The titanium dioxide
(TiO2) feedstock industry is dominated by three main
producers - Rio Tinto, Iluka Resources and Tronox - which
account for the majority of global supply. Pigment producers
rely on these companies but the recent price rises in the
market have encouraged a wide range of juniors, which are now
waiting in the wings.
As with all industries, some junior
miners may never enter production while some could become major
new suppliers like success story Kenmare Resources Plc.
But the question of which projects
are coming online in 2013 and what products might they supply
onto the open market is an important one, as such products may
take the place of existing supply that has been restricted
through recent moves by Rio Tinto and Iluka Resources.
As such, many end-users will be
anxiously watching the progress of the juniors in this industry
and they will see that 2013 will be Africas story.
Base Resources - developing a project with a
Base Resources Ltd, like many
mineral sands juniors, is based in Australia. It is exploring
the Kwale project in Kenya and is looking to be first new
TiO2 feedstock supplier to reach the market in
The project remains on
schedule for completion on 24 August 2013, Base Resources
The Kwale project is one that has
been around for years and has somewhat of a chequered past
under previous owner Tiomin, which ran into roadblock after
roadblock. The company struggled in particular with the Kenyan
government with what CEO at the time Robert Jackson termed as
bureaucracy and corruption. As well as this, seven
local farmers refused to accept the compensation for their land
- which was within the mining lease - leading to a lengthy
By the beginning of 2009, Tiomin
stated that the year would be critical for Kwale but, by the
end of that year, one of the companys major investors,
Jinchuan Group Ltd, pulled out of a deal which included taking
a 70% controlling stake and cash injection of $25m.
Beleaguered Tiomin finally threw up
its hands in despair and offloaded the project to Base
Resources (then Base Iron) for a paltry $3m in February
After quitting Kwale, Tiomin merged
with Vaaldiam Resources Ltd which focused on diamond mining in
The Kwale project
The Kwale projects special
mining licence covers an area of 56km2 and is
located approximately 50km south of Kenyas second largest
city, Mombasa, and 10km inland from the Indian Ocean. It
consists of two main zones, South and Central Dune, and has a
total proven 86.2m tonnes grading 5.4% heavy mineral content
(HMC) and a probable reserve of 54.4m tonnes grading 4%
The total proven and probable
reserves are therefore 140.6 tonnes grading 2.59% ilmenite,
0.65% rutile, and 0.29% zircon.
The Magarini sands which host the
Kwale deposit are believed to be of aeolian origin, Base said,
deposited as coastal dunes after conditions of intense erosion.
The Kwale deposit is generally poorly stratified and contains a
fraction of clay and silt of about 24% HMC is concentrated
locally and are abundant in some places.
The general stratigraphic sequence
of the Kwale deposit is composed of a brown sand at the
surface, followed by orange or reddish sand, becoming more
beige or pink at depth. The base of the deposit is weathered
sandstone from the basal formation. White sand and clay are
also found at the bottom of several holes, it added.
Over a mine life of 13 years, Base
Resources is looking to produce on average 330,000 tpa
ilmenite, 79,000 tpa rutile and 30,000 tpa zircon in the first
seven years of operations. Over the final six years, production
volumes will average 200,000 tpa ilmenite, 55,000 tpa rutile
and 19,000 tpa zircon.
Despite a weakness in the zircon
industry throughout 2012, Base believes it will be able to sell
its zircon products: The quantity of zircon is modest by
global standards and therefore will be easily absorbed into
global consumption, the company told
Of this, there are offtake
agreements in place for roughly 70% of expected revenue which
will be for 100% of rutile, 30% of ilmenite and 52% of zircon
We have strong interest for
the un-contracted volume for each product and will continue
dialogue with interested parties over the coming months -
potentially choosing to secure further offtake contracts for
some or all of that remaining tonnage, the company
Over the coming months we
will determine our sales approach relating to the un-contracted
volume for each product, it added.
A major offtake agreement was
signed in November 2011 with the worlds largest producer
of TiO2 pigment, DuPont, for 72% of its rutile
production for the six-year period. In the last four years of
the agreement DuPont has the right to reduce offtake volumes in
line with its overall high-grade feedstock requirements.
Base said at the time that the
offtake deal underpins about 35% of annual revenue for the
Kwale project or up to 47% if additional optional volume is
supplied. The other offtake partners have not been
Base Resources fends off Kenyan
Since purchasing the Kwale project
from Tiomin, Base Resources has moved quickly to complete
feasibility studies and to begin construction, which recently
passed 50% completion.
