GCC chases Asian paper

By Alex Feytis
Published: Thursday, 31 March 2011

Rising demand from papermakers drives GCC growth which sees Europe and North America tailing behind Asia


Imerys GCC is supplied in slurry form
to paper mills in Jiangsu province, China


During the last decade, the industry of ground calcium carbonate (GCC) has been expanding dramatically, thanks to an increasing demand from its main end market, the paper industry.

World production of GCC has increased dramatically to 80m. tonnes in 2009 from 56m. tonnes in 2004.

Having been severely affected by the financial crisis, sources from the industry agree on the fact that 2010 showed cautious signed of recovery, although the industry is not back yet to pre-crisis levels. “The market is very competitive,” Vipul Joshi, marketing manager at Specialty Minerals Inc. (SMI), USA, declared to IM.

Among the main challenges, GCC producers have to deal with increasing transport and energy costs which account for more than 50% of the final price. In addition, while GCC consumption is increasing, prices are decreasing. “Prices are low because of the competition and because consumers consider GCC as a low cost commodity without taking into account the technicality of the product and the high value it has in their processes,” underlined Catherine Delfaux, managing director at France-based Provencale SA.

The crisis seems to also have triggered new trends in the industry. “Our clients are shifting their volumes to create more profitable plants. Volumes are the same but companies tend to regroup their activities in order to optimise their results. This trend started before the crisis but it has expanded since then,” a source from a leading producer explained to IM.

But the most significant new trend during the last four years is that GCC world production shifted geographically from mature to emerging markets.

Whereas Europe was the main producer with North America in 2004, with respectively 40% and 32% of the shares, Asia now leads the way with 35% of the world production, followed by Europe (30%) and North America (27%) (see Figure p.36).

China became a leading producer with almost 18.5m. tpa with Japan but European countries such as Austria, France, Germany, Norway and Spain are still major players in the industry along with the USA. About ten major producers lead the GCC global market which is mainly dominated by Switzerland’s Omya AG and France’s Imerys SA.

“The GCC market is relatively stable with declining growth in mature markets, like Europe and North America for the paper industry,” a source from the industry told IM.


Leading GCC producers




Europe loses leading place

Although the global share of Europe’s GCC production decreased from 40% in 2004 to 30% in 2009, European GCC production increased during these five years from 22.4m. tonnes to 24m. tonnes in 2009.

Leading producing countries include Austria, France, Germany, Norway, Italy, Finland, Turkey, Russia and Spain, accounting for an estimated 65% of the European production. There is also production in Turkey, the UK and Sweden.

According to a report by the Chemical Economics Handbook - HIS, it is estimated that in 2010, approximately 6.7m. tonnes of GCC were consumed in the paper industry, including 0.2m. tonnes consumed in paper filler applications and 4.8m. tonnes consumed in paper coating.

“A significant share of the GCC sold is marketed as slurry, which simplifies use in the paper mills. Because of transportation costs, the economic sales radius of slurries is lower than that for solid material,” senior analyst Stefan Schlag explained in the report.

GCC is by far the dominant filler in the European plastics industry, according to HIS. About 2m. tpa are used annually, at loading levels of 15-80% in a wide range of plastics materials, in particularly in PVC.

In Europe, GCC resources include marble, limestone, and chalk. Europe has abundant deposits of very-high-purity GCC-grade material, which are easily ground into a wide spectrum of particle sizes of fine ground calcium carbonate (FGCC). The use of higher-priced for PCC is typically limited to high-value-added products and used when special physical properties are needed that cannot be met by FGCC.

Particle size and uniform particle distribution are important factors when carbonate filler is chosen. PCC can be manufactured more economically than FGCC in smaller particle sizes.

As Schlag underlined, the market for calcium carbonate in Europe differs from that of the USA. FGCC in Europe, also known as natural calcium carbonate (NCC), that is produced locally, is of very high purity and the competition between FGCC and precipitated calcium carbonate (PCC) is very strong. The European FGCC industry is clearly dominated by Omya which controls over 50% of the European FGCC market. Other large companies are Imerys and Carmeuse.

In fact, the competition between the main FGCC suppliers - Omya, Carmeuse and Imerys - and those of PCC - Omya, Solvay and Specialty Minerals Inc. - has intensified in recent years not only in Europe but also worldwide.

Omya has an estimated production capacity of close to 10m.tpa of FGCC in Europe. It owns subsidiaries in almost all European countries and keeps growing through acquisitions.

Imerys entered the European FGCC market by acquiring English China Clays Plc (ECC) in April 1999. ECC International, a subsidiary of ECC, had an annual production capacity of around 2m. tonnes within Europe. ECC International became part of the newly created Pigments & Additives Division within the Imerys Group.

