Projects in the Pipeline: New supply could end industry bottleneck

By John Ollett
Published: Monday, 23 July 2012

The minerals rutile and ilmenite, and to a lesser extent leucoxene, are key feedstock minerals used to make the white pigment titanium dioxide (TiO2) which has dominated headlines in recent months. Pigment prices have rocketed to reach as high as $4,000/tonne (CIF US) in July 2012 from an average of $2,630/tonne just two years previously.

The minerals rutile and ilmenite, and to a lesser extent leucoxene, are key feedstock minerals used to make the white pigment titanium dioxide (TiO2) which has dominated headlines in recent months. Pigment prices have rocketed to reach as high as $4,000/tonne (CIF US) in July 2012 from an average of $2,630/tonne just two years previously.

The main reason for this price hike is the short supply of the feedstock minerals, on which the pigment industry depends. As a result, a number of new projects are springing up around the world as the exploration for new deposits continues.

Traditional major producers are also investing in expanding existing facilities as well as green and brownfield deposits, which will help them address the supply shortfall.

Changing face of the industry

Historically, feedstock production has been dominated by Rio Tinto, Iluka Resources and Exxaro Resources, but this is beginning to change. New producers with potentially large projects are emerging but, more significantly, there has been evidence of paint companies and other end-users of TiO2 moving into feedstock production themselves.

Paint companies have been investing in upstream producers in an attempt to secure a captive supply. A good example is PPG Industries, which has invested in feedstock company Argex Mining Inc. in Canada and sulphate route TiO2 producer Henan Billions in China. PPG is now sharing its chloride-route technology - developed at its own plants in the 1980s - with its new partners.

This new potential source of funding presents an opportunity for junior miners and explorers that they have previously lacked and could lead to a higher success rate for projects compared with juniors in other mining industries.

Future demand for feedstocks

Future feedstock demand will hinge on demand for TiO2. Paint companies are being hampered by the cost of TiO2 as a raw material, with several attempting to reduce their reliance on it. While there is no direct substitute for chloride route TiO2 (sulphate route does not provide the same whiteness), the required quantity can be diluted by partial substitutes, although this is unlikely to affect overall demand significantly in the long term.

Australia-based TZ Minerals International (TZMI) predicts that demand will continue to rise for TiO2 and so the demand of feedstocks will reflect this.

Iluka Resources recently said (see p16) that it sees a slowdown in the pigment industry, which will filter through to the feedstock industry, and, as a consequence, slashed its sales forecast and intended production for the rest of this year.

However, these claims were quickly dismissed by DuPont and Tronox, two of the largest pigment producers. While this is one of the first signs of uncertainty in the industry, the majority of forecasts are that TiO2 demand will continue to rise.

Major companies respond

Rio Tinto is responsible for more than a third of global TiO2 feedstock production out of facilities in Canada, Madagascar, and South Africa. The company acknowledges that TiO2 pigment demand is growing and will continue to grow, but “the industry’s ability to meet this demand growth is limited,” the company told IM.

The Anglo-Australian miner has responded with a number of investments into its existing capacity as well as exploration of greenfield sites in Mozambique, home to existing feedstock producer Kenmare.

The company invested $63m in 2011 and $85m in 2012 into existing capacity expansions as well evaluating new potential mines.

Iluka Resources is also looking into expansions through green and brownfield sites at both the Murray and Eucla Basins in Australia, which are major sources of feedstocks. The company will use three deposits near its existing production facility Jacinth-Ambrosia, where it is also doubling capacity, to extend the life of mine.

It is also opening new mines close to its east coast US facilities in Virginia. The Hickory deposit and Aurelian Springs deposit are much closer to the pigment producing market than the Australian deposits and could extend the mine life of the US operations, which are scheduled to finish in 2014. Aurelian Springs is close enough to use existing Iluka infrastructure.

Iluka anticipates bringing 11 expansion projects online in the next five years, the company said.

Exxaro, the other major producer, has been bought by US pigment producer Tronox Inc. Tronox has embarked on a strategy of becoming a fully integrated TiO2 producer entirely reliant on its own supply.

