Industrial Minerals: state of the industry

In this, our 500^th issue of IM, we wished to review the industry and its outlook, and decided to invite a selection of our key contacts to offer some comments on how they view the industry’s evolution, its way forward, and any particular memories. Our questions were thus:

1. Choosing over the last four decades, which are the chief factors that have had the most impact on the industrial minerals business and why?
2. Going forward, what do you see as the primary challenges and opportunities in the industrial minerals business and why?
3. Describe one memorable event or moment(s) in your career in the industrial minerals business that stands out or is special to you – this from any viewpoint eg. pioneering, dramatic, influential, amusing.

The response was excellent, and we would like to extend our gratitude to all those that participated. We are sure that you will find the following comments of great interest, and a source for continued discussion.

Gerard Buffière spent a large part of his career in the electronics industry in various international management posts before joining Imetal in 1998, which became Imerys after the takeover of English China Clays in April 1999, and the subsequent divestiture of all non-mineral Imetal businesses. He was executive vice president of Imerys until the end of 2002, and became chief executive officer of Imerys on 1 January 2003.

Influencing factors

a) First and foremost, the globalisation of the industrial minerals playground. China emerged as a major force in many minerals, then retracted somewhat over the last few quarters, leaving more room for traditional western companies. At the same time, new countries developed some very strong positions in certain minerals. This is the case for Imerys’ production of andalusite in South Africa and kaolin in Brazil. Some of those new deposits with high natural quality and relatively low extraction costs put pressure on the profitability of traditional deposits in Europe and the USA.

b) This globalisation was parallel to the rapid development of markets using different types of materials from those traditionally supplied by our industries, as is the case for the development of ceramics in China but also, to a lesser extent, for the paint industry.

c) A third element is the phenomenon, not specific to the mineral industry, of the brutal transition from a flattish cost world to a major inflationary environment in the last five years. Costs of energy, freight, and other major items reached summits in 2008 that were not foreseeable. It is worth pointing out that industrial minerals only joined in the general pricing rally to a minor extent.

d) A fourth factor is the still relatively high degree of fragmentation in the industrial minerals industry with only a handful of large companies. Among those, very few companies have a global approach with a large portfolio of minerals. However, they remain dwarfed by large, worldwide mining companies. So there is still room for consolidation in the industrial minerals sector. Such consolidation becomes all the more necessary as customers are consolidating very fast. This is obvious for the steel and paper industries, but also for the paint and ceramics industries.

Challenges & opportunities

a) The increasing need for sustainability is completely changing the way companies operate. Industrial behaviours that were considered good practice a few decades ago are now unacceptable to both the public and the regulatory authorities. Environmental protection and conservation of biodiversity are progressively becoming factors that need to be fully integrated into operating plans. This requires new types of talents for the mining companies and also generally increases the costs of operations.

b) Dealing with volatility: cost spikes followed by brutal collapses and variations in freight rates by a factor of at least five lead to major disruptions back and forth in the competitive position of some minerals in a given market. Very often, the freight costs decide which minerals will be used where. This is particularly true for minerals like clays for ceramic tiles that undergo less processing than others after extraction. Currency movements have similar impact. In this changing environment, global players may have an advantage as they can adapt rapidly to the changes.

c) A third challenge stems from the current economic crisis. Shutdowns and relocations of customer plants can radically change the economics of our business. As our sector is capital-intensive, our companies are generally managed for the medium or long term. I am convinced that we must continue to run for the long term, but at the same time we have to adapt constantly, without letting our products turn into commodities. So we must maintain a significant R&D effort, invest for the long term in mineral reserves or development projects, and be able to hold and even increase sales prices in a deflationary environment because we don’t jack them up in good times.

d) Dealing with regulation: very heavy regulations are being implemented in the world. Europe is certainly giving the example. In the coming years, the industry will have to cope with the implementation of REACH, a new mining waste directive and the Emission Trading Scheme. This list is certainly not exhaustive. These regulations require heavy workload and investments from companies. Scale effects are increasingly necessary.

e) Opportunities: lower energy costs, if correctly reflected by the energy industry, will be an opportunity. Also, industrial minerals are very often a way to reduce both costs and the environmental footprint of finished products. This may be an advantage compared with other solutions, at a time where these two factors are of paramount importance. Last but not least, the mineral industry has a tradition of sound R&D effort and value-added products, and this will certainly help find new solutions to the above challenges.

Mineral moment

The strongest memory for me is certainly the integration of English China Clay. Definitely a cultural shock between a company that was relatively new in the sector (the former Imetal) and the world leader that we acquired at that time. The biggest challenge here was to turn the strategy from high volume, low price to a value-added, high technical content, pricing for value strategy.

This was only made possible by a very strong restructuring plan. ECC probably had more technology than any industrial minerals players, yet customers were not rewarding that value. That led to a situation where the business was undervalued and had to be acquired by another company. We found extremely good people at ECC, and they are the teams which run our company now in many places. Making that change happen was a big challenge.

Dietmar Alber joined Hosokawa Alpine in 1986: from 1992-1996 he was responsible for the sales of all micronisation and air classification machines and systems into Asia and Middle East; from 1997 he was area manager for Asian and South American markets of the Minerals & Metal Division. He has been involved in the implementation of more than 300 processing plants for minerals, mainly for GCC, talc, quartz, feldspar, and wollastonite.

Influencing factors

The fast development from telex via fax to the possibilities of the internet today, has caused easy communication, a very wide market transparency for everybody and effected the globalisation tremendously. The trend to globalisation did not stop in front of the industrial mineral business. It created not only global mineral players, but also can be made responsible for a worldwide exchange of knowledge in mining, mineral processing and especially minerals applications.

This is still driving many companies and even country’s policies, away from simple raw material supply to the ones who are adding value at the source of exploiting industrial minerals. All this gives the industrial mineral market a permanent movement, driven by shortage, oversupply, cheaper and/or better substituting industrial minerals.

Another important role over the last few decades is the intensive R&D efforts of industrial mineral suppliers and users in new industrial applications.

Challenges & opportunities

Today I see the challenges of the industrial mineral industry in the development of application oriented new uses, the development of nano-scaled minerals and their applications.

The application oriented industrial mineral producers, who are very close cooperating with their clients, will be the ones gaining now and in the future. Chemical additives will play an important role for linking the mineral powders to any other material and to make nano applications possible.

