Supply Situation Report: Not so boron

By Siobhan Lismore-Scott
Published: Friday, 21 December 2012

Borates are found in Turkey, the US, Europe, China and Russia and in South America. Turkey is the world’s biggest producer of borates and holds the largest reserves. The US holds the second-largest reserves, and is the second largest producer, responsible for around 40% of the market.

SUPPLY SECURITY

Borates are found in Turkey, the US, Europe, China and Russia and in South America. Turkey is the world’s biggest producer of borates and holds the largest reserves. The US holds the second-largest reserves, and is the second largest producer, responsible for around 40% of the market.

Borates, largest end markets are in glass, but they are also used in detergents, agriculture and ceramics. Lesser-known applications include nuclear applications, metallurgy and fire retardants.

 
Turkey

In Turkey supply is dominated by Eti Maden. The company operates out of four sites: Bandirma Boron Works, which produces borax decahydrate, broax pentahydrate, boric acid, boron oxide, Etidot-67 (agri boron) and sodium perborate; Emet Boron Works, which produces boric acid and concentrated colemanite; Kirka Boron Works, which produces borax pentahydrate, anhydrous borax and calcined tincal; and finally ground colemanite/ulexite; concentrated colemanite and ulexite and natural zeolite.

Production of borates across Eti Maden’s business is expected to reach 2.1m tpa in 2012, up from 1.78m in 2011, the company said. This is almost five times the amount that was being produced ten years ago and also, will be the first time the company is producing in line with its capacity.

The 2011 figure equates to 914,000 tonnes of boron trioxide (B2O3) in terms of saleable products, which excludes off-grade products, the company said.

Eti Maden exports the majority of its produced minerals; in 2012 it is expected to generate $1.02bn from exports and just $30m for domestic use.

The company is targeting a capacity of 5.5m tonnes of boron chemicals by 2023.

US

In the US there are two boron producers: Anglo-Australian miner Rio Tinto, which operates an open pit mine in Boron, California, and a refinery via its US Borax subsidiary; and Searles Valley Minerals, which is working out of Searles Lake, Trona and refined in Trona and Westend, California. Searles is owned by India-based Nirma Ltd.

Neither company will reveal how much it produces, but Rio Tinto said in its Q3 2012 results that “Borates production was 12% lower than the third quarter of 2011, in response to current market conditions”. However, this also included the companys' Argentinian assets, the sale of which was completed in August this year. Argentina has historically contributed around 4% of Rio Tinto borate production, the company said. In 2011 Rio Tinto produced 504,000 tonnes borates. 4% of this figure leaves roughly 483,840 tonnes of borates out of the US.

In Q3 2012 the company produced 111,000 tpa of borates, compared to 127,000 tpa in 2011. And 2011 wasn’t a particularly strong year for borates as the company encountered severe rainfall in Boron and in Argentina, which meant that production had to stop, or that many of the minerals could not get to market.

In fact, the company had to call force majerure sales out of Boron in 2011 because of heavy rainfall. It received five years of rain in less than five days, prompting it to install pumping and piping in its pit to remove storm water.

It also changed stockpiling practices to make sure that the impact of heavy rain was minimised.

Finally, the company said that it has not ruled out expanding.

“Our borates assets have considerable optionality for expansion built upon the tier 1 orebody at Boron in California,” Michael Le Page, Rio Tinto Minerals new chief commercial officer (see p40), told IM.

“We are making significant investments in technological advancement projects at Boron which support efficient mine utilisation over the next 40 years of the mine life plus providing flexibility to respond to changing demand conditions,” he added.

Europe

 
 
So far, Europe is not producing any borate grades, but that is set to change as two companies are prospecting in Serbia.

In Piskanja, which is 250km south of Belgrade, Canadian junior Erin Ventures Inc. is exploring a property which it believes holds boron grades of similar purity to those found in Turkey.

An historical non-compliant resource estimate puts the project at being “more than 7.5m tonnes with the useful component of 36.39% B2O3”.

Erin is currently working towards establishing a NI43-101 compliant resource.

Elsewhere in Serbia, Rio Tinto is exploring a lithium-borate development project, at Jadar, near Loznica, 100km from Belgrade. The company is currently conducting prefeasibility studies on the project.

“Our Jadar project in Western Serbia, a significant lithium/borate deposit, also provides us with strategic optionality to expand our borates business in the right market environment,” Le Page told IM.