Tronox currently needs to source 229,000 of its 429,000 tonne feedstock requirement on the open market but, after the merger with Exxaro, it will produce 211,000 tonnes of feedstock beyond its estimated requirements of 512,000 tonnes.

Existing producers such as Kenmare Resources and Sierra Rutile are also expanding, which could help to relieve market pressure in the short term.

New sources

As prices for feedstocks have risen as supply tightens, both TiO2 pigment producers and end users with pigment producing capabilities have shown great interest in new sources.

Most near-term producers have existing offtake agreements with feedstock users and when the new feedstock capacity comes online it will help to ease the supply tightness that is affecting all downstream industries.

Of all the potential new sources coming online, Base Resources Ltd, Gunson Resources Ltd and Matilda Zircon Ltd have all estimated start-up dates in 2013.

Base Resources is developing the Kwale minsands deposit in Kenya and is looking to produce an average of 330,000 tpa ilmenite, 80,000 tpa rutile and 35,000 tpa zircon from a total resource of 138.8m tonnes heavy minerals.

Base Resources also has an offtake agreement with DuPont, the world’s largest TiO2 pigment producer, for 72% of its rutile production for a six-year period.

Gunson Resources, which is exploring the Coburn project in Western Australia, is also looking to enter production in 2013. The company already has an offtake agreement with DuPont for the ilmenite produced at Coburn over five years. There have been no offtake agreements for the rutile and zircon production as yet, but the company is nearing agreements, it said.

Matilda Zircon is already producing from its Lethbridge South deposit in the Tiwi Islands just off the Northern Territories, Australia, and plans to begin mining another, larger, deposit on the islands in 2013.

This Kilimiraka deposit has an inferred resource of 56.2m tonnes grading 1.6% heavy minerals and will have a mining rate of 700 tph. The deposit has a mine life of eight to 10 years.

The company’s other major project is the Keysbrook deposit in Western Australia. This is also intended to come online in 2013 and will produce 70,000 tpa leucoxene and 10,000 tpa zircon. There is already an offtake agreement in place for all the leucoxene with DuPont.

Minerals Deposits and Tioline are looking to begin production in 2014, with the remaining companies looking at 2015 and beyond.

2015 could see considerable new capacity coming online when large projects such as Base Resources, Matilda and Mineral Deposits have already eased the tight supply. This has led to some predictions that supply of TiO2 feedstocks may begin to outstrip demand in the future.

Selected titanium dioxide feedstock upcoming projects

 

Company

Project location

Comments

Arcadia Minerals

Wyoming, US

-          Two deposits – Grass Creek and Dugout Creek

-          Defined a resource of 3.5m tonnes with over 21% TiO2 (ilmenite) and 4.1% zircon at Grass Creek

-          Has completed a pre-feasibility on Grass Creek

-          Current resources at Dugout Creek have been estimated as 33m tonnes with around 6% TiO2 and 0.35% zircon

-          The deposit is also open-ended

Astron Ltd

Donald, Murray Basin, Australia

Niafarang, Just south of the Gambia, Sengal

-          Recently updated 4.04bn tonnes grading at 4.8% HMC– roughly 37m tonnes zircon

-          Donald and Imerys Asia Pacific entered into a nonbinding offtake agreement

-          Forecasted production of 91,000 tpa rutile, 36,000 tpa leucoxene, 183,000 tpa primary ilmenite, and 40,000 tpa secondary ilmenite – assuming 15m tpa mined

-          Niafarang project has reserve of 4.8m tonnes grading 12.4% HMC

-          Produce 80,000 tpa ilmenite and 15,000 tpa zircon over five years

-          Prefeasibility completed and reserve being finalised

-          Deposit could be expanded along the shore line

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 has restart production (ceased in 2009) of its Mindarie Mineral Sands project in April 2012

-          Measured resource estimate of 43.3m tonnes, with 3% heavy minerals – 63.9% ilmenite 6.1% leucoxene, 5.1% rutile and 21.9% zircon

-          Planned output is 5,200 tpa rutile, 6,500 tpa leucoxene, 68,400 tpa ilmenite, 25,000 tpa zircon, 1,000 tpa monazite

Argex Mining Inc.