Energy efficient mineral processing, selection of processing locations with optimised site located factors, and generally the topic “logistics” will play a dominant role in the industrial mineral industry in the future.

Mineral moment

Fascinating China: since I started my career as a sales engineer for micronisation and air classifying machines and systems more than two decades ago, the most fascinating aspect for me was the development of China. Visiting almost quarterly in the eighties and nineties to China, one could feel in every trip the big boost China was experiencing and in the same way the industrial mineral industry did too.

Alan Williams is head of Raw Materials and Glass Compositions R&D in the NSG Group with technical responsibility for sourcing, evaluating and trouble shooting glass-making raw materials world wide.

Influencing factors

Major growth and the emergence of global companies in both the float glass industry and, to a growing extent, in the associated industrial minerals industry are the key developments over the last three decades. In the last 20 years the market for float glass has roughly tripled. The NSG Group, that acquired Pilkington in 2006, now has manufacturing operations in 29 countries spread widely across the world.

Some of our industrial minerals suppliers have also become more global but many high quality local suppliers remain. The NSG Group has become much more centralised both technically and commercially.

Raw material specifications have become more global and technical risks reduced by implementing best practices based on global experience collected centrally. Most suppliers have radically improved their quality control systems but problems remain with some suppliers in certain countries.

Challenges & opportunities

Going forward, the current challenge for our minerals suppliers is to adjust to the severe economic downturn and to reduce costs; as the glass industry itself is having to do in order to stay in business.

Looking further ahead, the growth in the various types of glass for solar cell applications will present major technical challenges for low iron raw materials production, especially in regions where these resources are scarce. Innovation in iron reduction in large tonnage processing plants will be required and also improved logistics to avoid iron pick up. Environmental considerations may require some selective tightening of specifications and the use of novel materials.

Mineral moment

During my 32 years in the glass industry the most professional satisfaction has been gained from new build sites in countries previously without float glass. You take the raw materials requirements from a blank sheet of paper and then follow through all the way to the first production of world quality glass. This involves intense local sourcing activity and sometimes opening up new quarries or major upgrades.

Before retiring in December 2008, Piet had worked for the Lime and Industrial Minerals business of Idwala Industrial Holdings (Pty) Ltd (until 1997 – part of the Anglo-Alpha/Holcim Cement Group) for 37 years. Piet was chief executive officer of the business for most of his career, managing production facilities and marketing lime and minerals.

Influencing factors

The perception in the early 1980s/1990s existed that industrial minerals was the area in which good business could be done without the major capital investment being required compared to primary industries/mining. In South Africa most big mining houses and other companies formed industrial minerals divisions. They soon, however, learned that volumes and profitability was limited in this business. They all disappeared from the scene and it was left to those which had slowly developed and built up their business to continue in this industry.

I believe that the Industrial Minerals association and magazine made an impact in placing industrial minerals “on the map”. The standard of the conferences since I started attending in 1982 has risen steadily, and the last few conferences I attended were really worthwhile.

The emergence of calcium carbonate as such a valuable industrial mineral (I believe mainly due to the development done by Omya) definitely made a contribution to improving quality and efficiencies in industries such as paints/coatings, plastics, the paper industry, and other speciality industries. Its use for its chemical composition in industries such as glass, agriculture, and building industries should also not be forgotten.

There is of course the unique aspect of the industrial mineral business that “know-how” is not readily shared. It is not like the cement or lime or similar industries where production techniques and products are quite standard.

It was always interesting for me to listen to presentations at conferences where some great new discovery or production technique was presented, which afterwards never materialised.

Challenges & opportunities

The main challenge and opportunity I believe remains to find new applications for industrial minerals to improve the quality and cost of production of other expensive commodities, as was done in the past in the paper and plastics industries.

The application of calcium carbonate and other industrial minerals in large volumes into newsprint and Kraft paper, as well as into plastics, other than PVC and polyolefins, are good examples of the challenges and opportunities.

Mineral moment

When Sappi agreed to convert to alkaline sizing using our calcium carbonate in 1990 was probably a defining moment in our industrial minerals business, as the volumes involved were so much larger than that used in other applications that it allowed a wider base to operate from.

In this, Omya (our technical and marketing advisors) was most instrumental, but at that stage paper filling was limited mainly to the use of slurries. I believe we were pioneers in producing a GCC in powder form for paper filling, which had to be made down, which was not very easy. It took very innovative measures to convince Sappi to continue with the alkaline sizing project. It, however, all ended well for both parties with good business relationships maintained.

Attending IM conferences through the years was also influential in my career. Not only did it allow for networking and friendships to be developed with people throughout the world, but it also afforded me the opportunity of overseas travel, visiting Omya operations and industries I would never have been exposed to.

Fotis began his career as marketing manager for magnesia and basic refractories at  FIMISCO, Athens, 1974-1984. From 1985-2006 he was managing director Possehl SA, Athens, sourcing and sales of refractory minerals. Since 2007 he has been managing director of Magmacom, sourcing and sales of industrial minerals with a focus on dead burned and fused magnesia, calcined bauxite, fused alumina and related products.

Influencing factors

I consider that the past four decades have been marked by the technological progress in steelmaking processes – the transition from the Open Hearth Furnace to modern BOF and EAF practices with substantial secondary steel refining. These have affected greatly the refractories industries and the requirements for the raw and processed minerals used in the production and type of refractories.

There has also been development in refractories used in the cement industries but this came about due to environmental reasons rather than as a result of the need to improve production processes as in the case of steel making.

The other factor that has changed the map of the industrial minerals supply is the emergence of China as the world’s big player in the supply of raw and processed industrial minerals and in the past few years as the number one producer of steel.

I was involved with the sourcing of products such as dead burned magnesia, calcined bauxite and later on fused magnesia and graphite from China from the beginning of that era, and it must be noted that in the past three decades we have witnessed leaps of progress and development in China and the transformation of that country during that time.

I consider that the remarkable industrial development of China by far overshadows the appearance of other countries such as that of Brazil with great performance in the field of mining and industrial expansion.

Challenges & opportunities

The challenges today for the future of the industry in general, I think, have been shaped by the on-going economic crisis gripping the world which has not had any equivalent during the past four decades. Even the financial crisis of the late 1920s was not so devastating as the present crisis, which can only be imagined as a worldwide tsunami that has swept over all the countries.

