SUPPLY SECURITY
Bentonite is an abundant, versatile
mineral found in many regions around the world. Its vast
quantities and unique properties have stood bentonite miners in
good stead over the past few years, as the mineral’s
supply and demand situation has remained relatively secure
throughout the economic downturn.
Global bentonite reserves of more
than 10bn tonnes are mainly distributed between the US, China,
the CIS, Germany, Italy, Japan, Greece, Brazil, India and
Turkey (see Table 1). Most of this bentonite is of the
calcium variety; global sodium bentonite reserves are thought
to be less than 500m tonnes.
Interestingly, the majority of
global bentonite production in 2012 was in the US, where more
than 4.9m tonnes was produced, according to the US Geological
Survey (USGS).
Elsewhere, according to USGS
figures, Brazil produced 540,000 tonnes beneficiated bentonite
in 2012 while the Czech Republic produced 180,000 tonnes
(crude), Germany 350,000 tonnes (sales) and Greece 900,000
tonnes (crude).
Italy produced 110,000 tonnes
bentonite in 2012, Mexico 54,000 tonnes, Spain 160,000 tonnes,
Turkey 1m tonnes and Ukraine 210,000 tonnes.
China, however, which most often
dominates industrial minerals supply, was the world’s
second largest producer in 2012 with approximately 3.5m
tonnes.
From a global standpoint, more than
10m tonnes of bentonite was produced in 2012, down only
slightly from the 10.3m tonnes bentonite produced in
2011.
US success
In the US, which leads global
bentonite supply, production has fluctuated from around 4.9m
tonnes in 2008 to the 4.8m tonnes recorded by the USGS in 2012.
Throughout this period, which encompassed the global financial
crisis, US bentonite production remained above 3.6m tonnes,
highlighting the mineral’s steady supply situation
throughout the economic downturn.
Due to the leading production
status of the US, the country has imported no bentonite over
the past five years, but has exported fairly large quantities
for use elsewhere in the world. In 2008 just over 1m tonnes
bentonite was exported, according to USGS figures. While this
export amount dropped slightly in the following years, it
picked back up to 1m tonnes in 2012.
China’s
significance
In China, the world’s second
largest bentonite market, the country’s 12th
Five Year Plan (2011-2015) for the non-metallic minerals
industry has outlined consistent supply of the mineral.
The plan, which was approved in
mid-March 2011 by the National People’s Congress (NPC),
notes that the bentonite industry expanded at a 2.5% annual
growth rate from 2005 to 2010 and enjoyed rapid development
during the preceding 11th five-year period.
The country expects that this
growth will continue in coming years, with predictions
estimating that by 2015 the Chinese bentonite market will show
an annual growth rate of 5.2%, increasing from 3.5m tonnes in
2010 to 4.5m tonnes in 2015.
Going forward, the plan outlined
its intention to “support the development and application
of high value-added products and encourage the development of
bentonite in Ningming in Guangxi, Xiazijie District in
Xinjiang, Chifeng in Inner Mongolia, etc.”
MARKET
DEMAND
Bentonite is a clay mineral that
expands, absorbing several times its dry mass, in water. The
mineral is composed primarily of montmorillonite, a mineral of
volcanic origin belonging to the smectite family.
It is mostly recognised for its
sorptive and thixotropic (water absorption, colloidal,
waterproofing, and binding) properties and comes in two main
varieties: calcium bentonite and the more
commercially-important sodium bentonite, which has many end
uses and applications but few comparable substitutes.
“It is not foreseen [that
there is] any significant substitution [for bentonite] from
other materials; on the contrary in the future, bentonite might
be able to substitute other materials which have less
flexibility than that of bentonite,” S&B Group, which
dedicates 50% of its business to bentonite, told
IM.
These adaptable properties lend
themselves to many different end-use markets, some of which
have weathered the economic downturn
better than others. The five major
global markets for bentonite are oil field, foundry, iron ore
pelletising, civil engineering and pet litter.
In the US, out of the 4.8m tonnes
bentonite produced, 30% was used for drilling mud, 27% for
absorbents, 14% for iron ore pelletising, 16% for foundry sand
and 13% for other uses.
Other bentonite uses include water
treatment, where it is used for water clarification and sludge
treatment; ceramics, due to its plasticity; and agriculture,
where it can be mixed with pesticides and fungicides as a
support carrier to ensure the substance sticks to the
target.
Bentonite clay is also used as a
supplement in animal feeds and as a colloidal additive in
cement slurries, where it is used to seal off soil
infiltrations and to line the base of landfills.
Other markets
Some of the larger bentonite
markets, such as oil well drilling and iron ore pelletisation,
are far more susceptible to economic impacts, meaning the
demand for bentonite in these markets has been slightly reduced
over the past five years.
Bentonite is the second most
commonly used industrial mineral in drilling fluids after
barytes. The average drilling mud or fluid may consist of
bentonite clay carried in water, diesel or mineral oil.
During the drilling process,
bentonite performs several purposes by cooling down the drill
bit, tubing and the rig itself while also stabilising the drill
hole, increasing the viscosity of the mud, allowing it to carry
rock cuttings to the surface effectively.
