Pigment pragmatism

By Mike O'Driscoll
Published: Wednesday, 26 October 2011

Demand recovery for titanium dioxide is brisk, mainly driven by China, but needy capacity expansions are hindered by continuing insecurity of adequate feedstock supply, which is driving up prices. The time has come for a pragmatic understanding of the symbiotic relationship between feedstock and pigment players



It’s a tough life being a titanium dioxide (TiO2) pigment producer. The product is essentially an intermediate raw material absolutely vital to the manufacture of any end product requiring a white colour.

That’s the good news, because the global and high volume markets of paints, plastics and paper are the primary outlets for TiO2. These end products are in consistent long term demand, and naturally show a growth curve as regional economies recover and prosper, and construction projects get underway. Although they also dip when recessions kick in.

However, the flip side is that TiO2 producers are utterly hamstrung by their dependence on just two main raw materials (feedstock) - the titanium bearing minerals ilmenite and rutile  - which have limited commercially developed sources worldwide operated by a select group of feedstock producers.

The bad news is that despite recovering demand for TiO2 pigment in the end use markets, there is still not enough feedstock, at present, to meet the desired TiO2 pigment capacity demand, thus the pigment producers are challenged to satisfy their end market demands.

The upshot is continuing concern over feedstock supply availability impacting on TiO2 plant capacity utilisation, and the associated price increases for feedstock, which have in turn led to the pigment players upping their prices as well, and taking another look at the merits of vertical integration with raw material supply.

Market status: recovering demand

Demand for TiO2 globally is growing at an annual rate of about 3- 4%, and even up to 5%, according to some research.

The continuing recovery of TiO2 demand during 2010 was both surprising and strong, placing increased stress on the de-stocked supply chain, ie. feedstock availability (discussed later).

Despite global TiO2 production reaching a new high of 5.33m. tonnes in 2010, strong demand continued to limit inventory growth, resulting in TiO2 sales prices rallying, mainly in the second half of 2010 and further into 2011.

Steven Watson, chief executive officer of Kronos Worldwide Inc. reported in August: “During the first and second quarters of 2011, we continued to experience strong global customer demand for TiO2 products. This allowed us to successfully implement further significant selling price increases. Our TiO2 segment profit in the first half of 2011 nearly quadrupled from the first half of 2010.”

The chief markets for TiO2 are architectural coatings (36%), industrial coatings (19%), and PVC and polyolefins (22% - see panel).

Demand levels in US and western Europe markets have not yet recovered to pre-2008 levels, and the market growth is largely driven by Asia, South America, and the Middle East. These growth regions have already driven an approximate 40% increase in TiO2 price in 2011 compared to 2010.

A dominant driver has been China, which in 2000 accounted for 11% of global TiO2 demand, but by 2010 this had risen to 21%.

China is a market which has been recognised as having huge potential for the TiO2 market, both in terms of a consumer of high grade feedstock and for TiO2 pigment.

The government is placing greater emphasis on cleaner industries using cleaner and more efficient technologies. The Chinese TiO2 pigment industry, mostly using the sulphate route, is being pushed to adopt the chloride process route and close down inefficient and polluting older plants.

This significant move will translate to a shift from Chinese TiO2 plants consuming low grade feedstock from local and regional sources to a new requirement for higher grade feedstock - a trend not ignored by overseas feedstock suppliers.

Stephen Hay, former manager of Iluka’s Shanghai representative office, in a special report on the Chinese market published in August 2011, said: “The [Chinese] manufacturing industries, such as the automotive industry, and the Chinese market in general, have become more dependent on quality, and we are likely to see further rapid demand growth for imported high quality pigments.”

“This, of course, fuels production growth in off-shore chloride pigment plants in places like the US, Europe and Japan. Pigment companies in those regions will then also increase their demand for higher grade TiO2 feedstock so that they can improve the overall throughput and product yield from their plants.” Hay added.

Otherwise, China’s housing boom appears to show no signs of letting up, despite observations that many new houses remain vacant. The Chinese government plans to build 10m. social housing units in 2011 and 36m. units over the next five years.




Capacity expansions

Through 2011 the global TiO2 pigment market has remained tight with the major producers operating at near full capacity, ie. >95% (see accompanying chart on TiO2 supply/demand).