The challenge therefore facing us is how the producers on the one hand and the users on the other may find the way to survive and in the process allow the survival of the necessary “services” providers, be it traders or shipping and forwarding companies and related operators.

One must also include the media that undertake the challenge to keep us updated with the news and developments in the industry, an invaluable asset for those wishing to survive.

There is no doubt that the much shrunk demand and production will force some producers or operators to abandon the active business. The imperative need to cut costs will force innovation and improvisation and this will ensure the survival of the progress-minded operators but will also be to the benefit of future generations.

Mineral moment

I recall a meeting in the early years of my career in the field of refractories. I was negotiating with representatives of a state organisation in a Balkan country that at that time, in the early 1970s, was responsible for the purchase of all the refractories and materials for all the industries in that country. The subject was the supply of refractories for glass furnaces.

I must note that at that time, the industrial group that I was representing, although a big concern in Greece, was young in the field of refractories production and there were no references to furnish in support of the performance of the proposed refractory qualities except that the technology was well established and the production facilities new.

One of the delegates said to me quite naturally: “Well, it will be necessary to offer some quantity free of charge so that the plant can install the refractory bricks and test their performance”. That suggestion was obviously not in line with what we had in mind, and I had to come up with a respectable way to decline, so I simply said: “This is not practical. The specific refractories have a campaign of seven years in the glass furnace and my boss expects me to report to him the outcome of our discussions and your decision before I leave tomorrow”.

Needless to say that this was not the first discussion that we had had on the subject and the main issue up to that moment had been the price, not the quality and performance. It took a few more days of negotiation but we finally agreed on the contract. I recall that in the following years, out of genuine interest, I had tried to extract whatever information was possible on the fate of the refractories but the system was so intentionally secretive that I finally gave up accepting that, if there were any problems, we would certainly have heard about them.

May I take this opportunity to say that I have been an avid reader of the magazine since my involvement in the field of industrial minerals in the early 1970s, and I appreciate and value the contribution that IM makes through the magazine and the many well organised meetings and congresses as well as publications. I also note with pleasure that the recent innovations that IM has made with the electronic updates and news flashes are great. Congratulations!

Oliver Koegel, a ceramics engineer, with his father Helmuth Koegel, manages the family owned company Europe Commerce SA, in Luxembourg.

Influencing factors

Industrial minerals have had their development in the past in the area where they occurred and were thus available. Examples include: clays in the Westerwald, Germany, production of ceramics; iron ore in Luxembourg, steel production. In a certain way it was an exclusive situation, which allowed for the making of good money.

Consumers of minerals were developing new and better products, and thus new and better minerals were required. New markets opened. Traditional players invested and new ones entered as the business was considered profitable and with growth potential.

Competition started, and even before anyone was talking about globalisation it happened in the early days of the minerals world. The business of users of minerals also changed in the same way, and global competition commenced in this sector as well.

However, margins were reduced, some went out of business, others left the business, and we were in the period of concentration on “core business”. (The exception confirms the rule.)

China emerged, and dumped minerals in which nobody outside the EU dared to invest. M&A started, unprofitable sites were closed.

Traditional structures can survive as all the investments are paid for and written off. At current margins, neither new investments can be earned back, nor will it be possible to earn back expensive takeovers in a reasonable timeframe.

Since the financial crisis, borrowing has become difficult. Growth will stop or be negative. Capacities have to be adjusted to demand and cost has to be reduced.

Challenges & opportunities

Going forward there is a short-term issue on cash management. It can have secondary negative effects but we will have to live with whatever they will be. An average level of reliable business volume has to be defined for the coming years.

It will be important that the remaining activity will be profitable to allow in a first step to increase the equity positions of the companies, to make them stronger for changing markets, to be able to invest in R&D to develop new products and to allow for internal growth by investments.

Partnerships between companies will become important in order to share the risks and to allow for developments. The business of minerals is medium and long term planning and investments. It cannot work properly if it is a spot market.

Mineral moment

The memorable events in my career have always been related to personal relationships with people who mostly have been strong characters and have had a lot of experience. It’s people who make things work at the end of the day, and it’s nice if you can rely on someone.

In today’s world, unfortunately “rely on” has often be substituted by “depend on”. 

Bernhard celebrated his 45th anniversary in the raw material business on 15 May 2007. Bernhard joined Frank & Schulte GmbH in 1962, the Essen based trading company for 38 years. In 2000, he joined the founding team of Cofermin Rohstoffe GmbH which has since become a mayor player in the international ore and minerals business.

Influencing factors

When I received the request to write a few lines on the occasion of the 500^th issue of Industrial Minerals magazine, my first thought was: who has been in the minerals business longer, IM or me?

Throughout the years IM has become an important element in the world of industrial minerals. Trends, tendencies, prices, new product developments, processing, logistics, people etc. are well covered. Most of the time IM is able to tap the right sources of information and sometimes even manages to shed light into the niches of the market.

Throughout my 47 years in the industrial mineral business I believe the biggest influence on the development of the market was the globalisation and the transparency of the business, something that was of course propelled by ever newer means of communication. My involvement in the chrome ore business for example started in 1968.

We bought the ore from Industrial Minerals Ltd (Mr Horst Kollrepp), later on from Engelhard Hannovia located in Liechtensten via Philip Brothers in Zug and Derby in Johannesburg. There was absolutely no contact with the producer of the ore – at the time Rand Mines Ltd – no discussions about quality, marketing etc. It was simply take it or leave it.

Today this has completely changed and we are in permanent contact with the producer – now Samancor Ltd, which took over Rand Mines Ltd – and there is an intensive exchange of information between the parties resulting in a permanent improvement of quality and service.

In my opinion, missing transparency in the markets led to negative developments for producers and consumers. The biggest challenge and chance in our business is the development of new products. At Cofermin Rohstoffe we are constantly developing new sources and products for our customers. This is one of our main focuses.

Challenges & opporunities

In many segments of industry there are endless possibilities to utilise natural industrial minerals. Logically this aspect has been covered by IM in all 500 issues published so far. Early on in my career, I personally was interested and fascinated by the so called by-products – the term “recycling” was not often used at that time. However, the growth of the world population, the raising industrialisation and the limits of natural resources will make the utilisation of those by-products and “left-overs” like slags, filter dust, tailings etc. more and more important.