But the development has not been
without its challenges. In October 2012, the Kenyan government
passed a legal notice that required 35% of any mining project
in the country is to be owned by a local individual or
It shall be a condition of
every mining license that the mineral right in respect of which
the license is issued shall have a component of local equity
participation amount to at least 35% of the mineral
right, the regulation states.
Speaking at a conference at the
time, Environment and Mineral Resources Minister Hon. Chirau
Ali Mwakwere mentioned that the new mining bill, once enacted
into law, would create a level playing field for all
participants in the sector and bridge the gap in benefit
sharing, according to the Kenyan environmental ministrys
In early January 2013, another blow
came as the companys exploration licences north of the
Kwale project were cancelled for what Ali Mwakwere termed as
The exploration licences - which
covered a 113km2 area in Ganze, Kilifi county - are
completely unrelated to Kwale and located about 150km north of
the main section. Base was considering using them to extend its
mining after production began at the main site.
We were banking on the
expected cash-flow from the Kwale plant for us to move
operations to the three Kilifi blocks, Joe Schwartz, the
Base Titanium general manager told Business Daily
It was not until later that month that Base Resources was
officially confirmed as immune to the new mining regulation,
leaving it a relatively unhindered path to production.
[Base Resources] has received
formal notification that the Attorney General of Kenya has
determined that the recently introduced 35% Local Equity
Participation Regulation cannot be applied to the Special
Mining Lease No. 23 covering the companys 100% owned
Kwale mineral sands project, the company announced on 11
Another potential threat to the
project has been the violence that occurred across Kenya during
the period surrounding the political elections which took place
on 4 March this year. Deaths have been reported both at polling
stations and around the country.
The company, however, does not
expect disruptions: There is nothing to suggest that
there will be any impact on our project or operations after the
election, the company told IM, we
will continue to provide a secure and safe environment for our
people and our assets during and after the election
Minerals Commodities - next in line
While Base Resources remains the
front runner in the race to bring new minsands supply to the
market, ASX-listed Minerals Commodities is not far behind as it
looks to bring its Tormin project in South Africa online.
We expected production to commence in the last quarter of
2013, CEO Andrew Lashbrooke told IM.
The Tormin project consists of a
high-grade beach deposit located on South Africas west
coast approximately 400km north of Cape Town. The predominant
minerals of value are zircon and rutile, with ilmenite and
garnet also occurring in potentially economic
The Tormin heavy minerals have
accumulated along a 12km long beach, to a maximum depth of 12
metres, with the favourable geomorphology of the J-shaped coast
line working as a natural concentrator of offshore-sourced
heavy minerals on the beach. The beach is an active
environment, which continues to be replenished through tidal
transportation of sands from deeper waters, the company pointed
Minerals Commodities carried out a
feasibility study on the deposit in 2005 and a JORC resource
estimate on the southern portion of the beach. More recently,
the company has carried out processing test work and in July
2012 received environmental approval from the South African
government to mine the Tormin project.
Minerals Commodities is developing
the deposit in cooperation with Blastrite Ltd, South
Africas largest producer of industrial minerals for the
local surface preparation industry. The two have already signed
a memorandum of understanding (MoU) for Blastrite to provide
mining, processing, procurement, warehousing, logistics, human
resource management, financial administration, IT and
regulatory compliance for Tormin.
Blastrites head office is in
Cape Town and the company operates nine other processing and
distribution facilities in the country, including wet and dry
heavy mineral concentration plants adjacent to Tormin.
The company is estimating annual
production, for a mine life of just over four years, of 48,000
tpa non-magnetic zircon-rutile concentrate (grading 81% zircon
and 11.6% rutile) as well as 134,000 tpa garnet concentrate
(grading 71% garnet) and 100,000 tpa ilmenite.
Direct cash production costs for
Tormin will be around $12-13/tonne* ore mined, estimated
Mirabaud Securities, and all-in cash costs (inclusive of
assumed CIF costs to China) at just over $18/tonne.
The upfront Capex requirement is
estimated by Minerals Commodities at $16m, which includes 10%
There is also the potential for the
deposit to be expanded offshore where a 1km area has been
briefly explored. Exploration of this area could double the
existing mine life, the company believes.
As of yet, Minerals Commodities has
not announced any offtake agreements but, Lashbrooke told
IM: We have had very good interest in
the products and hope to be able to announce offtake agreements
for 100% of the product to be produced by the end of March
While Base Resources Kwale
project expects to produce around 10% of total current market
demand in certain minerals, the Tormin project is on a much
smaller scale - expecting to produce less than 1% of total
global supply, Lashbrooke believes that the project will not
have a huge impact on the overall market structure.