In response, in May this year, DuPont Titanium Technologies announced a huge increase in TiO2 production capacity, 350,000 tpa across five sites worldwide. This is a significant move, representing almost 5-6% of the world’s TiO2 capacity, and 30% of DuPont’s existing capacity.

For an investment of over $500m., DuPont plans to construct a new 200,000 tpa production line at its site in Altamira, northern Mexico, by the end of 2014. This will add to the site’s existing 130,000 tpa capacity, making it one of the largest TiO2 production centres in the world.

In addition, capacity upgrades, totalling 150,000 tpa of new capacity over the next three years, are underway at the company’s other TiO2-producing sites at: New Johnsonville, Tennessee; DeLisle, Mississippi; Edge Moor, Delaware; and Kuan Yin, Taiwan.

TZ Minerals International, of Australia, believes some of this additional capacity could also be upward revisions in the site nameplate capacities to reflect actual production throughput capabilities, as well as some incremental expansion.

However, aside from this move, most other announced TiO2 plant expansions are expected in China and will be predominantly sulphate route. Large scale Chinese TiO2 expansions are expected over the next five years which could amount to 1.2m. tpa.

Added to DuPont’s plans, by 2015 this would add 1.5m. tpa TiO2 nameplate capacity to world 2010 levels, representing a 25% increase.

However, TZMI has warned that new capacity in China often operates at low utilisation rates during the early years of production, and a significant proportion of initial production is of a lower quality and thus can only be supplied to domestic and regional low-end applications.

Therefore, TZMI believes that on balance there is a need for additional TiO2 capacity in excess of that already announced by DuPont and that expected by China.

Despite the rise in demand, not all TiO2 pigment players are attracted to immediate capacity expansions. Steve Watson, Kronos, said on the subject: “The mere announcement of capacity expansion, such as those occurring in the last few months [ie. DuPont], will do little to relieve the longer-term shortage of TiO2 products. We believe that higher, long-term, sustainable profitability levels will be needed to induce TiO2 producers to commit the capital [for expansion projects].”

Huntsman is also cautious of running to new plant capacities. Peter Huntsman, president of Huntsman Corp. commented: “If I look at the historical margins of TiO2 in average over the last couple of years, I believe that any board of directors would be hard pressed to build a greenfield, brand new TiO2 facility. Just now, we’re starting to get back into the margins that would justify a new plant capacity.”

But there’s one more factor that will have its part to play in the future of any planned TiO2 capacity expansions, and that is the availability of feedstock, which at present is far from satisfactory.


Global TiO2 pigment supply and demand



Source: Tronox/TZMI


Pigment vs Rutile Price 2010-2011



Source: Iluka


Feedstock: still tight, making integration attractive

A statement by Tronox Inc., fifth largest TiO2 producer, on 6 October 2011 rather summed up the predicament for the TiO2 sector:

TiO2 pigment producers are limited in their ability to make significant capacity expansions to meet incremental demand due to a constrained ore market - access to ore is critical for any meaningful capacity increase.”

Although Tronox would have surely supported this sentiment in any case, the company had extra reason to remind the market of the importance of having security of feedstock supply since it has just announced a most significant development - the recent acquisition of the feedstock assets of Exxaro Resources in South Africa (see p.20).

This brings to Tronox a major integration of anticipated feedstock supply from Exxaro’s KZN Sands (220,000 tpa feedstock ore), Namakwa Sands (160,000 tpa), and its 50% in the Tiwest JV (83,000 tpa), providing a total of 601,000 tpa (this includes the 138,000 tpa in Tronox’s existing 50% stake in Tiwest JV).

Tronox’s strategy also underlines a growing trend to vertical integration in the TiO2 industry. Until relatively recently, very few major pigment producers were active in operating their own feedstock sources.

TiO2 pigment producers considered, correctly, that they were for the most part chemical producers rather than mining companies. The consequent investment in capital expenditure and technical know-how in minsands exploration, evaluation, mining and processing was considered not entirely economically feasible for most pigment players.

DuPont was the anomaly, which has been mining mineral sands in Florida for many years. Mining of the Trail Ridge ore body in north-east Florida started in 1949, and last year an extension to the Maxville mine permitted operations to continue to just 2017. DuPont is now increasingly dependent on external sourcing as its reserves become exhausted.