One very prominent and relatively new example is the extraction of chrome ore from the tailings generated during the production of platinum in South Africa. This chrome ore is used in the production of ferro chome. Taking this process a step further, Cofermin and Anglo Platinum have jointly developed a system to extract chromite sand as foundry grade from the platinum tailings.

Mineral moment

For me personally, the most important and emotional moment in my career so far was 1 September 2000. On that day I started my second career in the field of industrial minerals. What had happened? After 38 years in the industry I simply could not imagine and accept a life as a retiree. I felt far too young to stop doing what I loved doing so much. For different reasons also former Frank & Schulte colleagues and today’s partners were looking for new challenges at the same time.

On the 31 August 2000 we celebrated my official retirement from F&S with over 100 guests. To everybody’s big surprise we announced the formation of Coferal Minerals GmbH (today Cofermin Rohstoffe GmbH & Co. KG) during the course of the celebration. The company started operation the following day 1 September 2000. At the time I had promised my partners to stay on for three years. Next year we are celebrating our 10^th anniversary! For me the story has an open end, I still feel too young to retire...!

Before joining Lasselsberger, Lucas had been key account manager – Combined Heat & Power Production Services at Energieversorgung Niederösterreich AG, Austria, and product manager – Business Area ICPO (Industrial Chemicals and Polymeres) at Prochema Handelsgesmbh, Austria. In 2002 he joined Lasselsberger Gesmbh, Austria as director sales & logistics, Minerals Division covering all EC countries and Asian markets.

Influencing factors

a) Politically: European business has been significantly impacted by the political changes at the beginning of the nineties of last century. Not only the German reunification, but also the break down of the communist systems in CEE (Central & East Europe) bridged the gap, which has separated the continent for decades.

More recently CEE countries joined the EC and the Schengen treaty. One of the key targets of the EU the “free movement of goods and people” was implemented to and from several new member states. As a result more minerals have been sent and delivered to the markets – in total, additional products have been available making the European continent more independent on ex-European imports. The community currency Euro reduces and will reduce the risk of exchange rates even more.

b) Technologically: next to many other technical achievements of the last decades (eg. logistics, treatment, mining technology, GPS) IT technology is one of the key factors to ensure growth in terms of quality, transparency and efficiency. The minerals business has become quicker, companies may react within minutes. Information is more precise (QM) and availability of knowledge is assured almost all over the globe. Some companies with very local business might have suffered, but the vast majority did obtain opportunities not foreseeable.

Challenges & opportunities

The minerals business is confronted with many more aspects than some years ago. In the European Union new regulations such as eg. REACH Certification, LCA etc. have become of importance for the public opinion and the legislation. Minerals business requires significant impact of energy. A sustainable and affordable supply of energy is a key question of location, growth and development of mining companies.

Last but not least, all business is suffering from the unforeseeable economic crises of today. It is obvious that some companies will not survive, however, the others will find some great opportunities in the near future.

Mineral moment

Lasselsberger Minerals is the best example of the changes and opportunities of Europe in the last decades. Starting with some informal contacts before the changes in CEE, we have become one of the leading companies in the minerals business on the continent. I am honoured to have joined and developed this way. Business life is full of memorable moments when finding new partners of different cultures, languages, and countries.

Hans-Jürgen started his career in the oil business before joining Quarzwerke as sales manager in 1990. In 1996 he took over the marketing manager position of SamQuarz in South Africa. When Quarzwerke withdrew from South Africa in 2004, he returned to Germany to become division manager High Performance Fillers, the Mineral Engineers Division of Quarzwerke.

Influencing factors

Globalisation and internationalisation of business has increased worldwide transparency and thus competition. More and more customers in Europe are sourcing directly from overseas and local mining companies had to optimise their performances and improve the products in quality and consistency.

Not only sourcing moved global but also production facilities and demands shifted mainly to Asia. Globalising the whole business might be the call but the risks are plentiful, based on my own experience.

Increasing administrative demands (including REACH) caused by governmental institutions have more and more impact on the ability to continue business. There is a clear tendency towards lesser appreciation of the mining sector by the public in Europe.

However, and despite the enormous changes we have experienced in business and society during the last four decades, it is reassuring to know that industrial minerals has stayed the backbone of the industrial development in Europe.

Challenges & opportunities

a) Challenges: we have to improve the awareness for the importance and the value of mining as an integral part of the European industry to secure economical welfare and development.

We have to raise the awareness for the need of sustainability in mining policy to support a responsible way of mining and secure the right balance between economics, ecology and social issues.

b) Opportunities: with the growing development of new products, we can grow with our customer’s needs for new and improved raw materials. This will establish new areas of business which will compensate for declining traditional markets.

The continuing consolidation of the industrial minerals market will also give opportunities for medium size enterprises to develop into niches and capitalise on spin-offs.

Mineral moment

The most impressing experience for me was right in the beginning when I had my first contact with industrial minerals. It was amazing what was necessary to produce an “ordinary” sand. Nowadays I recognise this incredulous view when I invite guests for a tour through our plants. The public very often underestimates the technical know-how and professional expertise needed to supply high quality and consistent industrial minerals.

Arvind Singhal is the managing director of Wolkem India Ltd and also on the board of directors of a number of other companies of the Group.  He has been associated with industrial minerals for over 40 years and has varied experience in the field of mining and processing of industrial minerals, pesticides, electronic metres, and international trading.

Influencing factors

Lower sea freights to and from India have given a boost to exports and imports of industrial minerals from India . A shift towards micronised and speciality fillers across all consuming industries globally has enhanced the demand for such fillers.

China as a major industrial mineral exporter has negatively impacted sales of other countries, while China and India’s liberalised policy on foreign direct investment, has provided better choice to customers, helped developing new markets, applications, shifted the industry to manufacture higher value fillers/extenders but at the cost of intensified competition.

There has been exponential growth in automobiles, polymers, paper, and paint industry post liberalisation in countries like India and China and has added demand for specialty fillers which has also led to economy of scale operations.

