial director, Eric Norris
revealed that the group was operating at 17,000 tpa
Li2CO3 capacity from is solution mine in
the Salar de Hombre Muerto.
Both PBA and FMC Corp. were hit by the hike in mineral
export taxes in early 2008.
The other most promising Argentine Li minerals resource is
the Salar del Rincon. Admiralty Resources Pty Ltd through
Rincon Lithium had developed the site to pilot plant stage
before financial problems beset the metals focused parent
company (see IM December 07, p.12).
Rincon Lithium was sold last month to private equity company
The Sentient Group for A$33m. with an eye on the battery market
for electric vehicles. Sentient explained to
IM: ...lithium based batteries may (for
a period at least) be the battery technology of choice
(see IM February 09, p.9).
At present the group is evaluating the potential of the
operation; at the beginning of 2008 the plan was to begin with
17,000 Li2CO3 and 80,000 tpa potash
Admiralty Resources was also looking at sodium
sulphate production from the Salar del Rio Grande for
the Argentine and Brazilian detergent markets, however this is
likely to have been scrapped when the sale of its lithium
assets went through (see IM March 08 p.77).
Small amounts of barytes are produced for
oilfield drilling from Ambar Cia Minera SAs underground
mine in the Chubut province of south Argentina. The last
reported production was 10,000 tpa barytes together with
150,000 tpa crude limestone for construction.
Perlite for filtration markets is mined and
processed by Perfiltra SA in the Chubut province, while Piedra
Grande SAMICA produces sodium feldspar from
San Lius surface mine.
Bolivia has become somewhat protective of its natural
resources in recent years, particularly under the guidance of
President Evo Morales since 2006. The country believes its
mining industry has been taken advantage of in the past thus
has widely turned to nationalisation of the industry.
However, this has resulted in a skilled and experience
workforce introduced through foreign companies
leaving the country, and for this reason its gas industry has
suffered (see Comment p.23).
Bolivia is now seeking to develop the last great untapped Li
resource, the Salar del Uyuni in the countrys south which
was described by government mining agency, Corporación
Minera de Bolivia (COMIBOL) as the most important
industrial mineral project in the history.
For a comprehensive idea of Uyunis reserves more
drilling has to take place. On the basis of available
information the salar contains an average Li concentration of
Over the next two years COMIBOL is seeking to establish
20-30,000 tpa Li2CO3, 400,000 potassium and sulphate chloride,
20,000 tpa boric acid, and magnesium chloride production for
domestic road de-icing.
A 40 tpm Li2CO3 pilot plant is
presently being constructed at the salar to prove the product
quality and deposits economic viability. The plant will
cost $6m. with a full scale plant expected to cost $250-300m.
which has been guaranteed by the Bolivian government.
There are some challenges to the Uyuni project such as brine
chemistry, logistics, and environmental impact which were to be
discussed at IMs Lithium Supply &
Markets 2009 in Chile in January. However these presentations
were cancelled at the last minute by President Morales for
Brazil finds itself in one of the most dire situations of
recent times, highlighted by the fact it shed the most jobs in
nearly ten years, 654,946 higher than predicted by
President Luiz Inacio Lula da Silva. Even more stark, the
biggest cuts came in construction and automobiles, some of
industrial minerals biggest markets.
One of the major impacts on Brazils industrial
minerals industry is not just the demand fall from end markets,
but the fall in revenue owing to the exchange rate of the
Brazilian reais (R$) against the US dollar, particularly as
most companies trade in the US dollar.
Brazil is the big producer of kaolin in South America
accounting for 91% the continents production and 15% of
French industrial minerals giant, Imerys SA, and the
worlds second largest mining group, Vale are the main
contributors to Brazilian kaolin output (mainly paper coating
and filler grades) which reached 3.5m. tonnes in 2008.
Imerys Rio Capim Caulim plant has a capacity 1.6m.
tonnes and is the largest single kaolin plant in the world over
90% is exported into Europe, Asia and North America.