However, during the last ten years the idea of securing captive raw material supply sources has gained ground in a range of industrial mineral markets (particularly in refractories), and the TiO2 sector has joined their ranks as the pace has quickened in the last few years.

In 2009, Cristal Global, the second largest pigment producer, really set the ball rolling by acquiring Bemax Resources Ltd in Australia (fifth largest minsands producer). The company also inherited its mine in Paraibas, Brazil through its merger with Millennium Inorganic Mining Ltd in 2007.

In January 2011, India’s National Aluminium Co. (NALCO) entered an agreement with mineral sands producer Indian Rare Earths Ltd (IREL) to develop what could be the country’s first TiO2 operation.

The project would be located at IREL’s operations in Chhatrapur in the eastern state of Orissa, and is expected to require rupees (Rs) 4bn ($88m.) for construction.

India’s Trimex Group announced in February 2011 plans to invest over $800m. on a three-phase project in Indonesia utilising domestic mineral sand deposits - including an ilmenite mine and separation plant, with TiO2 and titanium metal plants.

In a memorandum of understanding with the Indonesian government, Trimex said it would invest $800-850m. in the project over the next ten years, starting the construction of a $150-200m. TiO2 pigment plant in September 2011, with start up expected in December 2013.

In April 2011, Austpac Resources signed definitive agreements with TiO2 producer Kronos Worldwide Inc. to provide funding for construction, commissioning, and initial operations of its Newcastle Iron Recovery Plant.

Kronos also invested $6m. for a technology licence to use Austpac’s Enhanced Acid Regeneration System and Metallisation processes at its pigment plants.

In August 2011, VV Mineral, India’s largest producer of ilmenite TiO2 feedstock (450,000 tonnes forecast for 2011), agreed to buy Kilburn Chemicals’ anatase-grade TiO2 plant in Tuticorin, Tamil Nadu state, southern India.

Another example of integration has been the July 2011 announcement that Australia’s Mineral Deposits Ltd (MDL) plans to form a 50-50% joint venture with French metal alloys group Eramet to develop its Grande Cote mineral sands project in Senegal, which is expected to start up in late 2013.

The deal could provide Eramet’s Tyssedal titanium slag plant in Norway with a reliable source of feedstock, while MDL’s Grande Cote project would secure the sale of most of its ilmenite production.

The trend is also moving downstream. Akzo Nobel, the world’s largest producer of paints and coatings and naturally a major consumer of TiO2, plans to enter the TiO2 industry through a partnership with China’s Guangxi CAVA Titanium Industry Co.

The partnership will see the two companies jointly build a 100,000 tpa TiO2 pigment plant in Qinzhou, Guangxi province, by early 2014.

And the driver for this vertical integration strategy? A scarcity of feedstock availability and extremely steep prices rises, and on a more frequent basis, from the feedstock producers.

A look at global TiO2 feedstock supply/demand charts provided by TZMI indicates clearly that demand is just beginning to outstrip supply, and that the gap is expected to widen considerably going through to 2020.

In his conference call of 10 October 2011, Tom Casey, chairman and chief executive officer of Tronox said: “Feedstocks are already limited and there is little or no supply foreseeable before 2015 at the earliest, and therefore, security of ore supply in today’s market is important, in 2012 and in 2013, and beyond 2013.”

The existing global feedstock production level of around 6m. tpa TiO2 units even includes 440,000 tpa from the new Exxaro (now Tronox) expansion at Fairbreeze, South Africa, and Kenmare’s Moma expansion in Mozambique - both of which are approved, but crucially, not yet in production.

New projects total some 1m. tpa TiO2 units from deposits that have only completed technical feasibility studies and have yet to be commissioned.

Another 1.5m. tpa of new projects relates to mines under investigation which have not completed technical feasibility studies.

And therein lies one of the main problems, the high risk and long lead time in starting new feedstock projects, which is typically 5-7 years.

Casey, CEO of Tronox, certainly considers this 2.5m. tpa of new feedstock projects as risky: “We think that there’s significant doubt, significant risk associated with these 2.5m. new units of production.”

“Many of them are in regions of the world in which the construction operation of the mine will require infrastructure investment, will require transport investment, will require some assessment of political risks.” Casey observed.

The other problem is the ongoing depletion of legacy ore bodies and lack of investment to develop and expand existing operations.