Quebec, Canada

-          The La Blache property in Canada has a measured and indicated NI 43-101 resource estimate of 30.88m tonnes grading 18.78% TiO2, 63.29% Fe2O3 and 0.45% V2O5

-          Also has an inferred resource of 2.87m tonnes grading 18.67% TiO2, 63.06% Fe2O3 and 0.43% V2O5

-          Also exploring Lac Brule property, Canada, which has an historical estimate of 3.8m tonnes ilmenite

Baobab Resources Plc

Mozambique

-          The Tete project will produce pig iron and TiO2

-          The overall Tete JORC resource base is 482m tonnes inferred resource at 12.2% TiO2, 32.9% iron, and 0.8% vanadium pentoxide V2O5

-          Resource drilling underway on other project areas

Base Resources Ltd

Kwale, Kenya

-          Completed DFS* in May, entering production in 2013

-          Plans average production 330,000 tpa ilmenite, 79,000 tpa rutile, and 30,000 tpa zircon in first 7 years

-          Final six year production to rise to 200,000 tpa ilmenite, 55,000 tpa rutile, and 19,000 tpa zircon

-          Four minsands projects north of Kwale hold indicated and inferred resources of 1.34bn tonnes grading 3.8% heavy mineral

Cove Resources Ltd

Finland

-          Purchased Finnish ilmenite deposit from Endomines AB

-          The two largest parts of the deposit have a historical JORC indicated resource of 38.6m tonnes grading 8.1% TiO2 and an inferred resource 30.1m tonnes grading 6.7% TiO2

-          Feasibility study to be completed April 2013

Diatreme Resources Ltd

Eucla Basin, Australia

-          Has completed PFS** on Cyclone project

-          Production in 2015 for 10 years

-          PFS: project could produce 46,000 tpa ore grading 67% TiO2; 10,000 tpa grading 87% TiO2; and 65,000 tpa zircon

Gunson Resources Ltd

Western Australia, Australia

-          Completed DFS on Coburn project, north of Perth

-          Early stages of construction in early May 2012; main phase of construction to begin in Q4 2012

-          Production for early 2014 and produce 40,000 tpa zircon

-          Possible extension for deposit with leasing of nearby Hamelin area

-          Current area has JORC reserve of 3 08m tonnes grading 1.2% heavy minerals

-          Already concluded off-take agreement with DuPont for ilmenite

-          Rutile, leucoxene offtake agreements are forthcoming

Kenmare Resources Ltd

Mozambique

-          Phase two expansion is underway

-          Planning 1,000tph dry mining operation for 2012

-          Initial 1,000 tph dry-mining operation online in March 2012

Iluka Resources Ltd

Murray, Eucla

basins, Australia

and Virginia, US

-          Doubling capacity to 2,000 tph at Jacinth-Ambrosia

-          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 began production in late May 2012. It has a resource of 1.4m tonnes of heavy mineral concentrate

-          Iluka’s combined brownfield projects intended to expand on existing operations at Jacinth-Ambrosia.

-          Here, a combined resource of 11.3m tonnes of HMC of which 67% is ilmenite and 2% rutile

Image Resources NL

Eucla Basin (Cyclone), Australia

-          Scoping study completed on Cooljarloo North deposit

-          PFS not completed but resource estimation on its Cooljarloo and Bidaminna deposit

IRC Ltd

Far east Russia

-          Upgrading production at its Russian Kuranakh deposit to a capacity of 160,000 tpa ilmenite for 2013

-          Purchased Bolshoi Seym with an indicated resource of 201m tonnes graded at 7.5% TiO2

-          Bolshoi has further inferred resources of 129.8m tonnes grading at 7.5% TiO2