Challenges & opportunities

a) Challenges for Indian miners and processors: freight costs within India will increase; manufacturing costs within India will increase; sea freights from India will be higher than from other countries; sanctioning of new mines within India will be more difficult.

b) Challenges globally: sea freights will rise; if China is unable to sustain exports at the level as achieved in past, and if it devalues its currency, this will shift the global industrial minerals trade to other countries; environmental issues pertaining to mining will be more stringent across the globe; customers will be asking for more stringent quality in terms of environment standards being fixed for their end products.

c) Opportunities: mergers, acquisitions amongst the large industrial minerals miners, processors and traders; Asia Pacific, South East Asia, India to witness enormous growth, as manufacturing is shifting to this region and this region is investing on infrastructure; large industrial mineral miners and processors will consolidate their mineral portfolio.

Prior to setting up CMP in 1993, James Devlin was active in Chinese metals & minerals trading in Europe at China Industrial Resources Ltd, London, and in long term metals & minerals research worldwide with Commodities Research Unit, London.

Influencing factors

Twenty years ago the world of industrial minerals was dominated by distant suppliers supplying far away markets with very little understanding of their customers; today the world has shrunk such that any customer can find and research a supplier online and instantly ring call them directly.

The consequences for the minerals markets is that suppliers and customers have become so close together that the once mighty trading community has all but disappeared and supply chains have become much more strategic. Consequently, suppliers have been able to climb the value chain much more quickly than they could have done even just a few years ago.

When I first came into the minerals game there were hundreds of small suppliers in China, at least twenty active traders between China and the rest of the world and literally hundreds of smaller sized customers. The role of the trader then was to consolidate vessels full of “run of mine” unprocessed material and bring it to the western markets either to customers with their own integrated processing plants or/and independent mineral processing companies which redistributed it as processed mineral to countless other small “retail” customers.

Twenty years ago this is how it had always been and was expected to remain. But since then in every industrial mineral the same process has occurred.

In the case of bauxite it was CMP (China Mineral Processing (Tianjin) Ltd) which fundamentally changed the business by adding the processing value in China and thereby commencing the long march towards continuous value addition. This was not only a logical strategy but in hindsight an inevitable reality.

In all minerals this process marked the beginning of the wholesale move of industrial minerals usage from the west to the east as the customers of the minerals processing plants in China inevitably moved production into China. Twenty years ago traders scoffed at customers buying processed minerals and premixed and finished products from China; today it’s a standard necessity and indeed CMP has exported nearly no run of mine bauxite to the refractory industry in recent years.

During this period the transfer of production from the west to the east has profoundly affected every element of almost every industrial mineral market – none more so than bauxite and magnesite.

Since 1993 I have been working with CMP in China to build up the sales of processed minerals ex-China into Europe. Since we’ve started there has been a fundamental shift in terms of the balance of sales volume which has shifted from Europe to Asia and domestic sales in China; Europe once dominant is now in decline. Markets such as India, Australasia and China, which were nowhere in 1993, now dominate sales. Not just in volume but even more so in value.

In respect of China, apart from the afore mentioned macro-economic changes, in our business, the factors that have most impacted on the market have been a. Chinese export policy and b. Chinese domestic policy.

Chinese export policy for our main product line bauxite was, twenty years ago, massively pro-export; exports attracted a VAT rebate and a foreign exchange subsidy. Today, however, the Ministry of Foreign Trade has imposed a gradual constricting policy which has centred around the imposition of export taxes and VAT plus an overall restriction in the total quantity of material allowed to be exported.

This policy has been massively disadvantageous to CMP because CMP has invested in a state of the art large scale processing plant in China which due to this policy has been unable to reach the volume that it could have done without such restrictions.

Furthermore, the systematic cost advantage of processing the minerals in China has to a large extent been nullified by these extra taxes and export fees. In addition the current “tonnage allocation” system has kept alive many small exporters whose only involvement in the business is merely to receive and sell their export quotas; this system takes no account of investment nor capability, nor value added as it is based on a crude quantity basis and as such discriminates very negatively against those like CMP which have invested in both assets and strategy and marketing. It is the only factor which keeps alive many small weak companies at the expense the serious players. It is also a disincentive to investment in the sector in China.

I do not believe the current export tax and license system is sustainable in any of China’s industrial minerals. If this policy does not change the inevitable result will be that there will be a significant loss of market for all Chinese minerals that fall under this policy and in particular bauxite and magnesite. Unfortunately, as with everything, Chinese influences outside China have negligible effect on Chinese government policy.

Chinese government domestic policy towards domestic industrial minerals production has changed from benign indifference (twenty years ago) to (today) too much micro-management. The main drivers of this change have been firstly the determination of the central government to reduce the appalling pollution created by unregulated heavy industry which is very laudable.

The second factor has been the (understandable) reaction to the appalling and continuous loss of life within the mining industry in China, dominated by recurring and serious coal mining accidents. In recent years large scale mining accidents in most central Chinese provinces were common and many lead to social unrest.

The result has been the dismissal of a many provincial governors and their replacement by central government mandarins whose policy remit has been to stamp out industrial accidents and “illegal” mining .

The consequence of this has been that a large part of the production base has been shut down without being replaced not withstanding that no larger scale safe and efficient mines have been developed to replace this loss in capacity. In bauxite and in some other minerals the mining industry in China is seriously under developed with very inefficient mining and low levels of investment.

Challenges & opportunities

I cannot imagine that this will continue but it can only change if domestic Chinese policy allows. In this respect two policy agendas prevail: the (traditional communist) doctrine of self sufficiency (in resources) and the desire to reduce pollution set against the necessity of employment maximisation in order to preserve social stability (and therefore the survival of the communist party). The same dilemma prevails across the board for minerals and metals in China, particularly for bauxite and power based industries.

For industrial minerals today these policies are conflicting and in recession it may be that employment in a less than safe mine is a lesser evil than unemployment. World markets of many industrial minerals will be effected by this policy dilemma in China and in particular on which doctrine will prevail. I suspect it will be a bumpy road ahead.

Mineral moment

Moment that stands out? – helping to push the bus on the Tianjin field trip during IM’s 1^st Chinese Industrial Minerals Conference, Beijing, 8-10 October 1995.

Prior to joining QMAG, Alan Roughead worked for CSR Ltd for nine years in international sales, marketing, business development and finance roles. Alan joined QMAG in 1991 and was general manager, Marketing until end 1999. He was general manager 2000-2004. He was appointed a director on 17 December 2004.