In its Q3 2011 report published on 13 October, Iluka described demand in the high grade titanium feedstock market as “remaining solid, Éand with overall industry supply remaining tight.”

Iluka’s synthetic rutile kiln 3 ceased activity in August and is undergoing major maintenance before re-commissioning later in the year.


Global supply and demand for TiO2 feedstock



Global production capacity and demand for TiO2 feedstock



Source: TZMI


Price increases

Perhaps unsurprisingly, as result of the market situation, feedstock producers have been able to increase their prices, and more frequently, as demand has grown over 2010-2011.

Leading feedstock supplier, Iluka Resources Ltd, points to a fundamental change in contractual pricing arrangements that is now occurring in the titanium minerals industry - and that Iluka is in no small way pioneering.

Iluka had observed a concurrent change in pricing by the TiO2 pigment producers, its main customers.

During the latter half of 2010 and into 2011 pigment producers reset their prices for pigment at levels appreciably higher than the historical norm.

In 2010, Iluka announced that it would start entering into supply contracts for rutile and synthetic rutile for six months - as opposed to the previous norm of contracts for 12 months or more. As a result, Iluka has achieved materially higher prices - up 30-40% - for the first six months of 2011.

In June 2011, the company continued its strategy: effective from 1 July 2011 Iluka raised rutile and zircon prices to record levels, far surpassing the expectations of several industry analysts.

The Australian group struck deals with customers hiking rutile prices by 70-75% for the second half of 2011. Iluka said the average first half prices for feedstock rutile were about $770/tonne (FOB Australia), meaning H2 prices could reach record levels of $1,309-1,348/tonne.

At the same time, synthetic rutile (SR) was increased by the same percentage, raising prices to $1,088-1,120/tonne from a first-half average of $640/tonne.

The primary reason given for the feedstock price increases is to assist with inducing the development of new sources of raw material supply which is clearly in high demand.

In turn, the TiO2 sector has also responded with its own price increases during 2011, and announced unprecedented price hikes for October 2011.

In September 2011, Huntsman announced a $500-700/tonne or Û450/tonne increase for all its TiO2 pigment contracts in Europe, Asia-Pacific, Africa, Latin America and the Middle East, while Tronox also increased its TiO2 prices to a minimum of $500/tonne in Latin America, Û500/tonne or $700/tonne in Europe, the Middle East and Africa, and $500/tonne in Asia Pacific.

Cristal Global followed also followed suit in September. In Eastern and Western Europe, including Turkey, prices in October increased by a minimum of Û250/tonne, while in the CIS countries and other European US dollar markets, prices increased by a minimum of $350/tonne.

In the Middle East and Africa, Cristal increased its prices by up to $700/tonne, and prices in North Africa were expected to be up to Û500/tonne.

In Asia Pacific, Cristal Global’s products sold in the Asian markets increased by up to $500/tonne, and in Oceania, by A$500/tonne.

Effective 1 November 2011, prices for all Cristal’s anatase and Tiona TiO2 products sold in North America increased by $15/lb ($330/tonne).

Prior to these increases, examples of September 2011 prices of bulk volume TiO2 pigment included Û2,975-3,115/tonne CIF northern Europe, $3,300-3,800/tonne CFR Asia, and $2,866-3,175/tonne CIF USA.

As to the market reaction to the price increases, in the past it was always a case of the TiO2 sector being between a rock and a hard place, having to endure the hit from the feedstock suppliers as they increased prices, and only being able to pass on a limited increase to their consumers, ie. customers in paint, plastics, and paper.

But it seems the end market sector is coming round. Dennis Wanlass, chief executive officer of Tronox commented mid-year: “Our customers were initially shocked, there was pushback, but I think they got a sense of reality in a period of time that in fact the supply/demand issue was real and as they started to worry more about the [TiO2 pigment] supply than they did pricing at some point in time.”

“I think that they understand the environment that we are operating in and they understand the feedstock issues. And I think with that in mind I believe that reluctantly they are understanding that pricing is necessary in the supply chain.” he added.


TiO2 pigment demand 2007-2015



Source: TZMI


Outlook

Any demand outlook for the TiO2 market is tied to the forecast performance of the global and regional economies.