Mainly depending on the paper and construction industries, it comes as no surprise that the GCC industry was significantly impacted by the financial crisis. A few companies had to take action as a result of a decline in demand, particularly from the paper industry.

In 2009, Imerys closed its GCC plant in Salisbury, UK. Meanwhile, Carmeuse had to put production on hold at its plant in Seilles, Belgium, and to stop production at its sites of Baccon and Montmorency. Omya reduced the number of production sites at its subsidiary Clariana in Spain.

“The crisis particularly had a big impact on the Scandinavian countries,” as source from a leading European producer told IM.

Even if the European GCC industry is on the way to recovery, it is not yet back to pre-crisis level. The new trend is that there are now shifts in productions within European countries as leading companies tend to regroup their production in order to increase profitability. “Volumes are the same in Europe but they are just shifting between countries, especially in Central Europe,” the source said, adding: “GCC in Europe is not growing. It is stagnating.”


Growth of GCC production in China from 1992 to 2008 (KT) for all markets



Source: Ian Wilson


North America

In North America, the trend is similar to Europe. GCC production cautiously increased from 18.3m. tonnes to 21.6m. tonnes between 2004 and 2009 while the share fell from 32% to 27% during that time.

According to HIS, six companies supply over 90% of the total FGCC market in the USA - Omya, Imerys, Franklin Industrial Minerals (part of the Lhoist Group), Minerals Technologies Inc. (MTI), and Huber Engineered Materials. Omya has the largest annual capacity, at around 2.8m. tonnes. Franklin Industrial Minerals and MTI have about 2m. tonnes of capacity each, followed by Huber Engineered Materials and Imerys with an estimated 1.5m. tonnes of FGCC capacity.

Specialty Minerals Inc. (SMI), a subsidiary of MTI is the industry leader in PCC, operating 28 plants in North America and a total of 53 worldwide. In 2010, SMI accounted for approximately 66% of the PCC capacity in the USA.

As a result of declining paper consumption and closures of paper mills between 2007 and 2008, paper production decreased slightly in the USA. Consumption also substantially decreased in 2009, with the dramatic decline of the US paper output by about 18% compared to 2006.

Paper production started to rebound last year and “growth is expected to be modest in the 2010Ð2015 forecast period,” revealed HIS. GCC consumption is expected to grow slower than PCC at about 0.5% /year.

In Canada, approximately 4,000 tonnes calcium carbonate were exported and 94,000 tonnes of all types of calcium carbonate were imported in 2010. By far the largest part of the traded calcium carbonate is shipped between the USA and Canada.

In Mexico, production of calcium carbonate was about 530,000 tonnes in 2010, down from 600,000 in 2006.

“Reduction of output is largely due to the strong decline of export volumes, and to a lesser extent due to slightly reduced domestic consumption as a consequence of the economic downturn,” explained HIS’s Schlag.

Total consumption of FGCC and PCC in 2010 is estimated to be around 522,000 tonnes with about 90% of the consumed calcium carbonate is in the form of FGCC, according to HIS data. Last year, Mexico exported about 15,000 tonnes of FGCC mostly with the USA.

Asia climbs to No.1

During the last decade, Asia has grown dramatically to become the world leading GCC producer. Ranking third in 2004 behind Europe and North America, Asia doubled production from 13.8m. tonnes to 28m. tonnes between 2004 and 2009 and the region now controls 35% of the world production.

China and Japan are the two main GCC producers in Asia, followed by South Korea (1.96m. tpa), Indonesia (1.1m. tpa), Taiwan (1.1m. tpa), Thailand (1.1m. tpa), Malaysia (840,000 tpa), and India (560,000 tpa).

China leading the way

During the last few years, China became the heaviest GCC player in Asia with a 66% share. China is now the leading producer in the world of finer-grade products (USA with 24% of production includes coarser-grained products).

Starting from 0.28m. tonnes in 1992, production in the country kept growing during the last two decades to triple from 5.7m. tonnes to almost 18.5m. tonnes between 2004 and 2009, thanks to a growing demand from its main domestic end markets: paper and plastics.

As consultant Ian Wilson explained to IM, back in the early 1990s the production of wet GCC in China was very limited with low brightness chalk being imported from ECC (Beverley, UK) and Omya (France) as powder and made-down on-site into slurry for use as a coating pigment.

About 65% of Chinese GCC is mainly split between two main markets: paper and plastics. The paper industry uses 6.5m. tonnes of Chinese GCC (35%) while plastics use 5.5m. tonnes (30%), the remaining being used for paint, sealants and rubbers.