Influencing factors

I only go back three decades in industrial minerals! I think the biggest impact has been China, particularly in the 1990s and 2000s. I’ll look at it from just a magnesia perspective but it probably applies to some other industrial minerals as well.

a) The 1990s: The 1990s saw the emergence of the Chinese magnesia industry. It started off as a fragmented cottage industry based on cheap labour with little recognition of proper safety, environmental and cost accounting standards.

The 1990s was a period of low global steel and refractory growth and the lack of financial and market discipline by Chinese producers and international trading companies saw magnesia exports flood the world market and prices decline significantly. As a consequence, a considerable amount of non-Chinese magnesia capacity (DBM and EFM) closed permanently – particularly in Europe, North America and Japan.

b) The 2000s: the 2000s saw the acceleration of China’s urbanisation and industrialisation and consequent strong growth in the Chinese steel and refractory industries. During this period Chinese magnesia producers consolidated, moved from a cottage industry to more industrial based business model and started to place a greater focus on the domestic market and vertical integration (refractory production).

At the same time, there was a fundamental and permanent shift in Chinese government policy aimed at conserving scarce natural resources and energy: elimination of export rebates; introduction of export taxes; restriction in export licences; focus on improving safety and environmental standards; RMB revaluation.

These policy changes coupled with China’s industrialisation and integration into the world economy resulted in higher costs, reduced availability and declining quality. Following the capacity closures that took place in the 1990’s and with limited new capacity added outside of China, prices increased significantly over the period 2004-2008.

Challenges & opportunities

As always, the primary challenge for all magnesia producers will be controlling cost. This is particularly the case in the current economic environment.

The primary opportunity will be servicing future growth. Despite the current downturn in the world economy, we are still optimistic about the future of the magnesia industry. We think the developing world (led by China) will continue to drive world growth over the medium-long term.

At UNITECR in September 2007 we stated that we expected strong medium to long term growth in magnesia demand from steel, cement, nickel, copper, cobalt and environmental markets. This was based on our own internal study which projected the following growth in magnesia consumption:

• total magnesia growth 4.2% pa (330,000 tpa);
• refractory magnesia growth 3.8% pa (220,000 tpa);
• chemical magnesia growth 5.2% pa (110,000 tpa);
• high value refractory magnesia growth 4.3% (70,000 tpa);
• high value chemical magnesia growth 15.3% pa (60,000 tpa).

While 2009 (and possibly 2010) will be down on previous years, we still stand by these growth forecasts over the medium-long term. In addition, the significant barriers to entry remain – availability of new deposits, high greenfields capex requirements, availability of low cost energy.

Mineral moment

After almost 20 years in magnesia, I am still waiting for my memorable and special moment!

John has handled minerals on a global basis for many years and has specialised in refractory minerals, mineral sands, talc, tungsten, calcium carbonate, pigments, and barytes. He has worked on the LME with Amalgamated Metal Corp, was MD of Klockner Metals and Minerals Ltd, Divisional Director of minerals trading at Fergusson Wild & Co Ltd, (latterly Minelco), and has been Managing director of Anglo Pacific Minerals Ltd for the past five years.

Influencing factors

I feel that the overall event that has had most impact on industrial minerals is the shift of industry away from North America and Western Europe to China, India, and Eastern Europe. This has had a major impact on consumption and trade patterns. Trade between Australia and China has gained strongly together with emerging trade between Africa and the Far East as China invests in resources not only in Australia but in Africa too. Major companies such as Rio Tinto are affected by this. This event has coincided with the rise of China in the steel, automobile, and other industries which has affected mineral movements and freights.

Challenges & opportunities

In today’s economic circumstances consumers are looking at alternative supplies of quality minerals at a cheaper cost. Consumers are moving away from China as China imposes more licensing and taxes on exports. The pressures are also financial as major operators are finding it much more difficult to access credit. This also applies to their customers. Drilling companies in the oil and gas field now have much less cash from the banks and their cash flow is based upon $40 per barrel oil whereas last year it was based on $140 per barrel so there is much less drilling activity taking place.

Market recovery in housing, automotive and oil/gas are crucial to increased activity in minerals but it is my opinion that this will take twelve to eighteen months to begin to return to anywhere near the norm we have known. The opportunities are therefore those companies who can be flexible in locating alternative supplies of quality minerals at cheaper cost and to supply companies with minerals for higher technology applications particularly those which have an environmental impact. The supply of minerals to India will develop as that nation expands its infrastructure. If terrorism is sustained in India it will hamper the country’s growth.

Mineral moment

There are many events that stand out over my career but the overall memories are of meeting and working with my close business associates who have become my good friends. These include Tom Eisenman of Excalibar Minerals Houston, Raphael Wan of Topgrand Hong Kong, Mr Gao of Zhanjiang Dong Sheng, Samir Goenka of Gimpex Chennai, and George Li Gong of Minelco. These people have helped me tremendously and it has been both a pleasure and a privilege to work with them. There are many others across the world and I have found a fantastic camaraderie amongst the industrial minerals fraternity whether competitors or not. I also feel that Industrial Minerals magazine has done a tremendous job for the industry and we should all be proud to have had such a great team working with us over the many years.

Zoltan Tanyi managing director and Margit Tóth commercial director, Motim Electrocorundum Ltd

Influencing factors

From our point of view the most significant impacts affecting our business success are the following: having to secure raw material (feedstock) supply with appropriate quality and reasonable commercial conditions. Maintaining alternative sources is also a must. It caused a lot of difficulty for us that certain quality raw material could be purchased recently exclusively from China.

Our technology being rather energy intensive, the availability and price of energy (electricity) is also a deciding factor for us. The pricing of energy bearers in general has a great impact on the success of the industrial minerals sector. The concentration of industry also put an imprint on the business. Especially for smaller players (suppliers) the “global purchasing policy” of the international enterprises is really challenging.

After an exceptionally successful year of 2008 all of a sudden we are faced with the economic crisis at the beginning of 2009. I am confident everybody knew deep down that the fruitful business of the recent years could not last forever, but nobody was able to foresee the suddenness and size of the downturn. After a period in 2008 when everybody was sometimes close to losing common sense, we are on earth again in 2009.

Challenges & opportunities

We are facing challenging times and have to adapt to the new unhealthy economic environment and be flexible in applying the necessary measures, even those are sometimes unpleasant. To make the situation even worse, the producers of electrofused minerals in Europe (especially in case of white fused alumina) have to face increasing and more aggressive Chinese penetration of the market.