Despite this, projected prices
still show that Tormin will stand as a good cash generator for
Minerals Commodities second
Minerals Commodities also has a
second project in South Africa which it is exploring and hopes
to bring online in the next five years.
The Xolobeni project is located in
South Africa but on the opposite coast to Tormin and has a
total resource of 346m tonnes grading 5% heavy mineral content
of which 224m tonnes, grading 5.7%, is in the measured
The main mineral at Xolobeni is
ilmenite but the pre-feasibility study also indicates rutile
and zircon potential.
Mineral Deposits - making
strides in Senegal
The third jewel in Africas
feedstock crown is Mineral Deposits Ltds Grande Cte
mineral sands project in Senegal, West Africa. In September
2004, Mineral Deposits was selected by the Senegalese
government to develop the project which it then progressed
through feasibility to construction.
The project is a 445km2
area located on a coastal dune system starting about 50km
north-east of the Senegal capital of Dakar. The mineralised
dune system averages 4km in width and contains largely
un-vegetated sand masses.
Both the dunes and the underlying
marine sands contain heavy minerals, principally ilmenite with
accessory zircon, rutile and leucoxene.
The ore body comprises free flowing
sands of a consistent grain size. There is no overburden and
only minor vegetation with minimal slimes and no hard lenses -
thereby limiting operating costs, Mineral Deposits pointed
The deposit has a measured and
indicated resource of 1.03bn tonnes grading 1.73% heavy mineral
content with the majority classified as measured. The proven
ore reserves are 746m tonnes grading 1.8% heavy mineral content
in addition to a probable reserve of 5m tonnes grading 1.7%
heavy mineral content.
The Grande Cote project is
scheduled to come online in late 2013 and is aiming to supply
575,000 tpa ilmenite, 6,000 tpa rutile, 10,000 tpa leucoxene,
and 85,000 tpa zircon over a 14-year mine life.
The ilmenite production will
represent 10% of current global supply while the zircon
production will represent 7%.
Of the 575,000 tpa ilmenite
produced, 400,000 tpa will be shipped to the Tyssedal titanium
slag production facility in Norway in which Mineral Deposits is
a joint venture partner with French group Eramet. The average
TiO2 grade of this slag will be 54%.
The remaining 175,000 tpa will be
sold as feedstock for pigment production and will have a grade
of 59% TiO2.
The rutile and leucoxene will be
produced in relatively small quantities in comparison to market
size and will be marketed as suitable for the welding sector as
well as more traditional uses. Rutile and other higher grade
TiO2 products are some of the most important
constituents of welding flux, responsible for slag forming
properties, because they have a high melting point and are
The zircon will be of a premium
quality, Mineral Deposits indicated, and will have low
impurities meaning it will be suitable for the full spectrum of
The ore body size and
characteristics provide for a large scale dredge operation,
mining approximately 55m tpa, and conventional processing
technology. The dredge path has only been set out for the first
14 years and will cover an area which is approximately 40% of
the mine lease.
Mining will be carried out by
dredging a continuous canal through the dunal orebody. The
dredge will float in an artificial pond accompanied by a
floating spiral concentrator along with a tailings stacker that
will deposit the tailings to fill the mined canal and achieve a
The mine life could be extended by
10 or more years beyond the current ore reserves if further
drilling is carried out.
The Tyssedal ilmenite upgrading
facility on Norways east coast has been producing
titanium slag - for both sulphate and chloride pigment
customers - and pig iron since 1986. In July 2011, Mineral
Deposits and Eramet signed a joint venture agreement for
control of the plant.
Part of the agreement was the
supply of 400,000 tpa ilmenite to TiZir, the company which runs
that facility, to allow expansion. TiZir currently sources its
ilmenite from a nearby mine in Tellnes, Norway.
The security of the
additional ilmenite supply that will be available when Grande
Cte comes on stream provides Tyssedal with expansion
opportunities. A feasibility study is currently underway to
assess the potential for a second furnace, thereby doubling the
capacity of the plant, TiZir said.
The current capacity is 200,000 tpa
titanium slag and 110,000 tpa high purity pig iron but it would
look to upgrade its nameplate capacity to 220,000 tpa by 2014
and 400,000+ tpa by 2016. To do so it would have to reduce
actual production in the short run to 140,000-150,000 tonnes in
2014 but increase to 200,000-220,000 tonnes again in 2015 and
reach full capacity in 2016.
According to the company, this
would make it the second largest producer worldwide below Rio
Tinto, which produces 2.25bn tpa slag, and above Tronox and the
accumulated Chinese producers, which produce 370,000 tpa slag
and 200,000 tpa slag respectively.
