SUPPLY SITUATION REPORT: In the driving seat: talc demand looks to automobile market

By Kasia Patel
Published: Monday, 25 November 2013

Paper has traditionally been driving the market for talc, but as Kasia Patel discusses, other markets such as in automobiles and construction are looking up

SUPPLY SECURITY

Paper has traditionally been driving the market for talc, but paper producers are increasingly looking to other minerals, such as precipitated calcium carbonate (PCC) and ground calcium carbonate (GCC) to fulfil the filler function previously provided by talc.

This does not indicate that talc is a declining market. New opportunities for talc producers are presenting themselves in the automobile market, as the use of talc increases in polymers, as well as in other specialist markets. This growth is more than offsetting any declines seen in paper use.

The US Geological Survey (USGS) estimates that in 2012, global production of talc, pyrophyllite, steatite and unspecified similar materials totalled 7.43m tonnes. Of the total, talc accounted for 1.92m tonnes, pyrophyllite for 1.36m tonnes, steatite for 570,000 tonnes and unspecified materials for 3.56m tonnes.

The USGS figures indicate that global talc and pyrophyllite production decreased slightly in 2012, down from 7.5m tonnes in 2011. 2010 production was estimated at around 6m tonnes worldwide, at which time 18 companies accounted for 75% of global production, with nine of these in China.






Chinese production

As well as being the global leading producer of talc, China is also, unsurprisingly, the global leading producer of paper, coating, automobiles, household appliances and ceramics.

Chinese talc production remains relatively stable year-on-year, accounting for a third of the talc produced. 2010 production is estimated at around 2m tonnes, increasing to 2.2m in 2011, and the latest 2012 USGS figures estimate that the total remained much the same for 2012.

Of the 15 talc producing provinces in China, the most prominent are Liaoning, Shandong, Guangxi, Jiangxi and Qinghai, which account for 90% of China’s total reserves. White talc is produced in Liaoning, Shandong and Guangxi, while Jiangxi is rich in black talc.

Despite its high levels of production, Chinese talc export volumes remain low, accounting for just 0.008% of total Chinese export volumes in 2011. China does however view the mineral as a strategic resource, and is the only country in the world that imposes export duties, export quotas and lawful inspections on talc, which, according to Dr Jia Xiuzhuang, could threaten the stability of Chinese talc supply to the rest of the world.

In order for the Chinese talc industry to grow sustainably, Xiuzhuang said there are certain policy issues that need to be addressed.

One of these is the need for China to review the strategic importance of talc with regards to the regulations, export quotas imposed on the mineral and the 5 to 10% export duty, which has been collected since 2009. Another issue of contention is that China’s national basic policy is to encourage the export of finished products while controlling the export of raw materials. This policy, however, is not reflected in the export duties and export quotas of ground and crude talc, resulting in high added value talc products carrying a higher export duty and a situation where China is not fully able to take advantage of its talc resources.

Export of lower quality talc is also not encouraged - that is, mixtures containing less than 50% talc - for which there is steady demand on the international market, but only limited use for China domestically. Chinese regulation prevents the export of low quality talc and chlorite as there is no tax number for mixtures containing less than 50% talc, making imports impossible. This, Xiuzhuang said, not only prevents the international market from accessing this material but could lead to large scale overstocks, waste, and environmental pollution.




Imerys

In 2010, Luzenac Group accounted for 15% of global production, however the talc industry was altered in 2011 as Talc de Luzenac changed hands when it was acquired by France-based Imerys from Rio Tinto for $340m. This transferred 15% of the world’s talc production to Imerys, which complemented its existing calcium carbonate and kaolin supply to the paper, paint and plastics and technical ceramic industries.

Imerys now produces talc through its Performance and Filtration Minerals segment, of which talc accounts for 28% of total segment sales, with production levels of 1m tpa.

Mondo Minerals

Mondo Minerals accounted for 13% of global production in 2011, placing the company firmly as the second largest producer globally. However, in the same year that Imerys purchased Luzenac, Mondo minerals also changed hands. In October, private equity group Advent International Corp. finalised its acquisition of Mondo Minerals, from HgCapital, for an undisclosed amount.

Headquartered in Amsterdam, the company produces around 800,000 tpa talc from its mines in Sotkamo and Vuonos, central Finland, and operates talc factories in Finland and the Netherlands. Mondo Minerals produces specialised talc for paper, paints and coatings, plastics, cordierite ceramics, consumables, personal care and pharmaceutical products.