Imerys European logistical ties were strengthened in
2008 by establishing a 600,000 tpa kaolin port terminal in
Antwerp with Belgian shipping group Sea-Invest (see IM
December 08, p.24).
Vales kaolin production was 1.05m. tonnes in 2008,
down from 1.345m. in 2007, the group even went as far as
putting its kaolin businesses up for sale in 2007 but placing
out owing to lack of interest.
At the end of last year, Vale cut production at its two
Brazilian kaolin sites. Pará Pigmentos SA (PPSA) output
has been reduced by 17.5% (639,000 tpa to 528,000 tpa), and at
its CADAM SA operation has been cut back by 15.8% (from 714,000
tpa to 602,000 tpa) (see IM December 08,
|South American kaolin output 2008 (000
|Source: Ian Wilson Consulting
Brazils fertiliser market has grown by over 50% in the
last ten years resulting in a huge fertiliser production base
and demand for feedstock minerals production. Domestic
fertiliser consumption accounts for 37% of production (9m.
By 2018 Brazil is expected to import more meat than the USA,
Canada, Australia, and Argentina thus its need for grain will
be colossal, an astonishing prospect driving its agriminerals
The fertiliser sector has suffered from the appreciation of
the Brazilian reais against the US dollar, mentioned earlier,
which hiked phosphate fertiliser prices impacting domestic
Brazils potash capacity is close to 450,000 tonnes, a
small figure in comparison to Canada and Russia. The largest
country on the continent is on every ones lips however as it
hosts the worlds greatest untapped potential in the
The Amazon Basin has been extensively explored by petroleum
and natural gas companies since the 1960s and now junior potash
companies such as Amazon Potash Co. are using these data sets
for potash exploration.
Actual production from this area is expected in the next two
to four years and despite the recent downturn in the potash
market a correction of sky high fertiliser prices in
2008 sparked by the economic crisis medium and long term
demand is set to be strong as the mineral has no natural or
The most recent development on the Brazilian potash scene
was Rio Tinto Plcs sale of its undeveloped Argentine
asset to Vale for $850m. Vale produces 607,000 tpa potash from
its Taquari-Vassouras mine in Brazil and the new acquisition
adds to the groups South America potash dominance
Potash production at Vales Taquari-Vassouras mine fell
from 671,000 tonnes in 2007 to 607,000 tonnes in 2008,
representing a 9.6% decrease. Production fell 40.9% from Q3
2008 to Q4 2008 when Vale stopped potash production altogether
in November 2008.
|South American phosphate rock output 2008/09
|Source: Industry estimates
Bunge Fertilizantes, part of US group Bunge Ltd, is South
Americas largest fertiliser company and owns two
phosphate rock mines and processing plants in Brazil.
The groups subsidiarys Fertilizantes Serrana
à Manah at Araxà in Minas Geras state, and Cajati
near Jacupiranga in São Paulo state mine are major
contributors to Bunges phosphate rock output of 1.4m.
The Araxà operation supplies two single
superphosphate (SSP) fertiliser plants adjacent to the mine and
the Cubatão, Gurarà, and Uberaba SSP plants.
A total of five SSP fertiliser operations produce 2.2m. tpa,
a third of Bunges worldwide production. The phosphate
rock mines also feed the groups 600,000 tpa Diammonium
Phosphate (DAP), MAP, and TSP production.
