Filler grade barytes industry in 2009

By Simon Moores
Published: Saturday, 22 August 2009

Looking to fill the void: Filler grade barytes is suffering from the severe downturn in the auto industry leaving some with a demand shortfall of up to 50%. While times are hard, barytes diversity, outside of its dominant use as an oil drilling medium, is set to give necessary future stability to producers by Simon Moores, Senior Assistant Editor

Market demand for barytes has declined dramatically since mid-2008. But for producers of filler grades, it could be worse.

Global barytes output last year hit a high of 8.5m. tonnes over 50% of which was produced by China. But the situation has changed since the boom times for the most part of 2008. Barytes output is forecast to slump in 2009 to between 7.5 and 7.9m. tonnes as a demand drop from all markets is realised. China, unsurprisingly, will take most of the hit.

Demand from the oil and gas drilling market, in which around 85% of barytes is used, is down 50-60%. Despite barytes second biggest market, fillers, reporting significant demand falls, its wide range of applications – from paints and plastics to sound proofing and radiation shielding – is set to give the market solidity and security.

Asia: the world’s supply


China

China truly drives world barytes supply mining 5.5m. tpa in 2008. Its consumption level, however, is only a third of that of the USA (1.1m. tpa), this is expected to significantly change over the next five years. Filler grade production in China represents around 10% of the total output.

Chinese barytes production in 2008 was hit by significantly disruptive events: the severe winter in central and southern China, rains and flooding, and the devastating Sichuan earthquake on 12 May.

China’s major barytes producing provinces are Guangxi, Guizhou, Sichuan and Hunan. As the accompanying map demonstrates, all three severe natural hazard events hit directly the barytes mining regions.

China’s 2008 barytes disruption


Barytes mining in China (outlined in black) was directly hit with  three severe natural hazards - snowstorms, flooding, and the
Sichuan earthquake - disrupting production.


The winter storms in January and February 2008 ground all operations in western, central China to a halt and cost the country’s economy $15,000m. Significant flooding followed in June of that year resulting in disruption some of the open pit mines and the flooding of underground operations, particularly in Guangxi. The rainfall of 7-8 June in Guangdong was the heaviest in 50 years for China.

In the aftermath of the 7.9 Richter scale earthquake which struck Sichuan province and significantly impacted adjacent provinces, the Chinese government mobilised all the available rail cars to transport water, food and medical supplies to the affected areas.

This caused a shortage of rail cars for the barytes industry located in the provinces of Guangxi, Guizhou, Sichuan and Hunan miners which have to move tonnages to the southern ports, in particular Zhanjiang in Guangdong and Fangcheng in Guangxi (IM June 2008, p.6: Sichuan quake impacts barytes supply).

White filler grade production from Sichuan was among the hardest mining areas hit.

The cost of road transport limited barytes transport via this means.

Steinbock Minerals Ltd explained to IM that this was the first time in 50 years producers faced such a barrage of natural challenges.

Steinbock, which mines barytes from Guizhou province, reacted by stockpiling the mineral until better conditions prevailed. The company sources white paint grade barytes from Kaili and Duyun in southern Guizhou province.

The mine in Guizhou opened in May 2008 and has a 5m. tonne reserve. In mid-2008 it was producing 3,000 tpm all grades. This has since ramped up to 7-9,000 tpm with the capacity to reach 10,000 tpm.

From this mine Steinbock produces filler, chemical and drilling grades. Its white barytes is predominately from vein deposits while the grey/off-white barytes is from stratiform deposits.

Steinbock states that its grey chemical barytes (BaSO4 >96%) is used in the plastics, paper, paints, coatings industries, while its high brightness white filler is for paints and plastics applications.

In China, chemical and white filler grades of barytes are also mined from Dali in Yunnan province for domestic use. The location is primarily a source of drilling grade but the lower price it commands makes shipping by rail or roads uneconomical.

Historically, China has produced a large quantity of off-white product, but with new producers and more importantly internal demand requiring larger quantities and higher specifications (fuelled by its 7-8% GDP growth in these recessionary times), China is well underway covering all grades and qualities of filler product.