Bentonite also forms a
low-permeability filtercake on the wall of the drilled borehole
that prevents the circulating mud from escaping through the
adjacent formations. When mixed with water, bentonite disperses
to form a colloidal suspension that sets as a thixotropic gel
at concentrations of 1-2% by weight, thus providing the
required viscosity.
Drilling fluids, or muds, can be
divided into three primary types: water-based, oil-based and
synthetic. Bentonite is among the most popular of the
water-based fluids, and accounts for around 70-80% of the
drilling grade bentonite produced.
In this market,
bentonite demand can fluctuate in line with
global rig counts, which are tracked by oilfield services
companies such as US-based Baker Hughes.
Another oilfield leader,
Halliburton, explained to IM that while the
bentonite market is cyclical and demand follows the cycles of
energy, housing or other major indices, the market is
“mature and can be expected to grow in general relation to
population growth”.
In other bentonite markets, such as
foundry, the USGS estimates that bentonite sales might increase
in the US for foundry sand bond in the coming years, driven by
an increase in commercial and residential housing construction
as the global economy begins a slow recovery.
Demand in other markets, such as
those driven by consumer demand, are expected to remain steady
in coming years, market sources have confirmed to
IM.
PRICE
TRENDS
Bentonite prices have fluctuated
during the past year as a slight decrease in demand drove
prices down, while increased logistics and energy costs pushed
them back up.
“Along with other minerals,
bentonite faces considerable cost pressures due to rising
energy and freight costs,” S&B Group told
IM towards the end of last year.
“Furthermore, the high demand
of the mineral required the use of a large exploration
programme into [difficult] mining areas, which also created a
considerable cost increase of the material. As a result,
bentonite prices increased considerably this year (É)
more than 8%, and are expected to increase further next year so
[allows] the producers to be able to cover at least partially
the increased costs,” the group added.
Despite this, prices have remained
steady in recent months.
Sources have told
IM that they believe some price movement will
occur in the first two months of next year, but for now
“prices are stable,” while others believe an uptick
could occur sooner.
Optimism from some market sources
towards the end of 2012 was unfounded, as anticipated price
increases are still yet to be seen.
One industry source told
IM in November last year that increased
logistics and energy cost pressures could cause bentonite
prices to increase by as much as 20% by the end of 2012, while
another agreed that they expected prices to rise by between
10-20% at the beginning of 2013.
“This seems high but I know
bentonite producers have been having a hard time keeping ahead
of cost increases,” one source divulged at the time.
However, the lack of demand caused
by the economic downturn spilled into 2013 and potential
overcapacity meant that prices have remained low.
In the US, prices of bentonite are
thought to be around $68/tonne, according to USGS salient
statistics, while prices for other areas vary (see Table
3).
MARKET
OUTLOOK
For bentonite supply and demand,
the future looks positive. The clay is both low cost and found
in abundance around the world, making it the mineral of choice
for many markets. This, coupled with the fact that bentonite
has few known substitutes, makes for a stable outlook.
While logistics costs and energy
issues are expected to plague low cost, high bulk industrial
minerals markets in coming years, strong demand from end
markets can be expected to steady the market supply situation
for minerals like bentonite.
Further, while some of
bentonite’s end markets are protected by consumer demand
and are expected to remain consistent, other end markets, such
as oilfields, are likely to grow.
Halliburton told
IM that it is moving ahead with its drilling
activities as the oilfield market continues to present positive
opportunities and will also consider additional uses for
bentonite.
“In addition to
bentonite’s use as a drilling fluid additive, Halliburton
will continue to explore new opportunities and activities as
they are presented or conceptualised,” the company
explained to IM.
Sipag Bisalta also told IM that it is
expanding its range of bentonite products with chemicals in the
civil engineering industry while also concentrating on new
business outside Italy.
Kitty litter
One of the most consistent markets for sodium bentonite is cat
litter. The mineral is selected by many cat litter brands due
to its low cost and unique absorption properties.
The cat litter market has remained
a steady and reliable demand source for bentonite since the
1980s, and is now the mineral’s largest market in North
America.
While this may seem a less
glamorous market in comparison to oil well drilling or iron ore
pelletisation, it is extremely stable as demand for such as
product has proven fairly constant due to its consumer market,
regardless of the economic climate and was described as being
potentially “recession proof” at
IM’s Oilfield Minerals Outlook meeting in
Houston in June this year.
In the US, cat litter was valued as
a $2bn market in 2010 by Packed Facts, which found
that the product actually accounted for 43% of all cat supplies
retail sales during that year, with litter accessories
contributing a further 2%.
According to Experian
Simmons, around one-fifth of US households purchased cat
litter in 2004, and by 2009 this number had increased once more
to 22%, representing 84% of all cat owners.
Though not all cat litter contains
bentonite, the scoopable variety, which most often contains
sodium bentonite, was the most popular product of choice with
58% of cat owners opting for this variety.
Elsewhere in the world, cat litter is also a large market
and, not surprisingly, there is a direct correlation between
the two largest bentonite-producing countries in the world and
the two largest pet cat owning countries in the world (see
Table 2).