In June 2011 the World Bank, in its Global Economic Prospects report claimed “The global financial crisis is no longer the major force dictating the pace of economic activity in developing countries. The majority of developing countries have, or are close to having regained full-capacity activity levels. As a result, country-specific productivity and sectoral factors are now the dominant factors underpinning growth.”

Global growth is projected to remain strong from 2011 through 2013. After expanding 3.8% in 2010, global GDP is projected to slow to 3.2% in 2011 before firming to a 3.6% pace in each of 2012 and 2013.

More specifically, and of interest to the TiO2 market, the World Bank pegs China’s forecast economic growth for 2011, 2012, and 2013, at 9.3%, 8.7%, and 8.8%, respectively. While that for India is forecast at 8.0%, 8.4%, and 8.5% for the same years, respectively.

As can been seen from the accompanying chart, according to TZMI, forecast growth in Asian TiO2 demand to 2015 is expected to be an impressive 41%, while overall global growth is expected at around 5.9%.

Artikol is forecasting pigment consumption at 6.23m. tonnes in 2015, representing 4.4% pa average growth from 5.015m. tonnes in 2010. This indicates the world will be consuming 1m. tonnes more pigment in 2015 than in 2011.

However, while TiO2 pigment demand is forecast to continue to rise, largely led by Chinese growth, supply is expected to remain constrained owing to a forecast lack of feedstock supply, which in turn will negatively impact on the build up of pigment inventories.

Prices have moved up with demand, as feedstock consumers negotiate new contracts in a market with increasing feedstock supply deficits. This trend is forecast to continue in the medium term - particularly for high-grade feedstocks.

Having recently announced a 10% increase in its zircon prices for Q4 2011, Iluka said in a statement on 12 October that it “intends to engage with titanium ore customers over the course of the balance of 2011 in relation to first half 2012 titanium dioxide volumes and pricing.”

It is thought that feedstock price increases will continue for at least the next two years. Clearly, most TiO2 majors are expecting price increases to continue.

“We believe our feedstock costs will increase significantly in 2012. We anticipate the tightness in ore feedstock supplies will last at least for a couple more years.” said Steve Watson, CEO, Kronos.

TZMI believes the imbalance in supply and demand is not likely to be addressed in the short to medium term until additional supply comes on line as greenfield projects are developed or existing mineral sands projects are expanded.

The global shortage in TiO2 pigment supply is also expected to continue for several years owing to constraints in adding significant new production capacity, especially for TiO2 premium grade by the chloride route.

As a result, TiO2 prices are also anticipated to see more increases in the near future. Peter Huntsman, president, Huntsman, said: “We said earlier that the prices this year would be going up by about 35% to 40%, and that would be throughout 2011. 2012 is a little too early to tell but I would imagine that 2012 prices will increase at a greater pace than that.”

The TiO2 sector hopes that these price increases will be able to help them expand their margins and get set for the future. “I would hope that in the coming quarters, that we’re able to not only to offset raw material cost increases, but we’re also able to expand margins, to recover our cost of capital in the business, and to be able to justify the de-bottlenecking and further investment that needs to be taken in the future.” said Huntsman.

It seems that the divide in the understanding and appreciation of each side of the TiO2 business by the other - ie. feedstock v pigment - is getting closer than it has ever been.

Steve Watson, Kronos, seemed to hit the nail on the head: “The TiO2 industry cannot grow without the expansion of ore supplies, and the ore industry needs the TiO2 industry to grow in order to justify its own expansion.”

Therefore there is a growing belief that if both sides of this market understand this symbiotic relationship, then increases in the cost of feedstock should remain reasonably realistic, so as not to be detrimental to profit margin expansion in the TiO2 industry, which could in turn hinder TiO2 capacity expansion and thus kill off feedstock’s future demand. Let’s see what happens.



“World pigment supply more than adequate right now.”



Overall, what is the status of TiO2 pigment supply?


Total world TiO2 pigment consumption in 2011 will be about 5.23m. tonnes, which will be a 4.3% increase on 2010. World effective capacity for the year 2011 is 6.8m. tonnes. So, on the face of it, world pigment supply ought to be more than adequate right now. And especially so in China, where a lot of new capacity has been added in the past three years. For China, pigment consumption at 1.45m. tpa translates to 65.4% of total effective capacity (2.22m. tpa). For the rest of the world, pigment consumption at 3.78m. tpa translates to 81.2% of total effective capacity (4.651m. tpa).