India

Indian barytes production is the world’s second largest at 1.1m. tpa in 2008, nearly all of which is mined from the 74m. tonne Mangampet barytes deposit, one the world’s largest in the south-east state of Andrah Pradesh and exported through Chennai Port.

Andrah Pradesh Mineral Development Corp. (APMDC) is the leading producer in India with a 300, 000 tpa output in 2008 while Gimpex Ltd produced 200,000 tpa from the same deposit last year.

APMDC supplies 200,000 tpa of barytes “A grade” or oil well drilling grade to Ashapura Minechem Ltd for sale to domestic markets, and barytes powder (filler) and barium chemical feedstock for local industry.

Ashapura has agreed to buy 16,667 tonnes of A grade barytes every month until August 2011 at a price of Rs1,944/tonne ($341/tonne in August 2009) ex-Mangampet mine/plot on the basis of 4.25 SG.

IBC Ltd (formerly India Barytes Co.) has mined white barytes over 500 acres lease in Khammam District in Andhra Pradesh for the past eight years. The operation is predominately manual underground mining which has limited production of filler grade barytes so far.

IBCL explained to IM, however, that its white filler grade will increase threefold from 10,000 tpa to 30,000 tpa while production of off-white will rise from 15,000 tpa to 50,000 tpa.

The company aims to achieve this through mechanisation of its mine.

IBCL’s managing director, K. Rajamohan Reddy, told IM: “The deposits have now been proven and IBCL are taking steps to increase production by introducing mechanised mining. Innovative methods are being established for increasing white barytes production. IBCL are also setting up a jigging plant at mines site for enriching and additional recovery of white and off grades.”

Presently the company supplies the domestic market, however, the new production will target European and North American consumers

IBCL also operates subsidiary Mahalakshmi Micro Minerals in Kadapa, south-central Andrah Pradesh, which processes white barytes into a 500 mesh powder for domestic industries.

Vietnam

Vietnam contributes around 150,000 tpa to world barytes production. The vast majority of this is sold into the south-east Asian oil well drilling markets.

Ha Noi based Vietnam Mineral Resources (VMR) operates a number of mines in the northern province of Tuyên Quang.

In Tien Bo, Yen Son district VMR has two 4.2SG barytes operational mines and one in Tu Quan.

From Tien Bo, VMR produces 50,000 tpa lump barytes ore, primarily for oil drilling markets, with filler potential. It is also developing two mines in Thuong Am, Son Duong district in Vietnam’s north, one mine in Dao Vien, Yen Son district.

VMR sells its barytes either as lump or as powder in 1,500 kg and 1,000 kg big bags, and 45.56 kg craft bags.
 
Global barytes production and consumption 2008/09




Europe: processing dominates

Europe’s barytes industry is defined by a number of processors with limited production of barytes from the mines that are still operational.

Leading filler processors in Germany are Sachletben Bergbau GmbH, Deutsche Baryt-Industrie and Solvay SA (which manufactures a synthetic product called Blanc Fixe – see later).

Netherlands is home to one of the leading filler producers, Ankerpoort NV, and CEBO Holland NV, while Spain’s Minerals Girona SA and the UK’s Viaton Industries Ltd are also significant industry participants.

Viaton, based in Brassington, Derbyshire, UK, explained to IM how it has been hit with significantly low demand.

“We are operating at 25% below these levels with slight upturn recently” Richard Edwards, sales director at Viaton, explained to IM.

“[Demand is down nearly 30%] mainly due to manufacturers destocking in raw materials to concentrate on working capital [this is driven by the] the falling demand for white goods (powder coatings) and new cars (friction products),” Edwards added.

Viaton produces 50,000 tpa of barytes for filler and extender markets – 40,000 tpa from its UK plant and 10,000 tpa from a joint-venture plant in China.

“Our main grades are for the filler and extender markets in paints, powder coatings, plastics, adhesives and the friction industries,” Edwards said, “we have a joint venture partnership with our material supplier in China... the partnership provides long term security of supply for us and our customers.”

SCR-Sibelco owned Ankerpoort NV is significant supplier of white barytes through eight production units across Europe.

