Projects in the Pipeline: Zircon buoys as prices rise

By John Ollett
Published: Monday, 23 April 2012

The zircon industry has long been tied closely together with the titanium dioxide (TiO2) feedstock industry. Although the two industrial minerals have widely different end uses and supply chains, ilmenite and rutile, used to make TiO2, and zircon are often found in the same deposits. This means that the shortage in supply of titanium feedstocks, that has sent prices rocketing in the last 18 months, will have an impact on the zircon industry.

The zircon industry has long been tied closely together with the titanium dioxide (TiO2) feedstock industry. Although the two industrial minerals have widely different end uses and supply chains, ilmenite and rutile, used to make TiO2, and zircon are often found in the same deposits. This means that the shortage in supply of titanium feedstocks, that has sent prices rocketing in the last 18 months, will have an impact on the zircon industry.

Prices for zircon have indeed risen drastically from $870/tonne in October 2010 to $2,500/tonne today for zircon, standard grade, FOB Australia, according to IM’s prices database.

This has been mainly caused by a shortfall in supply accompanied by a rise in demand fuelled by the Chinese construction market.

Zircon is used primarily in ceramic tiles as well as foundry applications, refractories, and as the base for a wide range of zirconium chemicals. In 2011, according the US Geological Survey, only 1.4m tonnes of zircon were produced, originating mainly from Australia where leading global producer Iluka Resources is based.

Australia is also the home of the majority of new projects springing up, most of which occur in the Eucla and Murray basins (see map).

These basins are significant because ancient seas, of Tertiary age, deposited large quantities of heavy minerals - rutile, zircon, leucoxene, ilmenite, thorium, and others - through tide, wave, and wind action into paleo strandlines before receding.

The strandlines in these basins have remained remarkably well preserved.

The Eucla Basin

The Eucla Basin is located in south-western Australia, both on and off shore, and has been through four marine cycles - seas encroaching and receding.

As such, its well preserved strandlines are a great source of heavy minerals which companies like Iluka Resources, Diatreme Resources, and Image Resources are exploiting.

Iluka has an existing production base at Jacinth-Ambrosia, where it has only recently begun mining, which it describes as “the largest, highest assemblage zircon development globally for several decades”.

Iluka’s confidence in this geological area is indicative of the high quality of mineralisation that exists and can reflect the potential of more junior projects in the area.

In the Western Australia section of the basin is Diatreme’s Cyclone project. This has passed the pre-feasibility stage and could start production in 2015.

It would then produce, according to the study, 65,000 tpa zircon over 10 years.

Image Resources’ Eucla basin deposit - Cyclone Extended - is located directly below Diatreme’s deposit. While it is at a less defined stage than Diatreme’s, the company has carried out an aircore drilling programme and found a typical shoreline style with low slime (4% within the mineralisation), well sorted sands and heavy mineral grades up to 13%.





The Murray Basin

The Murray Basin is a major production source for Iluka for both rutile and zircon. As such, it is also home to a number of other companies exploring areas of similar mineralisation.

This includes Murray Zircon, a joint venture between Australian Zircon and Orient Zirconic - one of China’s largest zircon processing companies.

Murray Zircon is working on the Mindarie mineral sands project which was active until production ceased in 2009.

As such, the mine is one of the closest to production which the company hopes to achieve in the first half of 2012.

The mine consists of eight strandlines of which two have already been mined. The company intends to restore the area of the two strandlines and mine the rest.

When operational the mine should produce 120,000 tpa of mineral concentrate. Of this 17% would be zircon, 67% ilmenite, 3.9% rutile, and 5.1% leucoxene.

The US

The US is not a major producer of zircon but now there are two new projects looking to take advantage of the current rising prices, as well as Oregon Resources which began production at its Coos Bay deposit in March 2011.

The first is Arcadia Minerals’ two deposits in Wyoming - Grass Creek and Dugout Creek. Of these two, Grass Creek has the higher grade resource and the deposit is still open-ended on three sides.

A pre-feasibility study has already been carried out on this deposit which has a defined resource of 3.5m tonnes with 4.1% zircon and over 21% titanium dioxide (ilmenite) as well as saleable quantities of magnetite and monazite.