The ramp-up over time to its
maximum capacity of 400,000+ tpa slag means that TiZir will not
require the 400,000 tpa ilmenite initially but most
likely only after a second furnace has been constructed,
Mineral Deposits CEO Rick Sharp told IM.
Therefore it is likely that
this ilmenite will be sold directly to market for a couple of
years, he said.
While 2013 is to be Africas
year, 2014 looks destined to be Australias year with the
most likely to come online first being MZI Resources (formerly
Matilda Zircon) which recently revised the start date for its
Keysbrook leucoxene project in Western Australia from late 2013
to Q1 2014. With the length of the lead times confirmed, the
company believes it will be able to begin selling its products
in Q2 2014. It has hired MSP Engineering to complete the front
end engineering design (FEED) for the project.
MZI believes that the revised date
will mesh well with the TiO2 feedstock industry,
which has been in sharp decline since Q3 2012. The
Australia-based company also increased the size of the
indicated and inferred resources by 60%.
The deposit consists of 78.9m
tonnes grading 2.5% heavy mineral content (HMC) which includes
an unchanged measured resource of 34.1m tonnes grading 2.6%,
with the remainder being 33.2m tonnes grading 2.2% and 11.6m
tonnes grading 2.6%.
This new estimate more than doubles
the potential mine life of Keysbrook to 15 years compared with
the 7.2 years found in the feasibility study, which was based
on accessible mineral resources and shire approvals.
Keysbrook is estimated to produce
70,000 tpa leucoxene and 10,000 tpa zircon over an eight-year
mine life when it starts production.
The company has secured an offtake
agreement with DuPont for the leucoxene produced at its
Keysbrook project in Western Australia.
Continuing the Australian dominance
will be Metallica Minerals, which is looking to bring its
Urquhart Point project in northern Queensland, Australia,
online early in 2014. The project area has a JORC indicated
resource standard of 2.8m tonnes of ore with an average heavy
mineral sand grade of 7.03%.
The project is estimated to produce
20,000 tpa zircon and rutile concentrate over a project life of
four years. However, where additional resources are located
during exploration, the project life may be extended up to a
maximum of six years. The company guarantees a TiO2
minimum content of 47% and a Zr2O minimum content of
There are no offtake agreements in
place for Urquhart Point but the company is looking for
potential offtake partners.
Gunson Resources is also
approaching production with its Coburn project located in
Western Australia. The company recently completed a study to
boost production with zircon production rising to 49,500 tpa
from 41,000 tpa so that the product will contribute 65% of
Ilmenite production will also rise
to 109,000 tpa from 89,000 tpa and contribute 19% of revenue
while its HiTi - a mixture of all the recoverable leucoxene and
rutile, containing 91.5% titanium dioxide (TiO2) -
production will grow to 23,500 tpa from 19,000 tpa and
contribute 16% of revenue.
The expanded mining rate
under the re-optimised operating plan reduces the mine life by
approximately 17%, from 23 years to 19 years, said
Gunson has been required to reduce
its operating costs and boost its revenue to meet a minimum set
by its prospective joint venture POSCO SPV - which is the
investment vehicle of South Korean steel producer POSCO and a
South Korean investment fund.
The Australia-based company also
has an existing offtake agreement with DuPont for Gunsons
share of ilmenite in its Western Australia Coburn mine. The
ilmenite has a TiO2 grade of 61.5% and will be
supplied to DuPont for five years.
Another Australian company, World
Titanium Resources, is looking to bring a project online in
late 2014 in Madagascar. Production was initially scheduled for
late 2014 or early 2015 but, as IM was going
to press, the company signed an agreement with one of the
largest Chinese TiO2 pigment producers, Sichuan
Lomon have agreed to pay all
capital costs - approximately $300m - and will be offered 80%
of the ilmenite output of the mine which will be doubled to
approximately 800,000 tpa.
The mine life will be unaffected
because the resource can support a mine life of up to 60
There are also a number of other new mineral sands projects
both in China and in the Western world that could come online
in 2014 but may slip back to 2015. However, if all projects do
come online it will mean a large expansion in supply which
could change the face of an industry that is currently
dominated by a small number of large producers.
Titanium dioxide feedstocks
- the facts
feedstocks are produced from heavy mineral sands (HMS) deposits
found in paleo-strandlines. These HMS deposits were created
when paleorivers eroded sediment from the hinterlands and swept
it southwards down to the sea.
