Industrial Minerals Inside Edge – 23 November 2012

By Mike O'Driscoll
Published: Friday, 23 November 2012

Titanium dioxide toughs it out; China in change; EU shale gas & fracking resolutions

Titanium dioxide doldrums

Not a great week for the titanium dioxide pigment and zircon market. Tronox’s Q3 results are indicative of the sluggishness in both markets which are not expecting to witness signs of a pick-up until H2 2013.

As ever, the titanium dioxide feedstock business is key to the pigment market and zircon availability is also often hostage to the fortunes of feedstock.

Tight supply and rising prices of titanium ore has sparked a trend where certain pigment producers, if able, have altered their feedstock mixes to accommodate lower-grade feedstocks into their processes.

In response, leading feedstock producer Iluka has simply switched to exploiting lower grade deposit sections and reduced synrutile output.

Not called “pig(ment) in the middle” for nothing: the titanium dioxide sector not only suffers from taking the feedstock hit, but has also faced pretty grim conditions from its end user markets in paint, paper, and plastics, influenced in large part by a weak construction market.

However, there are signs of recovery, and nowhere will the relief be welcomed more than in China, and its effect on bolstering Asia Pacific prospects in general. With a new leader at the helm, the markets (and industrial minerals suppliers) will look on keenly to see what might unfold and hopefully support much needed confidence which ideally could re-start growth.

Astonishingly – but then this is China – some sort of can-do factor is already registering. The world’s tallest skyscraper, called Sky City and at 838 metres, is planned to be built in Changsha, capital of Hunan province (and where Mao Zedong started his political career).

It took five years to build Dubai’s Burj Khalifa (828 metres), the world’s tallest building. Construction of Sky City is expected to start at the end of this month and be completed by...March 2013!

Pre-fabricated modules assembled on site are apparently the secret here. But is this not a good sign for the future for Chinese construction markets? And, in turn, for mineral demand for steel, glass, cement, ceramics, refractories, paint, and plastics?

Sound scientific advice sought for shale gas

To the hallowed halls of the Geological Society of London where this week UK Government Chief Scientific Adviser Sir John Beddington was invited by the British Geological Survey to air his sensible and enlightened approach to using the geosciences to assist in issues impacting the UK’s economy.

Shale gas and fracking naturally came to the fore and Sir John appeared somewhat baffled as well as concerned by Europe’s disjointed approach to nursing our energy sources for our expanding future generations (no nukes in Germany; fracking banned before birth in France).

Sir John lamented the “power” of the anti-fracking lobby with its headline grabbing stunts and slogans. That’s as maybe, but surely it’s time (past time!) for the oilfield sector and those in the fracking fraternity to stand up and start educating and advising the public and those authorities that need to know with clear information on hydraulic fracturing and its potential good and safe use to develop shale gas resources.

Like the industrial minerals industry, which also needs to follow this path on informing the public of the importance of sensible development of natural resources, the oilfield sector is probably a bit conservative and slow off the mark. But that must change, and soon.

Just the day after Sir John’s speech, the European Parliament passed two oilfield resolutions. The first, that member states are recognised to have the right to decide on shale gas development for themselves but at the same time adhering to “robust regulatory regimes” to minimise evironmental impact.

The second involved an overhaul of existing EU regulations related to shale gas development.

Above all, at least for now, Members of the European Parliament rejected calls for the imposition of a EU-wide moratorium on fracking, but urged that fracking should be subject to tighter regulation. Now is the time for industry to work alongside state governments and communities.

Omya goes for gas

As a neat link to this topic, it was timely of leading calcium carbonate producer Omya Inc. to announce its decision to switch to using liquefied natural gas (LNG) from No.2 fuel oil at its Pittsford facility in Vermont, US.

LNG is fast becoming the natural gas fuel of the future with the US recently forecast by the International Energy Agency (IEA) as being a net gas exporter by 2020. The country’s well- documented shale gas development is driving this trend.

But look out Down Under. Australia is set to overtake Qatar as the world’s leading LNG producer with a raft of LNG projects underway and on the drawing board. The feedstock for all this LNG? – unconventional gas resources in the form of coal seam gas and shale gas, all requiring hydraulic fracturing...and a quality and consistent supply of frac sand and ceramic proppants.

Mike O’Driscollis Global Head of Research and Consultant Editor at Industrial Minerals, previously he was Editor of IM 1995-2012.

T: +44 20 7827 6444; modriscoll@indmin.com

For the latest trends and developments in oilfield mineral supply and demand don’t miss Oilfield Minerals Outlook: Middle East, 21-23 January 2013, Dubai.



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