The company produces Diamelia and Portayte brands for high value applications such as polymers – these compete with precipiatated barytes product, Blanc Fixe.

Ankerpoort also produces Opalia barytes for a range of applications is X-ray absorption, paints and plastics.

CEBO Holland BV, a filler grade supplier for automotive sound insulation, has explained its sales have plummeted by 50% in the last year.

CEBO processes all of its 10,000 tpa barytes at its Ijmuiden, Netherlands plant, the vast majority of which is sold to European markets for sound insulation. The significant decline in European auto manufacturing has therefore hit the company hard.

Luuk van Tooren, CEBO’s manager of sales and marketing explained to IM that he does not expect to see any improvement within in the next six months and that there are not many readily available alternative markets.

Solvay’s synthetic filler

Solvay SA through its Barium and Strontium subsidiary produces Blanc Fixe, synthetic barytes for high value applications. Blanc Fixe uses off white barytes as a feedstock, and competes with the high specification grades of natural filler white barytes.

Dr Rolf Gerstenberg, raw materials manager told IM: “In Italy we produce the synthetic barytes which is used as a filler and extender. We make sub-micron grades to a very high specification.”

Gerstenberg explained that “demand has dropped in the last six months” citing significant declines in automobile and construction markets, which indirectly hits Solvay as it supplies companies who manufacture products for these huge markets.

“We are yet to see an upturn except in Asia,” said Gerstenberg, “which has already started [to recover].”

Solvay is not making any predictions as to when an upturn will come, however. Gerstenberg said: “If you deliver to Asia a lot of people have stockpiles of product. With destocking occurring on several levels, you cannot tell if you are still in or out of the crisis.”

USA: driving consumption

US filler barytes demand is holding up considerably better than its drilling grade counterpart. While demand for oil drilling grades, predominately from operations in the Gulf of Mexico and Nevada, is down as much as 50-60%, filler grade is selling at a steady rate.

The USA relies heavily on filler barytes imports. It has active miners and processors of barytes, such as Halliburton Energy Services and M-I Swaco, but they are heavily orientated to the oil drilling markets.

“There is a lot less barytes activity in the USA with quite a lot of absorption occurring” explained Peter Huxtable, Director of The Barytes Association.

Much of the manufacturing in the USA has moved into China and higher value products. This has been demonstrated by companies such as the UK’s Viaton establishing plants in China.

Supply

UK based Anglo Pacific Minerals Ltd, which ships 25,000 tpa white filler barytes (lump ore) from China to the USA, explained to IM that it has already sold half of its expected target for 2010.

John Allen, managing director of Anglo Pacific said: “[The filler barytes] we shipped in 2008 and 2009 will see our customers to 2010. For 2010 we have already booked 12,000 tpa [worth of orders]”. This is 50% of the company’s target.

Anglo Pacific’s barytes is for paints, automobile clutch and break markets.

There is presently an US import tariff on crude barytes of $1.25/tonne.

The USA is heavily reliant on China for its supply of barytes. Chinese imports account for over 90% of the imported barytes tonnages in the USA while India is the second largest contributor of barytes, exporting around 7% or 224,000 tpa to the country.

USA’s barytes supply is presently experiencing positive times despite the overall demand slump with new sources of oil drilling grades being mined. Kent Exploration Inc. mining at Flagstaff, Washington and Canadian company, Blackfire Exploration Ltd mining in Chiapas, Mexico are both new sources of drilling grade barytes.

Although neither sources mine filler grade, Blackfire told IM that it is presently testing filler and chemical grade potential its Payback Mine, in southern Mexico, for the North American markets.

Barytes use in the USA is mainly in oil and gas drilling industry with many of those involved clustering around the Gulf of Mexico (GoM) and Nevada – the hubs of drilling activity.

Demand from the GoM region however has plummeted and in July 2009 was at virtually zero (IM 8 June 2009: US drilling barytes plummets).

A leading US purchaser of drilling grade barytes told IM: “The largest market [ie. GoM] will decline this year significantly. If required demand drops to less than 2m. tonnes, and Nevada produces more than 500,000 tonnes, which it will easily do, then US imports will go down to less than 1.5m. tonnes.”