Dugout Creek has had less drilling done on it but drilling so far has produced an estimated resource of 33m tonnes with 0.35% zircon and around 6% titanium dioxide.

This deposit too remains open-ended on three sides so the full extent of the deposits has not been determined.

Arcadia told IM that a $6m drill budget was in place for both resources for this year which would help define the resources and move the projects towards production.

Southern Ionics is also approaching production at its Mission mine in Georgia, in the south-east of the US.

While not traditionally a mining company, Southern Ionics has moved swiftly along and is submitting permit applications in June 2012, with first mine production scheduled for Q4 2013.

Southern Ionics specialises in zirconium chemicals and will utilise the zircon produced at its mine internally but will sell the titanium dioxide feedstocks that are produced on the open market.

The company has already completed drilling, bulk processing, and feasibility studies.

When production begins in 2014, the company told IM, the mine is expected to produce 8,500 s.tons (7,719 tonnes) zircon and 32,000 s.tons (21,029 tonnes) titanium minerals. From 2015 onward, zircon production will average 16,000 s.tons (14,514 tonnes) zircon and 60,000 s.tons (54,431 tonnes) titanium minerals.

The mine will use a dry mining method as opposed to conventional wet mining, which uses a floating dredge.

The company will construct a floating concentrator located in a central water-filled canal running the length of the ore body. As mining progresses further away from the concentrator mill, the mill is then pulled through the canal to the closest point possible to the active mining cell.

Oregon Resources principally produces chromite from its project in Coos Bay, Oregon, but it also produces foundry grade zircon, rather than ceramic grade, in addition to high-iron ilmenite and garnet.

It produces roughly 8,500 tpa zircon and has a resource of 7.9m tonnes grading at 21.5% heavy minerals and containing roughly 31,500 tonnes zircon.

Africa

South Africa is the second largest producer of zircon and has the second largest national reserves, according to the US Geological Survey, of 14m tonnes.

This, combined with the benefits brought by its existing mining industry, makes it a good location for mining.

Australian-based Mineral Commodities Ltd has two projects in South Africa that have had several regulatory problems but have made progress recently.

A definitive feasibility study has been completed on its Tormin Mineral Sands project which concluded that the deposit could produce 30-40,000 tpa of concentrates.

This year, the South African government approved the environmental management plan for the mine and the company believes that other regulatory matters will be concluded during the first half of 2012.

The acceptance of the environmental management plan was one of the final obstacles and now the company can undertake accelerated development activities, it said.

The company’s second deposit has much less exploration performed but has a resource of 346m tonnes grading at 5% heavy minerals which gives the deposit a resource of 9m tonnes of ilmenite.

Possibly the most well known African deposit is Base Resources’ Kwale Mineral Sands project in Kenya.

The project has a long and convoluted history under previous owner Tiomin that dragged on for 15 years.

The project was fraught with problems and Tiomin faced major bureaucratic issues with the Kenyan government and a dispute with local farmers over land rights.

The project was then taken over by Base Resources in 2010 for $3m.

Since then Base Resources has secured funding as well as an off-take agreement with titanium dioxide pigment producer DuPont for 72% of its rutile production for the first six-year period.

The project is expected to start up in the third quarter of 2013, producing 330,000 tpa ilmenite, 80,000 rutile and 35,000 tpa zircon in the first six years of operation.

Deposits in Senegal, Mozambique, and Madagascar are also being explored.

Overall, the zircon industry is buoying as prices rise and this has encouraged a number of exciting new projects.

While prices remain high this will continue but if there is ever a dramatic fall in demand, for example a crash in the Chinese construction industry, it could make a lot of these new projects uneconomical.

Australia will continue as zircon’s heartland for a long time to come, and as these new projects come to fruition it is likely to remain the dominant market player. However, the US and Africa have shown their potential as competitors and leave us without doubt that there are interesting times to come. 