Lanka Mineral Sands

Northern Sri Lanka

-          Constructing a mineral sand plant in Kokilai, Sri Lanka

-          Concerns persist that company to be sold to a Chinese organisation

-          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 Ltd

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 Ltd

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 70,000 tpa leucoxene and 10,000 tpa zircon

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

-          Mining is planned to commence in late 2013 and last for 8-10 years

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

-          The project will have a mining rate of 700 tph

Metallica Minerals Ltd

Australia

-          The Urquhart Point (Cape York, Australia) project is in the final stages of Environmental Impact Statement (EIS)

-          Will be in production late 2013 subject to permitting

-          Resource is 2.4m tonnes grading 7% total heavy minerals

-          Output of 20,000 tpa of a concentrate high in zircon and rutile

-          The Gippsland deposit has a JORC inferred mineral resource of 1.7bn tonnes grading 2.2% total HMC

-          Scoping study specialist to begin study in 2012

-          Metallica hold an option to buy the Gippsland deposit which is currently held by Rio Tinto

Mineral Deposits Limited

Northern Coast, Senegal

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

-          Will produce 575,000 tpa ilmenite, and 85,000 tpa zircon

-          Testing feasibility of production rutile/leucoxene around 20-30,000 tpa, no definite results have been published

-          Production for late 2013; first product for 2014

-          Mine life of 20+ years on minimum drilling, further drilling could extend life

Nordic Mining ASA

Norway

-          Engebo project in Norway could produce up to 100,000 tpa rutile, with a grading of 95% TiO2 by 2014-15

-          Also produce 100,000 tpa garnet

-          Has signed development MOU with Cristal Global

Pathfinder Minerals Plc

Nampula, Mozambique

-          Scoping studies completed on its Moebase and Naburi mineral sands deposits

-          Currently completed a DFS on both projects

-          The projects have a combined resource of 2.02bn tonnes grading at 3.55% HMC

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

Rio Tinto

Canada, Madagascar, and South Africa

-          In 2011, the company received $63m for PFS to assess increasing mining and processing capacity at existing operations in Canada, Madagascar and South Africa

-          Also developing greenfield site in Mozambique

-          Additional $85m was received in 2012 for PFS on either new mining capacity in Africa or new smelter in Quebec, Canada, 2014

-          Recently invested $135m in new tailings treatment plant at Richards Bay Minerals in South Africa

-          QIT Madagascar Minerals installed new dryer to raise production by 60%

Sierra Rutile Ltd

Sierra Leone

-          On track for production of 80-85,000 tpa rutile for 2012

-          Expansion on-track commissioning its dry mining facility in late 2012

-          Dry mining to up production by 30-35,000 tpa rutile and 6-9,000 tpa ilmenite from 2013 for at least seven years

-          Will complete FS*** for second large dredge in Q3 2012

Sheffield Resources Ltd

Australia

-          Flagship project is the Dampier project, north WA

-          Drilling began 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% HMC

-          The Eneabba project near Perth, Australia, will be undergoing a PFS from Q2 2012

-          Resource of 161m tonnes grading at 2.5% HMC

-          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, 1m tonnes rutile, 43m tonnes ilmenite, and 3.5m tonnes zircon

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

Tioline LLP

North Kazakhstan

-          A 540,000 m3 ore processing plant to be launched in 2014, full capacity for 2015

-          Full production volumes will be 12,000 tpa rutile, 50,000 tpa ilmenite, and 50,000 tonnes zircon

Trimex Group

Indonesia

-          New processing plant to start up in December 2013

-          Will use mineral sand deposits in Indonesia

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

-          Project is scheduled to start in July 2012 and produce 200,000 tpa ilmenite, 6,000 tpa rutile

-          Study underway for a heavy mineral separation plant

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 (rutile, ilmenite, zircon) in the first year and then ramp up over time

White Mountain Titanium Corp.

Chile

-          Recently signed a signed a letter of intent (LOI) to secure funding and an off-take agreement with Hyundai Welding Co. Ltd and Korea Resources Corp. for its Cerro Blanco in Chile

-          Company plans to develop the resource through conventional open pit mining and beneficiation to produce 135,000 TiO2 concentrate