TOP STORIES: Minelco’s Seqi olivine closes after just 5 years

“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 olivine
mine at Seqi, west Greenland, by November 2010


Supply: short or competitive?

Remarkably, Seqi’s closure will remove almost 25% of the world’s olivine capacity from the marketplace. Seqi is Minelco’s 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 Norway’s 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 Cape’s 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 production.

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 Cape’s 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.

Minelco’s managing director, Peter Mortlund, disagrees. He told IM: “I don’t think [Seqi’s closure] will affect the availability of olivine in the short term as the demand today is lower than the production capacity.”

Others agree. One source commented: “Seqi’s closure will mean less competition in the European olivine market, perhaps creating opportunities for other companies. I don’t think we’ll see an olivine shortage.”

World olivine production* (2008)

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.

Seqi’s closure is not Minelco’s 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 Minelco’s 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 Minelco’s customers they too may find themselves using Norwegian olivine.


Seqi development timeline

July 2004

Minelco agrees to buy a 51% shareholding in the Seqi olivine project after the deposit’s owner, Crew Development Ltd, completes feasibility studies at the site.

June 2005

Board of Crew Minerals A/S agrees to sell its remaining shares in Seqi olivine to Minelco, making the Swedish minerals group sole owner.

December 2005

First shipment of olivine leaves Seqi with 45,000 tonnes on board.

August 2006

Installation of quay facilities is completed and production increases to 1.1m. tpa.

August 2008

Production running at 500-600,000 tpa, but Minelco tells IM it will increase this over the next few years.

February 2010

Minelco announces it will close the Seqi mine by 1 November 2010 and buy olivine from external suppliers.

Other olivine producers

North Cape Minerals: owns three olivine mines in Norway (only one operational at present) with a capacity of 2.4m. tpa.

Pasek Espa–a 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 Turkey.

Beykrom Mining Inc: past subsidiary of North Cape; now owned by Sibelco’s new subsidiary, Turkish feldspar producer Cine Akmaden. Has an olivine capacity of 150,000 tpa.

Ado Mining: operates two olivine mines in Mugla, Turkey, with an output of 40,000 tpa.