Company

Project location

Comments

Alkane Resources Ltd

New South Wales, Australia

·         The definitive feasibility study is underway

·         Production of zirconia and rare earths to begin in 2014 and be used to produce zirconium chemicals

·         Current measured resource of 35.7m tonnes grading at 1.96% zircon

·         Inferred resource of 37.5m tonnes grading at 1.96% zircon that will produce an estimated 15,700 tpa zirconia

Arcadia Minerals

Wyoming, US

·         Two Wyoming-based deposits – Grass Creek and Dugout Creek

·         Defined a resource of 3.5m tonnes with 4.1% zircon and over 21% titanium dioxide (ilmenite) as well as saleable quantities of magnetite and monazite at its Grass Creek deposit

·         Has completed a pre-feasibility on Grass Creek and the deposit remains open-ended on three sides

·         Current resources at Dugout Creek have been estimated as 33m tonnes with 0.35% zircon and around 6% titanium dioxide

·         The deposit is also open-ended but less drilling has been done on it

Astron Ltd

Murray Basin, Australia

·         Recently updated the resource for its Donald Mineral Sands project in Murray Basin

·         4.04bn tonnes grading at 4.8% heavy mineral content – roughly 37m tonnes zircon

·         Donald and Imerys Asia Pacific entered into a nonbinding off-take agreement, for certain minimum annual quantities

Australian Zircon NL

Murray Basin, Australia

·         Formed joint venture company called Murray Zircon with Orient Zirconic Science & Technology Industry Co. Ltd - one of China’s largest zircon processing companies

·         Murray Zircon will restart production (ceased in 2009) on the Mindarie Mineral Sands project in H1 2012

Base Resources

Kwale, Kenya

·         Completed enhanced definitive feasibility study in May and should be entering production in 2013

·         Plans to produce, on average, 30,000 tpa zircon, 330,000 tpa ilmenite, and 79,000 tpa rutile over the first seven years

·         Over the final six years, production to rise to 19,000 tpa zircon, 200,000 tpa ilmenite, 55,000 tpa rutile

Diatreme Resources

Eucla Basin, Australia

·         Has completed pre-feasibility study and should start production in 2015

·         Project to produce 70,000 tpa zircon for the first three years, averaging 65,000 tpa over 10 years

Gunson Resources

Western Australia, Australia

·         Completed definitive feasibility study on its Coburn project, north of Perth

·         Starting the early stages of construction in early May 2012 with main phase of construction to begin in the last quarter 2012

·         Production is anticipated to start in early 2014 and produce 40,000 tpa zircon

Iluka Resources Ltd

Murray, Eucla

basins, Australia

and Virginia, US

·         Iluka has a number of promising projects based throughout Australia, mostly focused in the Eucla and Murray Basins, in addition to projects in the US; these include Cataby, Balranald, Sonoran, Typhoon, Atacama, and Woornack, Rownack, Piroo (Australia), as well as Hickory, and Aurelian Springs (US)

·         The closest to production is the Woornack, Rownack, Piroo deposit which will begin production in late May 2012. It has a resource of 1.4m tonnes of heavy mineral concentrate

·         Iluka’s combined brownfield projects – Sonoron, Typhoon, and Atacama – are intended to expand on existing operations at Jacinth-Ambrosia. They have a combined resource of 11.3m tonnes of heavy mineral content of which 16% is zircon

Image Resources

Eucla Basin (Cyclone), Australia

·         A scoping study has been completed on its Cooljarloo North deposit and a preliminary feasibility study is not completed

·         A resource estimation has been completed on its Cooljarloo deposit

·         A resource estimate has been completed on its Bidaminna deposit

·         Initial drilling has been completed on its Cyclone extended deposit in the Eucla Basin, just south of Diatreme’s Cyclone deposit - further drilling is underway

Lanka Mineral Sands

Northern Sri Lanka

·         Currently constructing a mineral sand plant in Kokilai, Sri Lanka

·         Ramping up of mine production of zircon and ilmenite since defeat of Tamil Tigers in 2009

·         The black mineral sands of Pulmoddai beach are considered as some of the world’s richest, having heavy mineral concentrations of 50-60%

Latin Resources

Chimbote, Northern Peru

·         A JORC resource of 118m tonnes grading at 5.7% heavy minerals has been reported at its Guadalupito Iron and Heavy Mineral Sands project

