Projects in the Pipeline: Kaolin bounces back

By John Ollett
Published: Thursday, 26 January 2012

It has been a difficult couple of years for kaolin as the global recession spread to its end user markets, but a recent recovery in demand has also encouraged a surge of new operations and exploration projects


It has been a difficult couple of years for kaolin as the global recession spread to its end user markets. Paper coating and filling, accounting for 43% of kaolin sales in 2009 (according to consultant Ian Wilson), experienced a sharp decline resulting in part from decreased advertising and inventory reductions by major paper manufacturers. Kaolin’s second largest end user market is ceramics, linked strongly to construction and residential start-ups. Construction has been in infamous decline since 2008, due to a collapse of mortgage supply and a fall in demand for both residential and commercial properties.

During the last few years kaolin production in many countries remained static or fell and total world production fell by 3m tonnes between 2008 and 2009, according the US Geological Survey (USGS). However, end user markets have begun to recover, prompting an increase in demand for kaolin which producers must match.

Driving the kaolin industry, as with many mining industries, is demand from Asia and, more specifically, China. Leading kaolin producers have begun to see increased sales which is encouraging a rise in production. Leading producer Imerys experienced an almost 20% growth in sales of kaolin to  €565.6m between September 2009 and 2010 and increased production through the purchase of an 86.2% majority stake in Brazil-based kaolin supplier, Para Pigmentos SA. This rise in demand has also encouraged a surge of new operations and exploration projects.

These new operations (see Table 1) are focused mainly in Australia and India and the principal reason for this is logistics. While the US remains the largest producer of kaolin worldwide, it struggles to remain competitive with Australia and India when supplying Asia, owing to the extra logistics costs.

USGS kaolin analyst Robert Virta confirmed that Asia still represented the best potential for kaolin sales with anticipated economic growth of more than 9%. However, a recent report by consultancy firm Deloitte forecast that the region cannot be relied on to maintain its current demand.

“China’s voracious appetite for commodities has convinced many analysts that the country represents a one-way ticket to long-term commodity price buoyancy, despite anticipated dips along the way. But things in China don’t happen in a straight line, making this type of prediction dangerous,” stated Jeremy South, Deloitte analyst.

There are, Virta pointed out, several problems with the up-and-coming producers: “The contributions of these start-ups will be small for the near future as most appear to still be in the initial stages of exploration, testing, and/or development.”

A few of the companies have been investigating kaolin deposits for several years and appear to be having problems producing high-purity kaolin economically, slowing the development of those deposits, Virta explained.

“Consequently, it may be several years before several deposits can be commercialised. Those companies depending on co-products, such as feldspar and silica, to defray costs may have to wait until those markets also improve before they can exploit the kaolin. Water may also be an issue for some Australian operations if they intend to produce water-washed kaolin products,” he added.

Since 1980 the number of major producers of refined kaolin worldwide has contracted from 14 to just seven (see IM October 2010: Paper pulls kaolin’s strings). The kaolin market can be one that is challenging to enter for new producers because the start-up costs are high and the profit margins are low. In addition, because the product price per tonne is low compared with some mineral and metal commodities, significant volumes must be sold before a profit is made.

Even when actual mining begins “it will take several years to build up production to even the 50,000 tpa level,” but, in the kaolin industry, top companies’ production levels can be much higher and companies “would need to approach 100,000 tpa of sales to affect the global kaolin supply infrastructure,” Virta stated.

Focus: North America

North America has traditionally been a leading producer of kaolin with Georgia as the industry’s heartland. Some of the biggest producers in the world are based here, including Imerys, KaMin and Thiele Kaolin.

One new project looking to enter this market is Canada-headquartered I-Minerals, which recently made progress with its Bovill Kaolin deposit in Idaho, US. The deposit has inferred resources of 38.4m tonnes of primary clay with 8.9m tonnes in the main area of focus. I-Minerals has estimated a production rate of 900 tpd and a minimum mine life of over 50 years.

“Much of the work to date has been focused on the process and product development of potassium feldspar (K-spar), quartz, halloysite, and metakaolin,” Linda Koep, market development manager, told IM.