On the contrary, what is good is that during these difficult times one can learn a lot which is a real asset for the future, and there might be more time available to conclude R&D and product developments.

Mineral moment

In spite of my relatively short history in the industrial minerals field, there occurred some really remarkable events. However, none of them could be compared to the economic crisis of 2009. The astonishing aspect of the downturn has been its swiftness and far reaching effects. There is hardly any industrial player worldwide that could be exempt of all the bad effects and their inevitable consequences. What is really amusing and dramatic at the same time to me is that there are so many interpretations of the situation, but no clear way out of it.

Murray Lines has worked in the minerals sector in Asia Pacific for around 25 years and is now based in Sydney. He worked with Commercial Minerals for many years and founded Stratum Resources in 1997. Most of his projects involve supply and demand studies, both regional and global, along with due diligence work in a variety of minerals and metals.

Influencing factors

Rationalisation of mineral producers (eg. Sibelco/Unimin, Imerys, Omya, BASF, Carmeuse). It has been mainly a matter of the biggest players acquiring the small-midsized company and operations. Multi-minerals and multiple country operations have become the norm.

Improved machinery such as ceramic-lined ball mills, and modern air separators that can cut down to a few microns, improved spiral separation technology and mineral agglomeration technology involving heavy minerals (capacity to extract WIM-style deposits), new titanium feedstock technology under development (eg. AUSPAC process).

The gradual shift of local manufacturing capacity from Europe, USA to Asia, principally China and some of its neighbours, eg. Vietnam.

The change from China being a large exporter of such minerals as fluorspar, (rare earths) to an importer of iron ores and coal (bauxite possibly). Also, unprecedented and rapid expansion of Chinese investment in overseas mineral resources (eg. petroleum, iron ore and coal) and in related infrastructure.

The continuation of Australia as a source of some critical raw materials including non-metallic, metallic, and energy. Some exciting new developments are underway and will have a beneficial impact both for the producers and end-users.

Challenges & opportunities

The capacity of China in particular to maintain high levels of industrial production in the face of environmental challenges involving the sustainable use of its air, water and land resources.

Resolving challenges involving territorial disputes and dictatorial regimes (eg. Myanmar) in the South East Asia region and their political consequences on trade relationships. Some of this investment is serving to entrench corrupt regimes to the detriment of local populaces who gain little from such investment – increase “sovereign risk” to external investors through potential for violent overthrow.

The potential for increased agricultural production in Asia (food, biofuels) and the associated demand for such fertilisers as potash and good examples of these are in Thailand and Australia are being developed.

To identify new mineral provinces or regions that might host industrial minerals as traditional sources of these minerals become depleted or unavailable for extraction.

Improved logistics and mineral separation technologies to increase viability of extracting mineral resources from distant locations and or low grade resources (high grade resources with detrimental impurities, eg. high-silica bauxite).

Mineral moment

The most satisfying part of being involved in the industrial minerals sector has been the opportunity to travel to many part of the world on various projects and attend some of the IM conferences in places such as Paris, Denver, and Athens. These visits have enabled me to meet many interesting people, including numerous individuals who have become friends and associates with whom to be involved in a wide range of mineral projects ranging from the world’s largest talc mines to nanomaterial laboratories.

Some of the most memorable trips were to evaluate limestone operations on Sulawesi Island, a very remote part of Indonesia as well as to visit silica flour deposits on Camarines Sur, across the bay from Naga city in the Philippines.

Another highlight was to visit Milos Island following the IM19 Athens Congress where we viewed the largest bentonite and perlite operations in Europe on a small but very historic Greek Island. Visiting remote parts of Sichuan and Guangdong provinces in China to do iron ore and feldspar projects have also been most memorable occasions.

Geology and minerals are spread worldwide and this often understated sector of the mining industry allows the participants to see much of the globe while working.

Ian worked 28 years for ECC/Imerys as a geologist and was also general manager of ECC kaolin operations in Brazil and Spain and involved in GCC start-up plants in Sweden and China.  Since 2002, Ian has worked as an independent consultant dealing with a number of industrial minerals and is author of many articles.

Influencing factors

a) Globalisation and consolidation within all sectors. A clear example of this is supply of pigments for paper. In the early 1970s pigments for paper filler and coating were dominantly kaolin with major players being English China Clays and various US producers. Profits were good and the ECC Group enjoyed a position in the top 100 companies of the London Stock Exchange.

In the early 1970s, the onset of alkaline paper making saw the introduction of GCC (ground calcium carbonate) replacing some kaolin in coating paper and PCC (precipitated calcium carbonate) replacing kaolin as the major filler based on production in SMI satellite plants.

Today, Omya is the major supplier of GCC in the world and Specialty Minerals Inc.(SMI) the major PCC producer. Sources of high quality kaolin are now sourced from the Amazon Basin and this has led to the demise of kaolin production from both the USA and Cornwall.

Today, the major pigment producers are Imerys which produces kaolin, GCC, and PCC; Omya with GCC and PCC; and SMI for PCC for paper.

Omya’s success has mainly been its ability, particularly in Europe, North America, and part of Asia (Thailand and South Korea) in gaining control of strategic marble resources. For Imerys its success in GCC has been in building up strategic resources of marble in key areas such as Malaysia, Vietnam, and China to support significant growth in Asia.

b) Significant growth in all markets but the switch to emerging markets in Asia, particularly China and India. Also growth in the Middle East and parts of Africa.

c) China has become a dominant world player in industrial minerals over the past 15 years. From being an exporter of bulk material it has evolved into a world leader in the production of paper, tiles, sanitaryware, porcelain, refractory materials, rare earths, barytes, talc, wollastonite and other industrial minerals.

The trend over the last few years has been to control exports by a licensing system and withdrawal of tax incentives and make the domestic market the priority. China continues to invest heavily in research and development for all minerals and maximise the value of their own resources.

d) The high cost of commodities over past decade has seen the exit of major mining companies from industrial minerals. The void has been filled to some extent by equity groups investing in industrial minerals – they believe that industrial minerals are at a low point and can only go up. Equity groups are showing more confidence in the industry than many of the existing players.

e) The period has seen the growth of new products in all sectors. This has been backed by high expenditure in R&D, particularly in China and India.

f) Legislation, environmental constraints have made the climate for industrial minerals developments in western countries more challenging and difficult over the last 40 years.