In China, there is a shortage of high quality kaolin deposits suitable for paper coating. China has abundant sources of high quality marble near to the main papermaking areas. An important development has been the installation of satellite wet-grinding technology for GCC. The first satellite plant in China was at APP Ningbo Chung Hua mill in 1993 with a capacity of 30,000 tpa. In 1997, APP Dagang commissioned ECC International (now Imerys) to build a turnkey 250,000 tpa GCC Satellite plant.

“Now, finer grades are being developed (up to 98 %<2µm) which gives improved. Previously topcoats were a blend of 70% GCC and 30% kaolin. The ratio is now 85-90% GCC + 10-15% kaolin.,” Wilson said.

In 2009, China became the world’s largest producer of paper and board (P&B) with an estimated 90m. tonnes, up from 20m. tonnes in 1995 and 78m. tonnes in 2008. Chinese P&B output is expected to reach 98m. tonnes in 2010. As the paper industry is expected to continue its dramatic growth, Chinese GCC still has bright days ahead.

It is estimated that over 600 companies produce calcium carbonate in China and projects keep flourishing to meet increasing demand. Marble deposits are widespread in China with major areas of production in Guangxi, Anhui, Zhejiang and other provinces.

Leading producers include Imerys Pigments Co. Ltd in the Anhui province with 700,000 tpa GCC in Qingyang and 250,000 tonnes GCC in Nanling; Jiangxi Guangyan Chemical Co. Ltd with 550,000 tpa GCC in Yongfeng, Jiangxi; and Guangfu Building Materials Fine Chemicals Industry Co. Ltd with 400,000 tpa in Jiaoling, Guangdong.

New production came on stream during the last three years including Babuqu Xiwan Yaode Powder Co. Ltd (200,000 tonnes) in March 2009 and Benxi Baixing Powder New Material Development Co. Ltd (200,000 tonnes) in October 2008 in Benxi, Liaoning.

Japan: quake’s impact

Japan produces 9% of Asia’s GCC, with 2.5m. tpa. The industry has been seriously affected by the earthquake and tsunami that struck the north of the country on 11 March as several calcium carbonate plants and paper mills were included in the widespread damage (see p.8). Several pulp and paper facilities in the region were severely affected by the catastrophe.

“As several large integrated pulp mills and receiving ports for wood chips from North America, South Africa and Australia are located there, raw materials procurement is going to be more difficult for the country in general,” leading information provider for the global forest products industry RISI reported, quoting a local source.

Tokyo-based Fimatec Ltd said its 5,000 tpm (60,000 tpa) calcium carbonate plant in Soma, Fukushima, has been taken offline due to the severe flooding. No workers at the Soma plant were harmed.

Fimatec’s joint-venture 8,000 tpm (96,000 tpa) calcium carbonate plant at Ishinomaki, Miyagi, which is attached to a paper mill operated by Nippon Paper Group (NPG), was also closed.

“Nippon Paper’s Ishinomaki mill will take a long time to restart, maybe six months or one year or more,” Fimatec’s chairman, Seiji Katayama told IM.

“At this moment, we cannot check how much damage there is,” he added.

According to RISI, within Miyagi prefecture itself, Iwanuma, another of NPG’s mills has also been offline since the quake.

The Ishinomaki mill can produce 643,000 tpa of various wood pulp grades, 370,000 tpa of deinked pulp, and almost 1.1m. tpa of graphic and specialty paper. The Iwanuma mill’s capacity rings up to 420,000 tpa of thermomechanical pulp, 514,000 tpa of deinked pulp, 522,000 tpa of newsprint and 120,000 tpa of uncoated mechanical and woodfree paper. Both plants have a capacity of 173,000 tpa GCC.

Further afield on the northwestern coast, the Akita mill, operated by NPG’s subsidiary Nippon Daishowa Paperboard, has stopped production. NPG’s Fuji mill had also stopped production. Activities were however said to continueas usual at NPG’s other mills, including its mills in Hokkaido prefecture, which is relatively close to the quake’s epicenter. New Oji Paper and Mitsubishi Paper Mills Ltd were also said to have stopped some of their operations.

IM understands that a 5,000 tpm (60,000 tpa) calcium carbonate plant operated by Imerys, also in Ishinomaki, was also damaged by the tsunami and taken offline.

“Following the earthquake and tsunami, all our employees are safe,” said a spokesperson at Imerys’ headquarters in Paris, who did not confirm whether the plant was damaged.

