Swedish minerals group Minelco A/S subsidiary of iron ore
producer LKAB Ð has revealed it intends to close its 2m.
tpa capacity olivine mine in Seqinnersuusaaq, west Greenland,
before the years end.
Based on [evaluations
conducted] we have decided to shut down the olivine mine
located in the mining site of Seqi in Greenland, Ingela
Olsson, communications manager for Minelco, told
IM. We see that we can strengthen the
competitiveness of both LKAB and Minelco by purchasing olivine
from an external supplier.
According to the group, prices
for olivine have fallen while market conditions have been
unfavourable. Olivine has a number of uses but its principal
end markets are in steel slag conditioning, refractory bricks,
EBT tap-hole filler and CO2 sequestration.
The market price of
olivine has dropped and conditions that prevailed on the market
when the mine was started five years ago have changed,
Olsson commented. Then the price was rising and it was
profitable business to produce olivine. Now the situation is
reversed and we are changing strategy.
Minelco aims to close the 2m. tpa capacity
mine at Seqi, west Greenland, by November 2010
Supply: short or competitive?
Remarkably, Seqis closure
will remove almost 25% of the worlds olivine capacity
from the marketplace. Seqi is Minelcos sole olivine mine
and its 2m. tpa capacity ranks the group as the second largest
olivine producer in the world.
Globally, the largest olivine
producer is Norways North Cape Minerals A/S, a subsidiary
of Sibelco Nordic, whose three olivine mines in
Norway Aheim, Bryggja and Raubergvik have a combined
capacity of 2.4m. tpa.
But North Cape has also faced
unfavourable markets, and last year the group announced it
would temporarily mothball two of its Norwegian olivine
mines leaving only Aheim active. It is thought that North
Capes temporary suspension of Bryggja and Raubergvik
removed around 500,000 tpa capacity from the market.
In addition, last September
Norwegian producer Steinsvik Olivin A/S declared
bankruptcy taking with it a further 150,000 tpa of olivine
These developments must be
considered against the backdrop of global olivine production,
which totalled 8.4m. tonnes in 2008. The next biggest source of
olivine is Japan, whose producers have a combined capacity of
around 2m. tpa but this production is consumed
domestically and thus does not impact export markets.
In reality, there is probably
only 5-6m. tpa of olivine available globally. With 500,000 tpa
of this shelved for up to five years (North Capes Bryggja
and Raubergvik mines) and now the news that another 2m. tpa
will be lost when Minelco closes Seqi in November 2010, olivine
consumers could face a tough task in buying material.
director, Peter Mortlund, disagrees. He told
IM: I dont think [Seqis
closure] will affect the availability of olivine in the short
term as the demand today is lower than the production
Others agree. One source
commented: Seqis closure will mean less competition
in the European olivine market, perhaps creating opportunities
for other companies. I dont think well see an
World olivine production* (2008)
* excludes CIS olivine production
||Production (000s tpa)
Minelco: what next?
Although shipments will continue
throughout the year, mining will be phased out and Minelco will
cooperate with the Greenlandic authorities in planning for
reclamation of the mine site.
The Seqi site is expected to be
closed by 1 November 2010 and its short term future after this
is uncertain; but Peter Mortlund told IM that
the group had not yet received any enquiries about the deposit
from a possible buyer.
Seqis closure is not
Minelcos exit from the olivine world, however, as
Mortlund confirmed that the group would continue to process and
trade the refractory mineral.
Minelco has signed an agreement
with an external olivine supplier that allows the group to be
more competitive in comparison to mining the
olivine internally. Minelco did not confirm which company will
be supplying its olivine in the future, but for industry
speculators the obvious choice is North Cape particularly
as North Cape was the original olivine supplier for
Minelcos parent group; iron ore miner LKAB.
Industry sources estimate that pre-2004 North Cape supplied
LKAB with around 300,000 tpa of olivine, which the group
primarily uses as an additive in the production of iron ore
pellets. As for Minelcos customers they too may find
themselves using Norwegian olivine.
Seqi development timeline
Minelco agrees to buy a 51%
shareholding in the Seqi olivine project after the
deposits owner, Crew Development Ltd, completes
feasibility studies at the site.
Board of Crew Minerals A/S
agrees to sell its remaining shares in Seqi olivine to Minelco,
making the Swedish minerals group sole owner.
First shipment of olivine
leaves Seqi with 45,000 tonnes on board.
Installation of quay
facilities is completed and production increases to 1.1m.
Production running at
500-600,000 tpa, but Minelco tells IM it will increase this
over the next few years.
Minelco announces it will close the
Seqi mine by 1 November 2010 and buy olivine from external
North Cape Minerals: owns three olivine
mines in Norway (only one operational at present) with a
capacity of 2.4m. tpa.
Pasek Espaa SA: operates two dunite mines in
Galicia, Spain Ð produced 1m. tonnes in 2008.
Nuova Cives Srl: Italy-based olivine
producer with a capacity of more than 300,000 tpa.
Şetat Madencilik: has an olivine capacity of
200,000 tpa, mined from its deposits in Orhaneli, north-west
Beykrom Mining Inc: past subsidiary of North Cape; now
owned by Sibelcos new subsidiary, Turkish feldspar
producer Cine Akmaden. Has an olivine capacity of 150,000
Ado Mining: operates two olivine mines in Mugla,
Turkey, with an output of 40,000 tpa.