Rio Tinto has been working on the deposit since it was discovered in 2004. It has said in the past that it is “one of the largest undeveloped lithium sources in the world, with the potential to supply more than 20% of global lithium demand (see pp23-32),” but it also holds vast borates resources.

A JORC compliant inferred mineral resource was declared at 125.3m tonnes, with a weighted average lithium trioxide (Li2O) concentration of 1.8% and 16.2m tonnes of B2O3 for the lower zone.

The project is expected to come online in the next five years.

In addition to Jadar, Rio Tinto’s exploration license covers two zones of colemanite in potentially commercial quantities.

South America

 
 
In the past, there have been many small producers in South America. But in recent years several mines have ceased production because they have either exhausted resources, or they have become uneconomical to run.

The US Geological Survey (USGS) put production of borates out of South America at a total of 1.6m tonnes in 2011, up from 1.5m tonnes in 2010.

Of the 2011 figure, 630,000 tonnes were mined in Argentina (up 30,000 tonnes from 2010); 120,000 tonnes in Bolivia (up 23,000 tonnes); 480,000 tonnes in Chile (down 24,000 tonnes) and 370,000 tonnes in Peru (up 77,000 tonnes) (see pie chart).

Argentina, then, is clearly the largest producing country in South America. Production here has been led by Borax Argentina, formerly owned by Rio Tinto Minerals. This year, Rio Tinto Minerals sold its Borax Argentina business to Australian junior lithium developer Orocobre for $8.5m.

“Rio Tinto Minerals reviews each of its operations regularly to ensure a good fit with business strategy,” Le Page explained. “A decision was made to divest Borax Argentina because RTM focuses on large-scale, long-life mines with expandable operations like our Boron operation,” he added.

For Orocobre, the deal meant it could tap into a market with strong demand “both regionally and globally”.

“Although Borax Argentina is currently only a relatively small and marginally profitable producer, it is asset-rich in terms of mines, plant and human resources and has potential to materially improve performance based on processing recovery improvements and plant utilisation,” Orocobre said.

ÊThe company added that there was also potential to increase “the operational scale” of Borax Argentina.

Borax Argentina has been in operation for over 50 years and, in 2011, it produced around 35,000 tpa boron-based products out of three open pit mines in Tincalayu, Sijes, and Porvenir. It has the potential to produce more, however.

In Chile, the second largest producing country in the region, output is led by Quimica e Industrial del Borax Limitada (Quiborax), which produces crude ulexite from which it produces boric acid and granular ulexite.

SQM also produces some boric acid as a by-product from potassium sulphate production at its SQM Salar (see pp23-32).

In Peru, Inkabor is the only producer of borates. The company told IM that it will be increasing production in February 2013 by between 30-50%. Boric acid is expected to grow by 20%.

The company also highlighted that it will be making the switch to natural gas to power its facilities next year.

The company has four operations: the Laguna Salinas mine in the Andes, which has 10m tonnes of boron reserves, from which it extracts calcined ulexite; its calcination plant in Salinas, which produces a variety of calcined ulexite products; its Rio Seco boric acid and borax plant in Arequipa, which produces 40,000 tpa of boric acid, and 12,000 tpa of borax; and its Oquendo, Callao production plant in Lima, specialised in the production of boron compound derivatives.

MARKET DEMAND

Borates are used in the making of glass; this is the largest end market (see pie chart). Boron is a powerful flux, while also offering high chemical resistance.

In both insulation fibre glass (IFG) and reinforcement fibre glass (RFG), boron improves the fluxing capabilities of the batch, reduces glass batch melting temperatures and increases the fiberising efficiency by lowering the viscosity,” Eti Maden explained.

It is also used in detergents, in agricultural markets, ceramics and in insulation.

For the world leader, 2012 has not been a good year in terms of demand.

“[The] global economy, to the most extent, has failed to live up to the expectations in 2012. This has led to the slowdown of economic activities in most of the world economies and hence the contraction in demand for borates,” Eti Maden told IM.

“Contrary to the past years, the demand for borates has been sluggish in Asia. The EU market was disappointing in the first half of the year but it has shown signs of recovery lately at least for the borates business. The demand in the US market has been reasonable given the economic circumstances,” it continued.

The company expected to export all the material produced in 2012, with the majority (1.42m tonnes) going to Asia, 500,333 tonnes going to Europe and 239,604 tonnes to European markets.

Rio Tinto also said that demand had been disappointing in 2012.