At time of press (end of March), companies were still assessing the damages and it was still too early to say it will affect the industry. One of the main concerns remains supply of raw materials on the medium term. However, a source from the industry told IM: “It is just a matter of months. The industry will not be affected on the long term.”

Growing markets

Central & South America

About 300,000 tonnes FGCC were consumed in 2010 in Central and South America, according to HIS data. Most of the FGCC, and an even larger portion of PCC, goes into paper production. Other important applications are as filler materials in plastics, adhesives and sealants and coatings.

Consumption in paper production grew in 2007 and 2008 with the growth of paper production, from 235,000 tonnes to 252,000 tonnes in 2008, and decreased with the economic downturn to about 245,000 tonnes in 2009.

In 2010, with the rebound of the economy and the production regrowth of the paper industry in particular in Brazil, consumption of calcium carbonate in paper production is estimated to reach 268,000 tonnes.

In the other application areas, consumption increased in 2007 and 2008, and substantially decreased in 2009 with the economic downturn. In 2010, consumption started to rebound, and growth is expected to continue through the 2010-2015 forecast period.

Imerys is one of the leading producers with a production of 170,000 tpa GCC and FGCC at its operations in Brazil. Other leading producers include Carbomil Quimica with 50,000 tpa GCC/FGCC, Micron Ltd in Brazil and Omya in Chile with 30,000 tpa paper grade GCC.

According to Global Industry Analysts (GIA) Inc., although the GCC industry witnessed scarcity in the supply of raw materials, demand is likely to sustain owing to the imports of raw materials, such as limestone.


Supply/demand for fine-ground calcium carbonate by region*

Region Capacity Production Imports Exports Consumption
North America 12,486 10,990 20 10 11,000
Central/South America 570 310 30 5 335
Europe 19,728 10,900 40 40 10,900
CIS 2,214 750 5 3 752
Africa/Middle East 2,531 480 65 105 440
Japan 2,496 2,040 0 12 2,028
China 8,626 10,678 0 45 10,633
Other Asia / Oceania NA 3,860 45 0 3,905
Total 48,651 40,008 205,000 220,000 39,993

* 000 tonnes, 2010
Source: CEH estimates - HIS


Africa & Middle East

The region produces about 2.5m. tpa of FGCC, Egypt, Israel, Jordan, Oman, Saoudi Arabia, South Africa, Turkey and the UAE being the main producers.

Omya produces about 50,000 tpa GCC at its plant in Ramadan city in Egypt and 670,000 tpa of GCC and FGCC at its three plants in Turkey. Other leading producers in the region include Saudi Carbonate Industries, Saudi Arabia, with 200,000 tpa GCC, Nigtas Mikronize and Hisar Maden, Turkey, with respectively 250,000 tpa and 200,000 tpa.

Paper producers in South Africa, Turkey and Israel consumed a large portion calcium carbonate. Consumption of FGCC in the region is estimated at about 440,000 tonnes, mainly in paper production and as afiller in plastics and sealants.

About 165,000 tonnes of calcium carbonate of all types were imported in the region in 2010. Most of this, however, is intraregional trade. Exports were about 130,000 mostly extra regional exports into Europe and the CIS.

New projects are flourishing in the region in order to meet a growing demand. In Jordan, National Carbonate Co., which owns a mine in Al-Damkhi, started to produce at the beginning of March a range of GCC grades for markets in Africa, the Middle East, and South East Asia. The operation has a capacity of 60,000 tpa.

The company told IM that it plans to supply both treated and non-treated grades at particle sizes at d98 of 4µm, d50 of 0.75µm to d98 of 45µm, for end markets such as performance fillers.

Osama Hawi, sales manager at National Carbonates, believes that the region has significant potential for the GCC industry. “South East Asia is searching for cheaper prices and good material, and that comes from the Middle East only,” Hawi told.

West Africa is also a growing end market to keep an eye on. “In the past, European producers were the only suppliers for West Africa and their pricesÊwere high. As there is no calcium carbonate produced in that region, we are exporting from the Middle East. But even fright costs are high, we still have more competitive prices than European producers,” he explained.

Jordan’s Eagle Mining also plans to produce pure limestone by the beginning of 2012 at its Al-Damkhy deposit located in the western part of Jordan. Hussein Hiyassat, managing director, revealed to IM that the company wants to build a calcium carbonate plant with a capacity of 200,000 tpa for the first stage before increasing to 500,000 tpa within three years (see full report p.74).


GCC worldwide markets (80m. tonnes)



Source: Ian Wilson


GCC world production by regions for 2009 (80m. tonnes)



Source: Ian Wilson


Paper potential

The main end markets for GCC are paint (9%) and plastics (20%), but paper remains the most important one with 37% of the world production.