A prefeasibility study will be completed by the third quarter of 2012. I-Minerals is targeting a final product that will be sold to the ceramics industry, and will be a combination of kaolinite and halloysite.

Focus: Australia

Australia has not been a traditional source of kaolin but it has always had a strong focus on mining. The country is one of the world’s leading producers and exporters of numerous commodities, including alumina, coal, iron ore, and uranium. However, with increased demand from South East Asia and the logistical advantage over more traditional locations, like North America, Australian mining has branched out into less traditional minerals like kaolin.

Some of the kaolin projects springing up around the country show promise and if the trend in demand continues over the next several years, these projects could have an impact on the global market. However, in the meantime small producers could alter the supply situation for some smaller niche markets such as animal feed and fibre glass.

Australian Minerals & Mining Group (AMMG) is exploring the licence acquired in November 2011 for the processing of kaolin/aluminous clay to alumina. AMMG sent a 4kg crude kaolin sample from its Meckering project, just north of Perth, Australia, to a Chinese technology holder for processing.

Results showed that 1.06kg of 99% metallurgical grade alumina and 86g of 99.99% high purity alumina was successfully produced.

The Meckering project has 16.77m tonnes of indicated resource and 48.28m tonnes of inferred resource and there is a trial mine pit in place. AMMG also claims that it “is not confining itself to a sole focus on paper filler applications,” and instead will be exploring options such as a filler in rubber, plastics, and as source of high grade silica.

Elsewhere in Australia, Minotaur Exploration Ltd is progressing with the feasibility evaluation of its South Australia Poochera kaolin deposit, and specifically the Carey’s Well section. Carey’s Well contains inferred resources of 20m tonnes of bright white kaolin and 47m tonnes of white to off-white kaolin.

The study will proceed “subject to board investment approval in early 2012,” according to the company which anticipates mine start up by the end of 2012. In addition to developing hydrous and calcined derivatives of kaolin for paper, paint and filler use, Minotaur would like to target premium ceramic markets.

WA Kaolin is still in the planning stages for a capacity expansion of 350,000 tpa platform with initial installed capacity of 150,000 tpa for its mine near Wickepin, Western Australia, and “the plan is still valid subject to adequate investment funding” CEO Alf Baker told IM. Wickepin has proved reserves of 100m tonnes kaolin.

A new mine is also in the process of being developed and shows the extremely high brightness of the kaolinised granite matrix with very little overburden, according to Dr Ian Wilson, consultant geologist for WA Kaolin, adding that “proved reserves of over 100m tonnes have been identified from the deposit”.

Focus: India

India has always had one particular advantage over other trading nations which is that it sits close to one of the single biggest markets in the world Ð China. It also has massive domestic markets of its own. This gives any Indian-based kaolin company a distinct advantage over more traditional suppliers like the US and UK.

In 2009, India produced 86 minerals including 46 industrial minerals. Of this, kaolin production accounted for 580,000 tonnes (salable crude) and 210,000 tonnes of processed grades.

20 Microns is a large Indian kaolin producer that is just finishing an expansion phase. The company is expanding production at its plant in Bhuj from 40,000 tpa to 65,000 tpa of calcined kaolin, joint managing director Atil Parikh told IM. Interestingly, 20 Microns exports 35% of its production - but none of this to China. Instead it exports chiefly to the Middle East as well as Western Europe and countries in Asia Pacific.

English India Clays Ltd is one of the oldest companies in the industry and is the largest single producer of kaolin in Asia. Consultant Ian Wilson places current capacity at 242,000 tpa produced from the company’s Veli plant in Kerala, Southern India. Production was ramped up in 2009, with capacity divided between 180,000 tpa hydrous kaolin and 60,000 tpa calcined kaolin.

Also in India, Popular Minerals has been developing its mine and plant in Chittorgarth, Rajasthan. According to consultant Ian Wilson, sedimentary kaolinitic sands are being developed. Evaluation is underway to expand into the markets for ceramics, paper, paint, and plastics.