US Production

Talc production in the US decreased by 16% to 515,000 tonnes in 2012 from 616,000 tonnes produced in 2011, while the value of US talc produced in 2012 declined to $17.1m, down from $21.8m the previous year. Production increased in Texas, from American Talc’s mine, and from Alberene Soapstone Co.'s mine in Virginia. Decreases in production were seen in Montana and Vermont, where both Imerys and Specialty Minerals source their raw materials, because of the draw down of ore stocks and mines and mills rather than as a consequence of reduced demand. In terms of production tonnage, the biggest producing state was Montana, followed by Texas, Vermont, then Virginia.

Following a similar pattern, consumption in the US also declined, as 589,000 tonnes were consumed in 2012 compared with a 2011 total of 678,000 tonnes.

Talc sales in 2012 increased in the US to 575,000 tonnes, or $87.1m, compared with 567,000 tonnes, or $87.7m, in 2011, while exports increased 13% to 251,000 tonnes from 223,000 tonnes the previous year.

In 2012, there were four companies mining talc via open pit operations in the US. Between them they operated six mines in four states in the US. The three leading talc producers, which collectively accounted for nearly all of the talc mined in the US in 2012, included American Talc Co., in Texas, Imerys Talc America, in Montana and Vermont, and Specialty Minerals, in Montana. Alberene in Virginia also produced talc, while CAL-TALC Inc. in California worked from existing stockpiles in 2012 without mining any new talc.

New sources of talc

Production of talc in India has been steadily increasing, and the country is now the second largest producing country behind China. Pakistan and North Korea are also offering new sources of talc, but according to independent consultant Ian Wilson, the majority of new talc on the market is from Afghanistan, where high-quality white talc is being exported to all continents, including China, through Pakistan.

Official information from Afghanistan is difficult to obtain and therefore production is difficult to estimate, however the development of the talc industry is being encouraged by US Aid, despite military action in many districts of Nangarhar.

MARKET DEMAND

The largest global end market for talc is still paper, which accounts for 34% of the mineral’s end use. The second largest is the steadily growing polymer market, accounting for 23%, followed by ceramics, 15%, and paint, 12%.

Major talc producers such as Imerys have experienced dynamic growth in talc demand in mature countries driven by the development of automotive applications for polymers. The applications for talc in plastics vary from reinforcement, temperature resistance and nucleation of semi-crystalline polymers to dimensional stability and acting as a flame retardant in combination with other fillers.

Both the polymer and coating industries, which require high quality white talc products, are interesting markets for talc producers, as both are growing compared to paper.

When used in the paper industry, talc can be used both as a coating and a pigment to enhance properties such as smoothness, printability, surface friction, brightness and barrier coating, and although the use of talc as a filler in paper has been declining in recent years, the decline has been more than offset by growth in other areas.

“Rising demand is seen in the polymer industry, the coating industry, ceramic industry. As well as in the smaller markets like cosmetics and pharmacy. The paper industry is not growing in terms of talc. In general talc in the paper industry in Europe is declining a little bit,” Gerhard Fraundorfer, LITHOS managing director, told IM. “The decline is being more than offset by the polymer industry, because all together all other markets are more than offsetting the decline in paper.”

“The polymer market is the biggest opportunity for talc producers,” he added.

Despite the substitution of talc as a filler in paper by kaolin and calcium carbonate, Gerhard Fraundorfer, LITHOS managing director, said it is still used as a pitch control specifically for speciality papers, so its use will not be completely eradicated.

“Talc is still used as a filler, especially in some countries such as Finland, where there are talc deposits. Again kaolin is still sold as a filler but has been replaced mainly by GCC and PCC,” he added.

In terms of regional demand, Fraundorfer said that the biggest growth is being seen in Asia, specifically China and India.

“Europe is also growing,” he added. “Eastern Europe is growing a little bit more than western Europe, but it’s not dramatic. We expect some further growth in Eastern European areas [and also] Russia.”

Although Asia is growing as a market for talc in some areas, there has been a slow shift in the paper market away from talc, following the trend seen in regions such as Europe and the US.

“In India, for example, papermakers use a combination of GCCs, talcs and clays, at low levels of around 12%. These levels can be increased to 15-16%, and in replacing other materials with PCC, 20% filler levels, as seen in developed regions,” D. J. Monagle, managing director of the PCC business at Minerals Technologies, told IM.

The company produces both talc and calcium carbonate, but its main focus is to increase levels of PCC as a functional filler in paper, specifically in developing regions. Monagle then views Asia as an area of opportunity not for talc, but for PCC, as the paper industry is refreshed and countries like Thailand and India move away from GCC, talc and clay.