In an attempt to mitigate against the exchange rate damages,
Bungay formed a j-v with Moroccos Office Chérifien
des Phosphates (OCP) for a phosphoric acid and phosphate
fertiliser. In turn the OCP has boosted phosphate rock plans by
opening four new mines to produce near 50m. tonnes by 2016 from
todays level of 30m. (see IM February 08,
OCP highlighted Brazil as the main country targeted for
Fertilisantes Fosfatados SA, a phosphate focused miner and
processer has the capacity to produced 4.5m. tonnes of raw
material with an output of 1.6-2m. tonnes (35.5%
P2O5) for acid and 500,000 tpa SSP
|South American lithium carbonate output
Following the sale of Brazils leading magnesite and
refractories producer, Magnesita Refratários SA in 2007
to South America private equity group, GP Investments Ltd, the
group announced plans to triple dead burned magnesite (DBM)
production, which it has a capacity of 320,000 tpa, and
refractories production (590,000 tpa capacity).
However at the end of last year GP announced a depreciation
of $124m. in the fair market value of Magnesita, which it
purchased for 38.6% of the companys capital for
R$1,240m.($641m. in 2007).
Most of the companys refractory products are utilised
in Brazils steel industry which, like the world over, has
suffered significantly in the last six months. Brazils
steel output is down over 45% on this time last year.
Magnesita also owns magnesite and talc mines in the Bahia
area north-east Brazil and also has chromite, dolomite,
kyanite, refractory clays, and pyrophyllite reserves.
Nacionale de Grafite, one of the worlds leading
natural graphite producers, is ready to launch a new grade of
spherical grade for the battery market, aimed at the
The company, which mines flake deposits in Minas Gerais, is
expanding its portfolio into the battery market following the
growing interest in the automobile industry as it considers
electrification of the vehicle.
Nacionale de Grafite supplies graphite products for a number
of markets including refractories and brake linings and pads.
These markets, owing to their intrinsic link to steel and
traditional automobile sectors have suffered considerably since
the global economic downturn began in September 2008.
Sao Joao del Rei based Companhia Industrial Fluminense
(CIF), part of AMG Advanced Metallurgical Group NV, revealed to
IM it is operating at 90% of its 11,000 tpm
capacity production for its Li-feldspar product and 100%
capacity for its 20 tpm tantalum concentrate.
CIF are looking into a number of expansion projects amidst
the economic gloom. Marcelo Suster of sales general manager at
CIF told IM: [We are looking] to
increase our mining products output, we are doubling the
current capacity, starting next month, and [installing] a
flotation unit to separate the spodumene from the
feldspar/pegmatite, to produce about 3,000 tpm spodumene in
Mining for gypsum is occurring in the Rio Grande area of
Brazil for the construction industry, while the countrys
carbon black production, predominately for automobile tyre
market, is around 3m. tonnes.
Industrias Nucleares do Brazil SA (INB) mines minsands
(ilmenite, monazite, rutile, and zircon) from the Buena and
Delta, Paribia near Rio de Janeiro.
Chile is an exporter of industrial minerals. The country has
a population of little over 16m. with small domestic markets,
glass and ceramics, in particular, suffering in the global
Thus Chiles primary markets are in South East Asia
particularly China with which it has a free trade
agreement and North America.
With a history of nitrate production, Chile added to its
industrial minerals portfolio in the mid-1980s with the
emergence of Sociedad Chilena del Litio (SCL) which extracted
from the Salar de Atacama brines and Quiborax mining borates
from the Salar de Surire in the north of Chile.
Salar de Atacama
The majority of Chiles rich mining history is from
copper, but over the past decade the emergence of its
non-metallic minerals industry, namely potash, common salt, Li,
iodine and nitrates, now have the worlds attention.
The present industrial mineral wealth of Chile lies in the
calcihe ore deposits and salars (salt lakes/pans) north of the
Both sources of minerals have given Chile world leading
positions in the production of Li2CO3
(capacity 69,000 tpa, presently operating at around 75%),
iodine (20,000 tpa capacity, production around 15,000 tpa) and
potassium nitrate 650,000 tpa.
Production of potash and Li from the Salar de Atacama began
in 1984 through Sociedad Chilena del Litio (SCL), a j-v between
Foote Mineral Co. (55%) and the Chilean government mining
development agency, CORFO (45%). SCL later became part of
German chemicals group, Chemetall GmbH.
