Turkey feeds Amcol’s Europe ambition

By Simon Moores
Published: Thursday, 25 February 2010

New Turkish mine becomes ‘powerhouse’ of Amcol Minerals Europe as the bentonite mining and processing group gains security from consumer related products

In a year when its parent company has been hit hard seeing its profits drop 34%, Amcol Minerals Europe (AME) has endured what has been an unsteady time for overall bentonite demand.

AME’s relative success has been driven in the main by the progress of its most recent acquisition, a bentonite mine and processing operation in Turkey  Amcol Minerals Madencilik (AMM, formerly Bensan), according to commercial director, Alan Newbold.

“Demand wise we didn’t really suffer over the last year,” Newbold said in an interview with IM, “right across the board demand was solid.”

Europe’s detergent markets were described as “strong” while the bleaching earths sales performed in a similar manner. These two markets, for which AME supplies intermediate products, remained solid owing to its strong ties to the individual consumer.

Amcol’s Turkish operation has become a significant new
source of bentonite for the company. Courtesy AME

“Demand for our products rose slightly last year,” explained AME’s managing director Tony O’Reilly, “people are still buying detergents and edible oils, the latter using bleaching earths. Demand for both remained strong.”

But it has been Amcol’s Turkish operation its first stronghold in the Mediterranean region Ð where the company has seen most benefit supplying foundry, bleaching earth, animal feed and drilling mud markets.

The new 150,000 tpa subsidiary Amcol Minerals Madencilik (AMM), based in Istanbul, is one of the country’s leading bentonite producers with estimated reserves of 15m. tonnes from its mines in the Enez Edirne region of Turkey. In 2009, AMM was responsible for nearly half of Turkey’s bentonite exports.

O’Reilly said: “The principal reasons for expanding into Turkey was to increase our geographic spread. We felt the time was right to re-establish ourselves in regions where key markets are.”

“We certainly see a very attractive foundry and metal casting market both domestically in Turkey and close by,” he added.

Much of the bentonite that is sold is dried and crushed, or milled and bagged, it is relatively unprocessed compared with products from its plant in Winsford, UK where much of the value is added.

A pilot plant at Winsford, UK. Courtesy AME

UK processing

The Winsford plant in Cheshire, UK is central to AME’s higher value business. The company imports raw materials from its own sites and external suppliers globally to serve the European market. Production ranges from bentonite detergent grades to magnesium aluminium silicate products from paints and polishes to bleaching clays for the purification of oil and as a binder.

The plant, which has a capacity of 200,000 tpa, was described as a conglomerate of smaller operations. Essentially, Winsford represents a research and development platform for mineral processing techniques that are then exported to Amcol’s operations around the world.

O’Reilly said: “Out of Winsford we have exported knowledge and technology to China and Thailand.”

The value of products range from a “few hundred pounds a tonne, to several thousands of pounds a tonne” and are exported globally to 24 countries mainly in Western Europe, Latin America, and Asia.

In 2005 AME won the prestigious Queen’s Award for innovation and exports owing to its focus on higher value products at Winsford.

The plant also offers contract processing to industrial mineral miners. Winsford has a 80,000 tpa capacity plant offering a range of scales from 5 kg lab work to a full capacity plant.

The Winsford minerals processing site where much
of the company’s technology is developed. Courtesy AME

Diversifying into chromite

The parent of AME, USA-based Amcol International Corp., decided to benefit from their relationship with foundry customers which represents 41% of total bentonite sales by acquiring a controlling stake in a South African chromite mine.

AME’s role in the j-v is as a logistics hub in Winsford and Turkey to sell products to the UK and Mediterranean markets, respectively.

Newbold said: “Foundry is by far Amcol’s most important business... the company got into chromite to make chromite sand rather than it being a by-product of ferro-chrome production.”

Chromite sand acts as a refractory facing sand to improve the cast quality of metal castings. Without the sand lining many castings for steel, power generation, and ship building industries would become very difficult to produce.

Amcol controls the majority stake (53%) of Chrome Corp. which owns 74% of the Ruighoek chromite mine, located approximately two hours north-west from Johannesburg, South Africa.

The deal gives the group full operating control of the mine and the option to buy the remaining 47% of Chrome Corp. in the next two years for $12.4m. It intends to increase production capability at the site, which started up in 2008, to 100,000 tpa.

The future for AME

In a little under a decade, Amcol has risen from relative obscurity to gaining a strong foothold in Europe. The acquisition of the Winsford operation in 2002 and of its Turkish mine and plant in 2007 has given the company a solid base to grow from and, significantly for its US parent, has diversified away from supplying metals focused industries.

Now, having negotiated a tough year which has seen many casualties, AME is hoping for solid growth to lay the foundation for possible future acquisitions.

O’Reilly said: “I would want to see AME maintain growth that equals that of Amcol the goal is to be able to maintain a 20% compound annual growth rate.”

Profile: Amcol International Corp.

Amcol Minerals Europe
Owner/Division: Amcol International Corp./ Minerals
Primary business: bentonite mining and organoclays
Secondary business: Contract processing

Amcol’s mines: Turkey (Amcol Minerals Madencilik - AMM, 150,000 tpa capacity), Russia (Bentonit Group, 300,000 tpa, 25% stake), USA (2.5m. tpa, parent company)

Worldwide production capacity: 2.95m.