·         Deposit is partially submerged and could require both dry mining and dredging

Matilda Zircon

Western Australia, Australia

·         Beginning detailed planning and engineering to enable construction of its Keysbrook project

·         Production to begin in early 2013

·         Resource of 60.5m tonnes grading at 2.48% heavy minerals

·         Keysbrook should produce 95,000 tpa of zircon and leucoxene

·         Currently getting approvals for its Kilimiraka deposit on the Tiwi Islands, Northern Territory Australia

·         Mining is planned to commence in late 2013

·         The deposit has an inferred resource of 56.2m tonnes grading at 1.6%

·         The project will have a mining rate of 700 tph

Mineral Commodities

Western Coast, South Africa

·         A definitive feasibility study has been completed on its Tormin Mineral Sands project which concluded that the deposit could produce 30,000-40,000 tpa of concentrates

·         The Xolobeni deposit has much less exploration performed but has a resource of 346m tonnes grading at 5% heavy mineral

Mineral Deposits Limited

Northern Coast, Senegal

·         Its Grande Côte deposit has a measured and indicated resource of 1.03bn tonnes at 1.7% heavy minerals

·         The mine will produce approximately 85,000 tpa zircon starting in late 2013

·         The company intends to start production in late 2013

Oregon Resources Corp.

Oregon, US

·         Started production of foundry grade zircon in March 2011

·         The company produces, on average, 8,500 tpa zircon and has a resource of 7.9m tonnes grading at 21.5% heavy minerals and containing roughly 31,500 tonnes zircon

Pathfinder Minerals

Nampula, Mozambique

·         The company has completed scoping studies on its Moebase and Naburi mineral sands deposits

·         Currently completed a definitive feasibility study on both projects

·         The projects have a combined resource of 2.02bn tonnes grading at 3.55% heavy mineral content

·         Anticipated production of 65,000 tpa zircon over first 10 years

Sheffield Resources

Western Australia, Australia

·         The company’s flagship project is the Dampier project located in the north of Western Australia

·         This project will undergo drilling in this quarter with a resource estimate to be produced in Q3 2012

·         The project has an exploration target of 450-850m tonnes grading at 5-10% heavy mineral content

·         The Eneabba project near Perth, Australia, will be undergoing a pre-feasibility study from Q2 2012

·         The project has a resource of 161m tonnes grading at 2.5% heavy mineral content

·         The McCalls project, located north of Perth, is currently undergoing additional drilling and will start prefeasibility in Q3 2012

·         The project has a total inferred mineral resource of 4.4bn tonnes, containing 3.5m tonnes zircon, 1m tonnes rutile, and 43m tonnes ilmenite

Southern Ionics Inc

Georgia, US

·         Submitting permit applications in June 2012 with drilling, bulk processing, and feasibility studies completed

·         First mine production scheduled for Q4 2013 and will operate for 8 to 10 years

·         The zircon will be used for Southern Ionics zirconium chemicals and the titanium feedstocks will be sold on the market

Trimex

Indonesia

·         New processing plant to start up in December 2013 although the exact location has not been announced

·         The plant will use resources from, and be located close to, mineral sand deposits in Indonesia

·         At the final stage of clearance for a mining lease Bhavanapadu deposit near to Srikakulam, India

·         The project is scheduled to start in July 2012 and produce 7,000 tpa zircon

·         A study is underway for a heavy mineral separation plant, probably located nearby

Varun Industries Ltd

Southern tip of Madagascar

·         The company has recently signed an agreement for the sale of rare earths with a Public Sector Undertaking under the Department of Atomic Energy, Government of India

·         The company plans to set up a processing plant in the coming 8-10 months

·         It hopes to produce approximately 500,000 tpa heavy minerals concentrate

·         Plans to produce principally rare earths but may produce zircon as well

VV Mineral

India

·         Informed IM that the company is currently exploring two-three projects inside and outside India

·         One project outside of India is expected to come online in 2013 and will produce 40,000 tonnes of heavy mineral (zircon, rutile, ilmenite) in the first year and then ramp up over time