“Demand was impacted by the construction downturn in China, global drought conditions in the agricultural sector, and continued pressure from the EU financial crisis,” Le Page told IM.

Inkabor also said that it has seen a growth in demand from the agricultural sector. "Because of the economic crisis, international demand has diminished in general terms," the company said.

Perhaps because of this, Inkabor has developed a new specification for its product Acido Borico TQ (boric acid) "in order to respond to international demand for a more economic product," the company told IM.

“Demand for boron products remains strong, both regionally and globally,” Orocobre said in its stock market announcement to the market, on buying Borax Argentina SA.

The company said it will be targeting the regional market for its product, namely Brazil and Argentina, which are fully dependent on imports for their boron needs. However the company did say that it believes “there are opportunities for Borax Argentina to expand into additional markets and supply additional products”.

New end markets?

In June this year, Bob Katsiouleris , then Rio Tinto Minerals chief commercial officer, told IM that it was eyeing exciting new end markets such as energy and energy storage, which are still in the development stage.

Another market earmarked for growth was the use of borates in materials and ceramics, as well as the use of borate carbide in bulletproof vests.

Eti Maden meanwhile told IM that, while “there is not any new end-market we have come across recently (...) it should be noted that borates consumption in agriculture as fertiliser (micronutrients) has been on the rise.”

“Further, thanks to the increased awareness about the environment and green energy, borates consumption continues to increase in wood based insulation, solar tubes for water heating systems and wind turbine blades,” the company added.

Elsewhere, in Peru, Inkabor told IM that it has launched a product, Ulexite ODT, which is for use in oil drilling.

The company also earmarked markets in Africa and the Middle East as being new growth areas in the the near term.

PRICE TRENDS

Borates prices have been relatively flat since July this year, but are expected to increase next year due to rising demand, Inkabor told IM. Growth is mainly driven by China, but the uptick of interest from the agricultural sector has also led to some predicting higher prices for the year ahead.

The curtailment of supply from South America and the US in 2011 due to poor weather curtailing supply and logistical routes to market, meant that prices were raised significantly. So far there has not been much of a climb back from the highs and prices today remain high, compared to levels at the beginning of 2010, for example.

In December 2010 prices were, on average $200/tonne cheaper than levels on the market in December 2012 (see graph).

Eti Maden meanwhile has gone on the record saying it expected prices to “soar by 40-45%” by 2015, according to a report in Asian Glass, available on Eti Maden’s website.

Inkabor, meanwhile told IM that it had seen prices of borates come down recently.

MARKET OUTLOOK

Looking ahead, Eti Maden expects demand to pick up next year.

“We expect the demand in 2013 for borates in the major markets to be better than 2012 but not very bullish,” it said.

Rio Tinto meanwhile said that it expected demand to be led by three main factors:

- Energy efficiency trends. “This will drive higher intensity of the use of insulation products and will lead to better building standards, both of which will require higher borates use,” Le Page said.

- Urbanisation. This drives demand for both construction products and consumer electronics that contain borates.

- Global food supply. Increasing crop yields and improving quality from a limited amount of arable land, relying on the micronutrient qualities of borates.

“Over the next five years, w e expect a total borate demand growth of 5-8%”, Le Page added.

“Global market demand for boron products continues to grow and South American demand also continues to grow in a wide number of industrial and agri-business applications,” Orocobre said, in its stock market release.

"We expect market demand to return in the second half of the next year," Inkabor meanwhile predicted.

Market stable, with new markets targeted

Market fundamentals suggest that the borates market is a growing one. Demand has increased in line with production so far, but with the major producers looking to expand in the years to come and new end markets targeted, this is a market which could see significant growth opportunities.

New projects in Serbia offer Europe an interesting alternative in the future, although both Rio Tinto and Erin Ventures have remained tight-lipped about whether they are intending their production for European markets.

The use of borates in some detergents is expected to fall due to new legislation being passed in Europe, although this will affect only a small sector of the market.



Other less discussed uses of borates

Absorb radiation
boric acid is used in the cooling water surrounding nuclear reactors to absorb escaping neutrons

Stain remover Borax is used in laundry bleaches

Fireworks borates are used to balance acidity and alkalinity

Wood treatment borates can be used to control bacteria, fungi and insects

Electric cables as a flame retardant

Magnets borates are used in neodymium-iron-boron magnets for wind turbines, hard drives and speakers

Flares green flares contain boron

Source: Rio Tinto (US Borax)