US talc demand

In the US, sales and usage of talc increased slightly to 575,000 tonnes in 2012, up from 567,000 the previous year. According to US producers, talc sold for use domestically increased slightly to 463,000 tonnes from 461,000 tonnes.

The leading end market for talc produced in the US was ceramics in 2012, followed by paper, paint, other or unknown uses, plastics, cosmetics and rubber.

As the major demand driver for talc in the US, the ceramics industry, specifically ceramic tiles, is linked to construction and renovation. Construction for new privately-owned housing increased by 28% in 2012. Sales of talc to manufacturers of adhesives, caulks, paint and roofing were also driven by an increase in the construction industry. Residential and commercial construction increased by 10% in 2012.

In terms of imported talc and talc produced in the US, the largest consumer of the mineral was the plastics market. The USGS estimates that of the 325,000 tonnes talc imported in 2012, 155,000 tonnes was used in plastics, 25,000 was used in paint, 20,000 in cosmetics, 12,000 in ceramics, 8,000 for paper, 8,000 for rubber, and talc for other uses was estimated at around 22,000 tonnes.

PRICE TRENDS

As the Chinese talc industry has moved from the export of crude talc to ground talc and micronised talc, demand for higher grade products has also risen and now exceeds supply. This has resulted in a steady increase of talc prices from China with an annual increase of around 10% for the past five years, according to Xiuzhuang.

An increase in labour and production costs, as well as in taxes and duties have also forced prices of Chinese talc up over recent years, with some prices close or higher than international market prices, deeming them no longer globally competitive.

According to Mondo Minerals, the price increases have caused European customers to be wary of the high price volatility and quality variation of imported talc and to base formulations on European talc where possible, with talc producers increasingly looking for alternatives to Chinese talc ore.

Chinese producers are not the only ones hit by rising costs. In June 2013 Imerys increased its talc prices by around 4% from its US and Canadian operations, citing increased labour, bag and pallet costs, costs of ore stripping and higher fuel and electricity costs.

MARKET OUTLOOK

While the paper industry, as talc’s traditional market, is seeing a general decline and a move away from using the mineral as a filler, there are still some opportunities in this sector as papermakers move into increasingly speciality and high end products, some of which contain high-value talc products. As talc competes with carbonates in Europe and the US, which are used instead of talc in fillers and coating, worldwide it is still being used in the coatings industry as pitch control.

The biggest opportunity globally for talc producers remains the plastics industry, particularly autoplastics, which was driven by strong automotive sales in 2011. Expectations of producing companies are that high-value talc products will be a growth area owing to the trend of lightweight cars, in which plastics are playing an increasing role. This expectation is driving the investment into new talc products for polymers by companies such as Minerals Technologies, Imerys, and Mondo Minerals.



Industrial talc end markets

Technical Ceramics

Talc is a key component in the honeycomb structure of technical ceramics used in catalytic converters and diesel particulate filters. With increased emission controls, this sector is showing good growth. The talc required should be <0.20wt. % CaO, which is critical to the coefficient of thermal expansion (CET). Customers developing ultra-thin wall substrates require macrocrystalline talc to control porosity of the cell walls.

Polypropylene (PP)

Automotive under-the-hood/bonnet parts require high-aspect ratio talc to enable under-the-hood parts (heating, ventilation and air-conditioning units) to perform over a wide temperature range. High-purity grades are ideal for the long-term thermal stability of such parts.

Polymer Applications


In polymer applications, around 75% talc is used in the automotive industry, primarily in polypropylene (PP). The talc imparts stiffness to PP, with a 20%-loading increasing stiffness by up to 80%. The shift to PP was driven by Japanese auto makers, who reduced the number of parts and total cost of their cars. Polymer compounders tend to use the finest particle size and whitest talc products available.

Peter Taylor and David Stuart of UK-based mineral and chemical supplier, Richard Baker Harrison Ltd (RBH), in looking at trends in the use of talc in plastics, have noted an increasing trend away from the “standard ground white talc”. The less critical markets, which have more cost pressures, have been moving to purer, but lower-brightness talc, as an alternative to whiter, but less pure, talc.

For more critical applications in the automotive industry, there has been a move to finer whiter talc. RBH has a new grade of high-whiteness 2500 mesh talc that gives impressive results in talc-filled PP. The new talc-filled compound shows good properties with respect to flex modulus, Heat Distortion Temperature (HDT) and scratch resistance.

Source: Ian Wilson, Independent Consultant.