IM 2012 Round-ups: Iodine

By Laura Syrett
Published: Friday, 21 December 2012

With almost 12 uninterrupted months of stable high prices, iodine producers have undoubtedly been among the winners of 2012

With almost 12 uninterrupted months of stable high prices, iodine producers have undoubtedly been among the winners of 2012.

While 57% of the world’s iodine is produced in Chile, Japan is the next largest producer at 20%. Most of Japan’s iodine production is centred in the region devastated by March 2011’s earthquake and ensuing tsunami.

As a result, the price of iodine shot up from around $25/kg in 2010 to more than $60/kg in March 2011, creating a huge tailwind for established producers such as Chile’s Sociedad Qumica y Minera (SQM), accounting for more than 20% of the company’s revenues in 2012, and for new entrants to the market such as US-based Iofina Plc and Canada’s Sirocco Mining Inc.

SQM, the largest iodine producer in the world with around one-third of the market share, announced in April that it would invest $550m in boosting iodine production for 2012.

The company consistently reported iodine and derivatives to be its top-performing business segment throughout the year, driven by strong demand and higher average selling prices, which increased by around 70% year-on-year.

Sirocco Mining reported sharply narrowing losses throughout 2012 - down to $244,000 in Q3 from $24m in Q1 - as it continued to build up production and convert inferred resources to indicated resources at its Aguas Blancas iodine deposit in Chile.

Sirocco targeted production of 1,400 tpa iodine for 2012, and is investigating the potential to develop further iodine reserves in Chile.

The past 12 months saw the successful fabrication, completion and commissioning of Iofina’s new WET IOsorb IO#1 plant, which extracts iodine from wastewater used in shale gas production, as well as a successful $6.9m placing in challenging global market conditions.

By the end of the year, the company had achieved “encouraging” first recoveries of iodine from IO#1, and construction of IO#2 was reported to be well underway. Iofina plans to commission a new iodine plant every quarter for the foreseeable future.

Demand outlook

More than half of all iodine produced is used in ways related to human and animal health, ranging from the table salt additive and animal feed to pharmaceuticals. It is also a commonly used contrast in X-rays (see pp.70-71), a major component in the manufacture of liquid crystal displays and is a key ingredient in nylon.

“We expect total market demand to remain strong [and] demand growth is being led by X-ray contrast media and pharmaceutical applications,” SQM said in its third-quarter results statement.

“Looking forward, a lot of what happens in terms of supply and pricing will depend what happens with ACF Minera’s Algorta Norte iodine project in Chile,” Lance Baller, Iofina CEO, said.

“If it achieves its target production of 6,000 tpa, we could see iodine prices come down to around $58/kg. If it doesn’t go so well, prices may well be up in the range of $80-85/kg in the medium term,” Baller told IM.

The long-term impact of such significant price increases remains to be seen.

Although iodine does not have a direct substitute in areas such as nutrition, contrast media testing, pharmaceuticals and similar applications, other areas (such as low-value applications, including biocides) could migrate to alternatives because of high prices.