Challenges & opportunities

The primary challenges in the next decade or so will be:

a) For developed countries the main challenge, particularly in North America and western Europe, will be to get government support for a continuing viable mining business. While respecting all the environmental and other legislation to comply with, it is important that current operations are able to continue. There will be a need for some countries that have closed down particular mines to re-consider opening them to ensure supplies.

b) Detailed exploration to extend reserves of known deposits needs to be carried out at the present time so a properly conducted mining operation can be planned, permissions sought and environmental permissions gained. Systems to support the geologist, mining engineers, and management teams must be further developed.

c) Sufficient training of geologists, mining engineers, processing engineers, chemical engineers, chemists, and research scientists must be encouraged. It would be good to see a School/Department of Industrial Minerals established in one of the major universities in the world, with support from industry, to concentrate on the training of industrial minerals personnel.

The opportunities in industrial minerals looking ahead are:

a) New product development. What is the future of nano-materials? The flurry of papers at present on various nanoclays for incorporation in nanocomposites is interesting and potentially exciting, but there is a need now to move into production and determine the true feasibility of some “products”. In the oilfield drilling sector there are many opportunities for new products involving a wide range of minerals such as barytes, bentonites, other special clays and chemicals.

b) The next ten years could well see increasing strife between China and other countries within certain sectors. The new papermills in China are state-of-the-art and have a distinct cost advantage over other operations in the world. This is being seen at the present time by closures of several key papermills in Europe and the USA. Any cost advantage that the Chinese have at present might well be eroded by import taxes and trade restrictions.

c) As has been well documented by IM, exploration activity and increases in capacity for magnesite based products – CCM, DBM and FM – have been generated by the desire not to have to rely on Chinese imports. However, with these plans reaching fulfilment the price of MgO products from China has fallen back to low levels (DBM in September 2008 at $650/t is now being offered at $250-300/t but with no buyers as everybody build up stocks in 2008). The message here is that prices will increase again so companies should continue with their own plans for developing their own resources outside of China.

d) It is predicted that North Korea will become an important supplier of industrial minerals in the next 10-20 years. Even given the current desperate situation in the country with power shortages and famines (during the last ten years) there are large deposits of many important industrial minerals such as magnesite (second largest resource in the world after China), talc (1st Grade), wollastonite, graphite, marble (for GCC), perlite, and others.

Mineral moment

This is the most difficult question as over the last 35 years working with industrial minerals I have visited approximately 75 countries and continue to enjoy the travelling and challenges of coping with strange languages and different foods. The joy of working in the sector is the people one meets from a wide range of cultures and backgrounds.

It is good to look back, as the first General Manager of ECC do Brasil near São Paulo that people you first employed are now in senior positions in their respective companies. Also the owner of the land, Fumio Horii, that ECC leased an area for 20 years to mine and process kaolin for the local paper filler market has invested in a luxury hotel and golf club and all his sons are running a business (one the kaolin company, another a limestone business with the younger son designing extensions to the hotel).

In carrying out exploration work for marble and studying kaolin and ball clay deposits in the Czech Republic, I used the geological knowledge of Dr. Jiri Jiranek, at the time with the Geological Survey of Czech Republic. Years later when I visited Chile to make a study I was met by Jiri at the airport who, because of his knowledge of Spanish and other skills, had become the Czech Ambassador.

My first visit to Brazil was back in 1975 when I landed on a flight from Venezuela at 0400 hrs in the morning in Manaus (Amazonas) and promptly went to the nearest bar for a welcome drink! I was very fortunate to work for a company such as ECC International/Imerys that gave me the opportunity to travel so widely and extensively.

In “retirement” I continue to visit new places, in particular North Korea where I have been made very welcome, particularly in the deposits where the generosity of the hosts in sharing their meagre food rations has been humbling.

I continue to work in China on a number of industrial minerals which is both fascinating and challenging as a geologist in visiting new deposits and meeting new people. In China, I am particularly grateful for the friendship and help of Professor Wen Lu (Chengdu University), Larry Lai (Yie-Lie Enterprises), and Rocky Wu (Rocky Mountains Development Co.).

I would like to congratulate Industrial Minerals on its 500^th Edition, and in particular Mike O’Driscoll who is a good friend. Here’s to the next 500 editions!

John R. Harman joined Martin Marietta Magnesia Specialties in 1977 and has held increasingly responsible management positions including vice president and general manager, Chemicals. In 2005, John was named president of Magnesia Specialties which includes its Dolomitic Lime Operation in Woodville, Ohio and its Magnesia Chemical Operation in Manistee, Michigan.

Influencing factors

For Martin Marietta Magnesia Specialties it was the decision to add chemical magnesia production in Manistee, Michigan in 1969.  As steelmaking practices improved and refractory grade magnesia consumption on a per ton of steel basis declined, the volume of magnesia for refractory applications fell significantly.

Couple this with the dramatic increase in magnesite imports from China which led to the consolidation and ultimate destruction of synthetic magnesia production in North America. Only two producers of refractory grade MgO exist in North America today, and the level of production from each is well below historical levels.

Today, synthetic magnesia producers are being encouraged to maintain supply of high purity magnesia as insurance against uncertainties in the global refractory market place.  

The other most significant impact that I’ve seen is the change in the regulatory environment in the USA.  Regulations continue to tighten in all environmental areas with air and water leading the list. Magnesia is a key mineral in chemical pollution control technologies and will continue to be for many years to come. Magnesia delivers on a cost and performance basis compared to other alkalis in the market place today.

Challenges & opportunities

The primary challenges have to be the burden place on industry to meet stringent chemical registration requirements such as REACH.  Many minerals that are synthetically produced are in a purer state than some that are found in nature, yet they are required to meet the same regulatory requirements of more hazardous chemicals. 

Mineral moment

As I look back over the past 30 years, the most memorable accomplishments for our business  have been related to developing markets that had not used magnesia previously.  Examples of this are the use of magnesia as a pulp bleaching chemical, providing a cost effective mineral hydrate in magnesium hydroxide for flame retardancy, and developing the most stable magnesium hydroxide that can be shipped thousands of miles and while maintaining its performance and stability characteristics.   

Especially gratifying is the success we have experienced in our pioneering efforts to move chemical grade magnesia prominently into the 21^st century as a safe, effective and efficient alkali to solve environmental problems.