The Ashapura Group is also one of India’s largest mineral companies and has produced kaolin for some time. In the last couple of years it has purchased new mine reserves of between 2.5-3m tonnes, grading 96% kaolinite, in Kerala, India, and opened a 180,000 tpa capacity plant which can produce both hydrous and calcined grades of kaolin.

The kaolin industry has suffered under the global recession but, now, it is beginning to re-emerge. Increased demand is encouraging new projects in new locations and, providing the trend in demand remains, it is possible we could see the entire face of the market changing. New projects in Australia and the US will not have an impact on major producers for several years but the recent expansions in India could become relevant in the shorter term. All in all, the kaolin market is developing and changing in exciting new ways.

Acknowledgements: The author wishes to thank Dr Ian Wilson and Robert Virta for their help preparing this piece.

Table 1: Selected global kaolin supply highlights

Company

Location

Comments

20 Microns Ltd

India

 

·         Finishing an expansion phase at its processing plant at Bhuj, India from 40,000 tpa to 65,000 tpa of calcined kaolin.

Advanced Primary

Minerals Corp.

 

US

 

·         Based in Dearing, Georgia, APM has put on hold a 100,000 tpa expansion to its wet processing plant - current capacity is 34,000 tpa.

·         Currently in a plant trial phase for exporting to South America. Recoverable reserves are 25.5m tonnes.

Australian Minerals and Mining Group

Australia

·         One granted tenement E70/3923, which lies adjacent to the town of Meckering, north-east of Perth. Also has eight other exploration licence applications targeting kaolin in South West, Western Australia.

·         Late 2011, granted a five-year option to acquire the exclusive unconstrained Australia-wide technology licence for the processing of kaolin or aluminous clay to alumina via an acid-based technology process.

Beihei Hanhe Kaolin Clay Ltd

China

·         Acquired the exploration rights to a kaolin deposit in Hepu county, Guangxi province, China with total reserves of 99.8m tonnes and a projected capacity of 3m tpa crude kaolin.

Daleco Resources Corp.

US

·         Currently interpreting data to develop its Sierra Kaolin project which contains an estimated 55.3m tonnes recoverable mineralised material. 

English India Clays Ltd

India

·         Current capacity at 242,000 tpa produced from its Veli plant, Kerala, Southern India.

·         Calcined kaolin was upgraded to 60,000 tpa in 2009.

Golden Eagle Mining Ltd

Australia

·         Currently conducting a feasibility study of its Cadoux Kaolin project which it hopes to complete by Q3 2012.  Has an initial resource estimate of 19.6m tonnes and contains a primary kaolin deposit with a mine life of over 20 years.

Gulf Mines Ltd

Australia

·         Has taken over Skardon River deposit from Minerals Corp. which has an estimated 737,000 tonnes yielding 520,000 tonnes kaolin.

I-Minerals Inc.

Canada

·         Bovill Kaolin project has confirmed an inferred resource of 38.4m tonnes of primary clay comprising an aggregate of halloysite, kaolin, quartz and k-spar.  Preliminary assessment also shows a potential yield 150,000 tonnes of marketable mineral products.

·         Prefeasibility study to be completed by Q3 2012.

Minotaur Exploration Ltd

Australia

·         Developing its Poochera Kaolin project which include four known kaolin deposits: Carey’s Well, Romnwy, Karcultaby South, and Condooringie.

·         Testing confirmed that kaolin from all four deposits is very pure and exceptionally white and has potential for use in high-value kaolin markets.

Popular Minerals

India

·         Developing its mine and plant in Chittorgarth, Rajisthan.

·         Sedimentary kaolinitic sands are being evaluated for paper, paint, plastics, and ceramic markets.

Swan River Kaolin Pty Ltd

Australia

·         Parent company Minerals Corp. went into administration in 2010 but Swan River Kaolin retains possession of the Swan River deposit.

·         Project status unknown.

WA Kaolin Holdings Pty

Australia

·         Continues to develop its Wickepin mine and plant in Western Australia.

·         A new mine was developed in 2011 and shows “an extremely high brightness of the kaolinised granite matrix with very little overburden”. Proved reserves of over 100m tonnes

·         At an advanced stage in planning its capacity expansion – 350,000 tpa platform with initial installed capacity of 150,000 tpa.