The TiO2 pigment market is two-tier (in terms of pigment quality): supply/demand in the upper-tier market is fairly tight, but supply/demand in the lower-tier market is fairly easy.

Artikol is forecasting pigment consumption at 6.23m. tonnes in 2015. That will represent 4.4% pa average growth from 5.015m. tonnes in 2010. It means the world will be consuming 1m. tonnes more pigment in 2015 than in 2011.

What of the prospect of TiO2 plant expansions?

DuPont’s product quality is very good and the company has a good track-record for running its plants at high operating rates. So, with its planned capacity expansion DuPont is going to be contributing at least 300,000 tpa of that extra 1m. tpa of demand in 2015.

Some other multinationals have declared plans to add a bit of capacity by debottlenecking - Huntsman adding 40,000 tpa worldwide, Tronox adding 25,000 tpa at Botlek, the Netherlands, and up to 10,000 tpa elsewhere. I can’t see any existing pigment producer (outside China) being bold enough to make a major capacity expansion. Instead, I think they will concentrate on trying to keep their costs down and their operating rates as high as they can, ie. producing and selling as much as they can at reasonably good prices and profit margins.

What will be the impact of continued restricted feedstock supply?

Yes, world TiO2 feedstock supply is tight right now and likely to remain tight through 2012, especially synrutile and sulphatable ilmenite. The sulphatable ilmenite tightness might handicap some of the major Chinese producers wanting to expand pigment production. But I think there will be more ilmenite supply coming through after 2013. There ought to be opportunities for investing in new sulphatable slag capacity to satisfy potential Chinese demand, but I’m not aware of anyone seizing such opportunities.

The feedstock situation - tighter supply and higher prices - is certainly causing some pigment producers to reconsider vertical integration. The recently announced Tronox acquisition of Exxaro’s feedstock operations (Australia & South Africa) is a case in point. Cristal (with captive feedstock in Australia & Brazil), DuPont (Florida, USA) and Kronos (Norway) are already partly vertically integrated and have in-house mining/feedstock knowhow that could be applied to potential feedstock acquisitions. Will Huntsman, Sachtleben, and others get involved in acquiring feedstock businesses?

How do you see the TiO2 demand outlook?

Across all regions, pigment demand in plastics will grow faster than pigment demand in paints. Pigment demand growth in the printing/office papers sector will be very slow. Pigment demand growth in decorative laminates will be healthy in Europe and East Asia, but will remain low in North America and elsewhere.

How concerned is the market with emerging TiO2 substitutes?

The threat of TiO2 substitution is very real, as Akzo Nobel and some of the other major paintmakers have said. With TiO2 pigment prices virtually doubling in less than three years, there is intensifying pressure on researchers in paint companies to develop partial or total substitutes for TiO2. The Evoque and Ropaque products from Dow are getting a lot of hype, but it’s not yet clear if they are going to make serious inroads into TiO2 usage in the paint industry over the next 5-10 years.

Where are TiO2 prices going in 2012 and 2013?

TiO2 pigment prices have certainly been rising fast throughout 2010/11, with prices for upper-tier (good quality) pigments breaking through the $4.0/kg level during the second half of this year. Artikol believes that there will be further price increases over the next five years, but
the pace will be moderate. Some observers have gone on record as forecasting that TiO2 pigment prices will exceed $6.0/kg in all regions by 2015. Artikol is forecasting $4.8/kg as the global average price for 2015, which would still represent an increase of more than 20% over five years.

What do you make of China and emerging TiO2 hotspots in Asia?

China has become a powerhouse in TiO2 over the past 10-15 years. China was already a larger TiO2 consumer than either North America or Europe in 2010. By 2020, China will be a bigger TiO2 pigment market than Europe and North America put together. During the 2000s, booming demand in China outpaced the country’s pigment production, so China was sucking in imports from all the major multinationals (especially DuPont). But there was also a lot of investment going into building new TiO2 pigment capacity by Chinese enterprises rather than foreigners. So China’s capacity more than doubled from 500,000 tpa to 1.125m. tpa between end-2003 and end-2007, and it will have more than doubled again, from 1.125m. tpa to 2.31m. tpa by end-2011.