From there, it was
deposited as strandlines along a beach by longshore drift or by
general wave, wind, and tidal action. As time passed they were
covered by sand dunes and as result, in order to mine them,
large quantities of sand have to be removed to access the heavy
The main minerals
produced are rutile and ilmenite but viable deposits can also
exist that use leucoxene.
Rutile is the best and
most expensive of the natural feedstocks whereas ilmenite can
only be used in the sulphate process or upgraded into a
synthetic feedstock. While rutile is sourced only from mineral
sand deposit, ilmenite can come from either hard rock or
mineral sand deposits.
Synthetic rutile is
produced by reducing the iron oxide in ilmenite to metallic
iron using carbon monoxide, followed by reoxidation and
separation from the TiO2 rich fraction (Becher
process) or leaching with hydrochloric acid (Benelite
Slag feedstocks are
produced by the smelting of ilmenite with coal at high
temperature. The process is adjusted to produce the different
particle size requirements for sulphate or chloride
Leucoxene tends to have
a high titanium percentage (70%-80%), but is exceedingly
The feedstock industry
mainly consists of ilmenite and rutile with very few producers
of synthetic rutile or slag.
Overall, the industry is
dominated by three main producers - Rio Tinto Plc, Iluka
Resources Ltd, and Tronox Inc. which produce over half of
market output with several smaller producers making up the
Aside from the three
main producers, rutile and ilmenite producers include Sierra
Rutile, Crimea Titans mining arm, Kenmare Resources,
Cristals mining arm, DuPonts mining arm and Unimin
Synthetic rutile is
produced by Tronox Inc. and Iluka Resources while titanium slag
is produced by Tronox Inc., TiZir and Rio Tinto.
World production of rutile in 2011 was 830,000
tonnes while production of ilmenite was 6.2m tonnes according
to the US Geological Survey.
The decline and fall of
mineral sand prices
Ilmenite and rutile prices
have had a turbulent two years seeing both soaring heights and,
more recently, rocky slopes.
Previous to 2011, rutile
and ilmenite had settled at relatively stable long term prices
but in 2011 they began to increase dramatically as demand
spiked in the Far East and TiO2 pigment producers
began to return to higher capacities after the financial
In March 2011, rutile
(concentrate min 95% TiO2, bagged, FOB Australia)
was priced between $675-750/tonne, according to the IM prices
database, but in six months the range had doubled to
Prices continued to rise steeply,
spurred on by panic buying from end users to whom raw material
costs were becoming a burden that was impacting profits, and
peaked at a range of $2,500-2,800/tonne in April 2012.
Buying slowed and prices began to
drop steadily as end users implemented inventory destocking
programmes which slowed their rutile demand and prices have now
reached between $1,500-1,700/tonne with some producers going as
low as $1,250/tonne and below.
Ilmenite, on the other hand, has
seen the prices rises and falls but on a much smaller scale and
with a less severe drop. Ilmenite (Bulk concentrates, min 54%
TiO2, FOB Australia) in March 2011 was priced
By 17 January 2012 prices had
spiked to a range of $250-350/tonne, tending towards the higher
end of the range. Prices have since dropped off to roughly
$300/tonne and below.
Rutile has seen a much larger drop
than ilmenite because it is used mainly the chloride process
-used by six main producers: DuPont, Cristal, Tronox, Kronos,
Huntsman and ISK, as well as one or two possible producers in
China - which is a smaller market than the sulphate and
synthetic feedstock markets that ilmenite serves.
The sulphate market also produces less costly and slightly
lower quality TiO2 pigment than the chloride market
which means that some pigment using end-users could look to use
it as a substitute for their chloride-produced
Industry to bounce back in
There is no doubt that 2012 was a
difficult year all round. Both TiO2 feedstock and
pigment producers saw falling prices and were forced to curtail
capacity with major producers Iluka Resources and Rio Tinto
going to the extent of mothballing facilities due to the
Pigment producers found it no
easier with TiO2 pigment prices slipping throughout
the year as end users continued to destock their
Many remain extremely positive that
2013 will see a pickup in the pigment side of the industry
which will translate to the feedstock industry.
If we see the expected
economic recovery through the year we would also expect to see
some improvement in pricing in H2, Base Resources told
Minerals Commodities agreed:
There does seem to be a general bottoming out in the
market from the information we have seen, but added that
caveat that how quickly the stock within the system is
absorbed and how or when this will translate into pricing is
difficult to say.
At the TZMI conference in Hong Kong
in November, the general consensus was that the beginning of
2013 will be where the market stabilises and the second half of
2013 is where demand will begin to rise again.
The zircon market, on the other hand, may not see a similar