The industry received a significant boost when SQM SA (then
Soquimich) began production of 300,000 tpa muriate of potash
(MOP) in 1995 from the brines of the Atacama for use in
potassium nitrate in Coya Sur.
Over the next two years SQM upped its capacity to produce
and extended its portfolio of minerals into sulphate of potash
(250,000 tpa), boric acid (16,000 tpa).
In 1997, SQM began extracting Li from the brines via a
simple solar evaporation process to produce lithium carbonate
(Li2CO3) and following a successful introduction into mainly
the ceramics, glass, and pharmaceutical market, it expanded to
30,000 tpa over the next five years.
The group also increased its MOP production capacity in this
period to 650,000 tpa in order to meet higher potassium nitrate
needs for the growing fertiliser industry and began producing
lithium hydroxide (6,000 tpa capacity) in 2005.
SQM and Chemetalls production facilities are located
in the Salar del Carmen, some 270km from the Atacama in the
Salar del Carmen on the outskirts of Antofagasta. This is where
the Li concentrated brine (6%) is trucked to before exiting the
facility as Li2CO3 and lithium hydroxide, with a by-product of
boric acid (65,000 tpa).
Both companies have expanded their
Li2CO3 capacity over last year: SQM
increased to 42,000 tpa and Chemetall to 27,000 tpa. However
owing to the present global financial situation impacting all
user markets, both companies are operating under capacity at
present, though to be around 75%.
|South American borates output 2008/09
|Source: Industry estimates
Along with the USA and Turkey, Chiles is one of the
worlds leading borates producers. The countrys
total borates production is around 500,000 tpa behind that of
the USA 670,000 tpa (through Rio Tinto Borax) and Turkey 2.2m.
tpa (predominately through government run Eti Bor).
Borates are mined in Region I and II through Quiborax mining
from the Salar de Surire and processing plant 69km located from
Quiborax uses the borates salts extracted from the Salar de
Surires surface to feed its 50,000 tpa boric acid
production. The company estimates that the salar contains
around 1,500m. tonnes of ulexite, equating to 30m. tonnes
Quiborax is constructing a fourth boric acid unit increasing
its capacity to around 70,000 tpa. The $20m. investment into
the automated plant will supply fertiliser product for the USA,
Turkey, and Russia.
Agroquimica Ltda produces around 20,000 tpa of agricultural
products based on these borates.
Chile is the biggest contributor of iodine to the global
market (close to 60%). SQM SA is the countrys leading
producer with an 11,000 tpa capacity, but is believed to be
operating around 9,000 tpa at present.
Cosayach (Compania Salitre y Yodo de Chile) is the
countrys second largest iodine producer with a 7,000 tpa
ACF Minera is the third Chilean iodine producer with an
output of 1,800 tpa at Lagunas, Region I. They have a new
project, including iodine and nitrates, at Algorta, Region II,
which ultimately will replace the operation at Lagunas.
Atacama Minerals Corp. mines 1,000 tpa iodine from an
iodine, sulphate and nitrate deposit at Aguas Blancas in
The Canadian company was planning to expand the operation to
1,500 tpa iodine and create a 70,000 tpa nitrate fertiliser
plant at the mine site in Agua Blancas, however following the
global economic recession, these projects have been
Since beginning operations in March 2005 Atacama Minerals
had a steady iodine output of 150-100 tonnes/quarter, despite
hitting a zone of lower mineralisation between the end of 2006
and beginning of 2007.
The company is also rethinking its development strategy for
the Salvador Potash Project in Brazil (see Brazil, Potash
|South American salt output 2008/09
|Note: Includes both rock and brine salt. Source:
Despite having large salt resources and excess product, as a
by-product of brine extraction, Chiles sales of salt are
relatively low considering the main market for the salt is road
de-icing where the markets of Canada, parts of North America
and north Asia are too distant.