China’s output exceeded consumption for the first time in 2010 and China became a net exporter for the first time. Its exportable surplus is going to increase over the coming years, with Henan Billions, Sichuan Lomon, Shandong Dongjia and at least 20 smaller companies keen to export TiO2 pigment to the rest of the world.

In Vietnam, the government evidently wants the country to convert from being a significant exporter of ilmenite to becoming a significant producer and exporter of TiO2 pigment. But I don’t see this happening until the second half of this decade, ie. beyond 2015. Indonesia’s prospects for becoming a major producer of TiO2 feedstock and pigment hinge on the successful realisation of Trimex’s ambitious $800-850m. project over the next 8-10 years.

India’s TiO2 pigment production will probably struggle to rise in line with the country’s consumption - which is forecast for quite rapid expansion. This means that India will remain a net importer of TiO2 pigment. VV Mineral has now joined the ranks of the pigment producers (with the acquisition of Kilburn). Beach Minerals (another Tamil Nadu garnet/ilmenite miner) is planning to build a greenfield TiO2 pigment plant. However, these are both small-scale plants. The substantial projects for new pigment capacity outlined (separately) by Tata and KMML seem to have run into the buffers because of political difficulties.

In summary, what do you consider the TiO2 market’s chief challenges for the future?

The underlying major challenge for the TiO2 pigment industry is to make sure that people keep buying the stuff! They will of course, so long as the ultimate consumers keep buying paint, vinyl plastic products, decorative laminate floors and worktops, etc. A big chunk of TiO2 consumption is allied to the commercial and residential construction industry. It will be mainly up to the governments, banks, and real estate owners to make sure that money continues to be spent on supporting construction industry activity. The TiO2 pigment producers simply have to watch out for the risk of substitution (or reduced dosages) of TiO2 in paints, plastics, etc. They also have to make sure that adequate quantities of titanium minerals are being mined to sustain anticipated demand.



Titanium dioxide pigment

Feedstock & production

The two primary raw materials for TiO2 pigment production are the titanium minerals ilmenite and rutile. A third, less common source is leucoxene, a mixture of highly weathered ilmenite and rutile.

Ilmenite, sourced from hard rock or mineral/beach sands, can contain 45-60% TiO2, while rutile, normally from beach sands, contains 95% TiO2.

There are also two important types of enriched TiO2 ore: titanium slag which is the residue left after the extraction of iron from ilmenite or mixed ilmenite- haematite/magnetite deposits; and synthetic rutile, or enriched ilmenite, in which the natural ore has been treated by physical and/or chemical means to remove most of the iron and increase its TiO2 content from 56-60% to around 90%.

There are two process routes for TiO2 - the chloride and sulphate routes.

The sulphate process uses ilmenite and titanium slag while the chloride process uses mineral rutile and beneficiated ilmenite as well as titanium slag and some ilmenite.

Titanium dioxide pigments having either the anatase or the rutile structure can be produced. Both types may be surface treated to impart properties of importance to specific end uses.

Anatase and rutile pigments can both be readily produced by the sulphate process. Although it is not impossible to produce anatase by the chloride route, the thermodynamics of the process make it more applicable to the production of rutile pigments.

By 2010, 53.5% of global TiO2 supply was via the chloride route, and 46.2% by the sulphate route.

Just five TiO2 pigment producers supply almost 60% of the global market, while China accounts for 21.2%.

Uses

Titanium dioxide (TiO2) is the brightest, whitest pigment available, with the highest opacity of any commercial product, and is used to impart whiteness and opacity to paints, plastics, paper and in many other smaller applications.

TiO2 can also improve the durability of coatings, paper laminate, and plastic items, and owing to its clean tone and opacifying properties, is widely used in pastel and coloured finishes as well as in whites.

Pure white, highly refractive, ultra violet absorbing, non toxic and inert, TiO2 pigments are used in protective coatings, such as house and car paints, sunscreens, plastics, paper and textiles, as well as a growing number of foodstuffs and cosmetics.


Supply (5.33m. tonnes 2010)



Demand (5.3m. tonnes 2010)



Source: TZMI


Trend of chloride v sulphate process route capacity 2003-2010



Source: TZMI


TiO2 content in finished pigments



* dry TiO2 pigment end use
Source: TZMI


TiO2 importance in the value chain



Source: TZMI