Increasing use of GCC as a pre-coat and coating pigment in paper has been driving major growth in the GCC sector, particularly in Europe. GCC is used mainly as a coating pigment, while PCC is principally used as a filler (although they can be interchangeable in certain circumstances). PCC is the dominant product in uncoated woodfree paper while GCC remains the preferred choice in coated paper.

Papermakers have increased their consumption of GCC and PCC as cheap and effective alternative for white pigments such as titanium dioxide (TiO2). With papermakers seeking optimal formulations, the industry is increasingly using blended formulations of PCC and GCC, along with other minerals. GCC blends well with some kaolin products in topcoat blends for paper coating, eg. 80% GCC to 20% kaolin. A GCC-PCC blend may contain 40% PCC, 40% GCC, and 20% kaolin.

Overall, papermakers are aiming to improve paper quality by increasing the volume of mineral pigments used, and especially calcium carbonates, with loading targets in uncoated.

Uncoated supercalendered (SC) papermakers are converting from using filler clays to carbonates, or blends of minerals. European papermakers are using GCC to replace clay fillers to improve brightness.

According to RISI, world paper production reached 370m. tonnes in 2009 down from 391m. tonnes in 2008 owing to the financial crisis. The amount of GCC used for paper production worldwide increased from 22.3m. tonnes to 29.6m. tonnes between 2004 and 2009.

According to data from the Confederation of European Paper Industries (CEPI), consumption of calcium carbonate in European coating grew to 7.9m. tonnes in 2009 from 4.4m. tonnes in 1991. Between 1991 and 2009, the share of calcium carbonates used in non-fibrous materials for paper increased from 46% to 54.8% while the share of clays was decreasing from 40% to 22.5%.

Calcium carbonate consumption, which had increased to 9.3m. tonnes in 2007, was then affected by the financial downturn. Paper production reached 103m. tonnes in 2007 and decreased by 13% between 2007 and 2009.

“Following the severe economic downturn experienced in late 2008 and throughout 2009 the industry had a much more positive 2010, although overall volumes remain some way below pre-crisis levels,” CEPI explained, reporting a 8% rise to 98m. tonnes for paper production in 2010 over 2009.

“The paper industry did slightly better than the European manufacturing industry taken as a whole,” CEPI underlined.

Outlook

Although it is not yet back to pre-crisis levels, the GCC industry seems to cautiously be on the way to better days thanks to paper industry needs and Asia’s growing demand.

Increasing use of GCC as a functional additive and process aid, in addition to its use as a filler, is expected to healthily push demand for the much finely ground calcium carbonate. GIA forecast that the global market for calcium carbonate will reach 108.m. tonnes by 2015. “Increasing use of calcium carbonate in paper industries,É conversion of existing paper mills from acid-based process technology to alkaline-based process technology are few of the key factors influencing market growth,” GIA said, adding that “GCC continues to enjoy increasing demand from the paper industry in paper coating applications as well as fillers.”

Recovery to pre-crisis levels could be expected for 2011 but it remains difficult to quantify it. “We have no visibility on the long term,” a European producer declared to IM, adding: “We deal with the market on a quarter basis.”

However, a source from a leading producing company warned the limits of paper potential. “We have now reached a limit for the evolution for the paper industry which could result in a limited growth for GCC,” the source said to IM, underlining that growth could come from cardboard and packaging. Global growth in demand for GCC is also expected to increase by an average 5% for plastics and 4% for paints over the next few years.

While North America and Europe will face cautious growth, consumption is likely to increase considerably in Asia, therefore confirming the recent geographical shift from mature markets to emerging markets.

It is expected that, in addition to Asia, regional markets such as South America and the Middle East will drive a potential growth on the medium term.

“Europe is stagnating. The potential will come from China, because it is such a fast developing region, and South America. That is where we have to invest,” a European producer told IM. “Growth is neither in Europe nor in the USA. So we have to develop elsewhere,” confirmed to IM a major player from the industry.

Entering the Asian market however will not be an easy task. As another European producer underlined to IM, “traditional GCC suppliers are finding it difficult to enter the Chinese market as there are a lot of small local producers and the paper industry in China, traditionally a big market for calcium carbonate, is often backwards integrated into manufacturing its own GCC”.

Paper exports from Europe to Asia are rapidly declining while first imports of Asian papers to European markets have started. This is related to declining domestic demand for paper in Europe versus increasing demand in emerging markets. As a result, production is slowly shifting in the same direction. “This will be an ongoing but slow process”, the producer believes.