Chile has an salt excess particularly at SQMs
operations in the Salar de Atacama where it stocks sodium
chloride next to the evaporation ponds.
The market conditions are not right to make shipping or
wasting the salt viable.
Chiles leading producer, Salinas de Punta de Lobos SA
(SPL), has a capacity of 7m. tpa rock salt.
The mine is located south of Iquique, Region I in the
countrys north where the raw material undergoes primary
processing crushing and grinding. SPL also has
beneficiation and packaging operations in Region V, VIII, and
X. It operates a private port at Patillos which has a shipping
capacity of 20,000 tpa.
The latest available production figures for Chiles
calcium carbonate sector shows the output
topping 7m. tonnes. The Metropolitana de Santiago region was
the leading producing area (2.24m. tonnes) while Region II was
second place (1.39m. tonnes).
White Mountain Titanium Corp. (WMTC) is pushing ahead with
the development the Cerro Blanco rutile and
feldspar deposit in of Chiles region
III. The source has the potential to supply a rutile
concentrate with 96.5% TiO2 for which WMTC is eyeing
the pigment markets, however it is also exploring the potential
to produce titanium metal for applications in aircraft and high
WMTC is pushing ahead with development and indeed looking to
take advantage where other miners are making cutbacks.
We are looking to advance our project as quickly as
possible in the recession, said WMTC president and chief
executive office Mike Kurtanjek to IM,
We are expecting a deep recession with no real recovery
in the mining sector for another 18 months
I want to make sure WMTC is ready to produce before
the when the economy and markets pick up. Kurtanjek.
Cerro Blanco could also represent a low cost sodium
feldspar source for ceramics and glass
producers. The feldspar by-product is substantial but not
WMTCs focus. Kurtanjek explained: If I could sell
the sodium feldspar at a third of the market price, we could
virtually half our operating costs.
Chiles market for feldspar in ceramics and glass has
somewhat waned in recent years and the country presently
produces under 7,000 tpa all grades for small scale
In such a tectonically active country the potential to mine
sulphur from volcanic sources is ever present with reserves
into the hundreds of millions of tonnes for an ore containing
between 30-50% S. These sources are located along the Andes
mountain belt which covers much of the country.
The are fresh doubts over Bosai Minerals Group Co. Ltd and
United Co. RUSALs alumina investment plans in Guyana
following the worsening economic crisis. The two companies were
to establish a 1m. tpa alumina smelter, but as problems at
RUSAL worsen the situation remains under constant review.
An expansion of Bosais calcined bauxite operations
from 300,000 tpa to 450,000 tpa was also planned over the next
two years as part of the companys future plans (see
IM January 09, p.19).
Time for change
South America is feeling the economic heat like the rest of
the world. Major industrial sectors construction (steel,
cement, glass), automobiles (steel, aluminium, glass, plastics,
foundry) have made significant production cuts on the
continent impacting the industrial minerals markets.
Brazil, South Americas most developed economy, has
suffered more than most, however, with its close business ties
to North America and Europe this comes as little surprise.
Chiles economy is to show signs of significant impact,
however, as an exporter to battered markets the country is
suffering. As CORFO explained to IM the
country is seeking to change its strategy on minerals:
The countrys plan is to increase the value of its
industrial minerals rather than just export [therefore] we are
looking at how to introduce the technology.
There appears to be an emerging trend in South America,
particularly Chile, whereby the economic situation has forced
mining industry support (technological, economical,
engineering) to diversify in order to survive and move
away from the mining sector. Thus when the markets see an
upturn there could be a shortage.
Mergers are also expected to be a common theme between
companies as the need for efficiency to survive sweeps the
Despite the present gloom, many believe that when the upturn
comes South America will resume business. The problem is that
in this unprecedented situation nobody can predict when.
Acknowledgements: Leading Chilean minerals
consultant, Pedro Pavlovic, for insight into the countrys