Sibelco restarts Norwegian olivine mine after two-year closure

Norwegian industrial minerals group Sibelco Nordic (formerly North Cape Minerals) has restarted olivine production at its Raubergvik olivine mine, following a two-year closure imposed during the peak of the financial downturn.

The group’s management cited increased sales for coarse olivine fractions as the deciding factor behind Raubergvik’s restart, which will target an initial production of 400,000 tpa, after Sibelco Nordic secured “several” new customers.

The group has planned an eight-month campaign to bring back production at Raubergvik, and also intends to restart the Grubse olivine mine at its main site in Aheim - which has an overall capacity of about 1.9m. tonnes.

It is understood that Sibelco Nordic, the world’s largest olivine producer, is sending the Raubergvik material to US customers, where there is a growing shortage of olivine. Much of the demand has come from foundries where olivine is used as moulding sand.

In a statement Birger Solberg, managing director of Sibelco Nordic, revealed that the group was targeting 5% of budgeted sales in 2012 to come from “new customers and markets”.

One US trader told IM that the global supply situation had become increasingly tight, with Turkish olivine producers now sold out of olivine foundry grades.

“The economy in Turkey is booming. Our Turkish supplier can barely meet local demand for olivine sand in non-ferrous foundries - they are expanding capacity but are not sure when material will be available for export,” the trader revealed.


Main olivine producers and processors globally (2010, ‘000s tonnes)

Olivine U-turn

Sibelco Nordic’s three Norwegian olivine facilities - Aheim, Bryggja and Raubergvik - have a combined capacity of 2.4m. tpa, while sister company Cine Akmaden has an olivine output of 150,000 tpa from its subsidiary, Beykrom Mining.

The group’s olivine capacity, excluding Turkish operations, accounts for around 20% of global supply - although, in reality, its influence is greater than this owing to captive production in Japan, which has an estimated 2m. tpa output for domestic markets only.

Thus any swings in Sibelco’s supply have a significant impact on the olivine export marketplace, far exceeding any other company’s - particularly since its closest rival, Swedish minerals group Minelco, closed its 2m. tpa capacity olivine mine in Greenland at the end of 2010.

At the time, Minelco told IM that the group thought it could “strengthen” its own competitiveness and that of its parent company LKAB (leading iron ore producer and olivine consumer) - by purchasing olivine from an “external supplier”.

It was later disclosed that LKAB signed a “significant and long-term contract” with Sibelco Nordic, which previously supplied around 300,000 tpa olivine to the iron ore group prior to the Greenland site start-up in 2005.

Market outlook

Olivine is primarily a magnesium source in steel blast furnaces; used as direct charge (sand or lumps), indirectly in olivine-bearing iron ore pellets, and in sinter. Its addition reduces the amount of coke needed in the blast furnace and also aids the elimination of potassium, thus reducing its accumulation in the stack.

Yet the way that olivine is used in steelmaking has evolved, with the route of direct feed gaining popularity over the addition of MgO to sinter plants - increasing demand for coarse grades, such as those cited by Sibelco Nordic as drivers of its Raubergvik mine reactivation.

Coarse grades are understood to be the best available flux to be handled directly into the blast furnace, and are also the most effective way to remove sulphur and evacuate alkalis from pig iron. Indeed, demand for olivine in this application has increased throughout the last 18 months as steel production has recovered post-financial downturn (see chart).

World crude steel production in the first six months of 2011 was 757.8m. tonnes, 7.6% higher in comparison with the same period of 2010. All major steel-producing regions showed increased production. China - the world’s largest producer - reported crude steel output of 59.9m. tonnes in June 2011 - an 11.9% increase on June 2010 levels.

In addition, foundry activity from increased metal casting has surged this year - as automobile and construction products, among others, have rebounded - also boosted demand for olivine foundry sand. The mineral is widely used in the casting of manganese steels, owing to its basicity.

“Traditional markets such as automotive, rail and construction continue to drive metal casting production, with newer markets - such as wind energy - growing to take a noticeable share,” North American foundry minerals supplier, HA International, commented to IM (IM June 2011: Foundries forge ahead).

Global crude steel production, June 2011 (‘000s tonnes)

Source: World Steel Association