This is expected to skew the figures in favour of filler grade barytes when 2009 comes to a close.

Processing

Excalibur Minerals LLC is a processor of industrial minerals and a leading producer of barytes products. At the start of 2008 the Houston, Texas based company had a capacity of 700,000 tpa of its ExBAR grade in 200, 325, 400 mesh sizes to the paints, plastics, rubber, adhesives, and sealants markets.

Georgia based Cimbar Performance Minerals processes filler barytes for extender, coatings and chemicals applications.

In 2008, the company produced 120,000 tpa all grades barytes: 90% “industrial grade” for filler and chemical applications and 10% for oil well drilling markets.

Cimbar has processing plants in Cartersville and Chatsworth, Georgia, Postosi in Missouri, Houston, Texas, and southern China.

The company supplies the niche, speciality markets of powder coatings, gloss, ink and PVC markets with its CIMBAR and Barimite grade barytes. Cimbar’s lower brightness Bara 325 is more of a general purpose grade for filler and extender markets.

USA barytes usage





USA import sources




Source: USGS, The Barytes Association, IM estimates

Elsewhere

In addition to the main production and processing hubs discussed, a handful of barytes mining operations exist in the Morocco (500,000 tpa), Iran (250,000 tpa), Kazakhstan (150,000 tpa), Mexico (150,000 tpa), and Turkey (150,000 tpa).

While much of this production (an estimated 90%) is for the drilling markets, some white filler grade material is sourced from Morocco and Turkey.

“Morocco has much white barytes and a certain amount of off white” explained Huxtable of The Barytes Association, “the white material competes with other pigment minerals and Blanc Fixe”.

Turkey’s Ado Mining produces filler grade barytes from its 240,000 tpa operation, although sales are mainly to global oil and gas drilling markets.


Barytes’ future

Exploration of future barytes deposits has been limited. Nigeria is continually being touted as a new source and Gabon is emerging through development work by India’s Taurian Resources, but as the oil and gas drilling market remains so depressed, there is little incentive to invest in new deposits exists.

“I do believe there will be a change in climate and a renaissance in mineral extraction in Europe,” Huxtable told IM.

Increasing awareness of companies’ carbon footprint and the need to reduce dependency on China as a mineral supplier, Huxtable believes, will result in a return to local sources.

Such a thought process has resulted in the reconsideration of barytes mines in Perthshire, Scotland. Planning permission has hindered this so far, however.

How will filler grade barytes fair in the future? None of barytes markets remain unscathed from the global recession.

Total global barytes production in 2009 is forecast to 7.5-7.9m. tpa from a high of 8.5m. tpa in 2008.

The filler market however will be the most robust performer. It presently commands a market share of 10-15% or around 850,000 tpa to 1.2m. tpa, a figure which has increased in the last five years by around 300,000 tpa.

This is set to continue its relative rise in comparison to oil drilling markets and use in barium chemicals, which are declining.

Barytes’ chemical markets have experienced a steady decline in relation to its main use in cathode ray tube (CRT) televisions which utilise barium compounds using barytes as a feedstock. The emergence of new flat screen and liquid crystal display models have forced down the use of chemical grade, now estimated to represent under 10% of total barytes demand.

Emerging uses for chemical grade are in construction products, but this is not expected to make up the short fall from the television demand deficit anytime soon.

As filler grade gradually eats away at chemical grade barytes’ share, the oil and gas drilling market will continue to dominate demand for the mineral despite the significant short term fall in production.

Irrespective of good intentions to wean the world off its addition to hydrocarbon fuels, significant drilling activity will continue for decades to come, thus ensuring a continued, if ultimately limited demand, for drilling grade.

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Barytes at a glance

Mineral: Barytes or barite
Formula: Barium sulphate; BaSO4

World production 2008: 8.5m.
Main producers: China (58%), India (12%), USA (7.5%), Morocco (6%)
Main consumers: USA (3.2m.), China (1.2m.), Europe (800,000), Middle East (550,000), Russia (350,000), India (350,000), South America (300,000)

Figures in tonnes per annum (tpa)

Markets in 2003/04



Markets in 2008/09 



Source: The Barytes Association, IM estimates