Every night, at 8pm exactly, the towering skyscrapers on either
side of the gulf between Kowloon and Hong Kong Island come to
life in an exquisite light show.
As delegates at the 2013 TZMI
Congress watched the sparkling lasers and blinking lights from
the panoramic windows of Hong Kongs Intercontinental
Hotel, there was a tangible feeling that the optimism and
opulence of the citys luminescent display was a far cry
from the realities of todays mineral sands markets.
While some presentations retained a
veneer of hopefulness for the industrys near term
outlook, and most predicted price rises for the second half of
2014, all retained caveats and advice on what the producers
need to do to weather the present bearish climate.
Rio Tinto, Tronox and Sierra Rutile
all showed how cost cutting initiatives had helped to maintain
healthy business models, while others gave a more sombre
assessment of the year that was.
Its hard to be
optimistic after last year, Michael Carvill, CEO of Irish
mineral sands miner, Kenmare Resources, told
IM. Last year, everyone was optimistic
and it didnt happen.
Indeed, after the buoyancy of the
2012 congress, when people believed the market had reached the
bottom of the trough, this years meeting was a wake-up
Listen to your customers, urges Jotun
This was nowhere more prevalent
than during a presentation by Tor Martin Holtan, group
purchasing director of Norway-based paint maker Jotun AS, in
which he warned that end users have already started
substituting and optimising processes.
Titanium dioxide (TiO2)
producers and feedstock miners need to listen more to, and
understand better, their customers needs, Holtan
He urged the industry to pursue
better communication: I think the three of us - the
miners, TiO2 producers and paint companies - are in
the same boat, he said.
Why cant we understand
each other better? Im not talking about vertical
integration but understanding. It is awful if you dont
understand how the coating industry works - thats your
customer, he added.
Holtan said that after the
TiO2 price skyrocketed in 2011, paint companies
began to look at other options.
We started to ask whether we
could use other suppliers that we would not normally use,
Substitution was also considered,
he explained. US-based speciality chemicals conglomerate Dow
Chemicals began researching substitution for TiO2
and continues to look at this, he added, despite the fact that
the mineral price has since come down from its 2011 peaks.
Its not just
substitution, its optimisation, Holtan said. He
explained that in his company, which has 40 facilities, looked
at grinding their raw materials more finely, which saved
between 5-10% of their TiO2 inputs.
Companies also began to use more
coloured paints, he added, and changed the colour tone.
White is nice, but you can
have other colours, he said.
Up to 25% of the paint market
Holtan sent shockwaves through the
audience when he said he believed that the optimisation and
substitution would mean that up to 25% of former customers
could potentially not return to TIO2. Other
projections put this figure at closer to 5%.
Speaking to IM,
Holtan said that he believed the paint industrys decision
to pursue optimisation strategies is the largest issue facing
the TiO2 market.
I dont believe there
are these masses of inventories which kept the price low,
he said. I think people are already
Tronox expects TiO2 prices to recover in
warnings that the TiO2 industry may have lost much
of its market forever as a result of price spikes, US miner
Tronox said it believed that prices of TiO2 will
increase in 2014
Our view is that the industry
is about bottoming out, CEO Tom Casey told congress
We think this [floor] will
stay here for the next quarter or two, but we think 2014 will
be a good year - we are optimistic about that, he
Tronox, which recorded a profit of
$92m in its latest quarterly results, said the return to higher
prices is a four stage process.
First, Casey explained, the
supply-demand imbalance has to end. This means the period of
destocking would be over, but inventories would still exist,
meaning that prices would remain soft.
Then, as pigment producer inventory
heads back to the typical -50 day cycle, prices will stabilise,
Following that as excess
inventories sell down and demand increases, plant utilisation
rates will increase, Casey said. This leads to price
increases as inventories are back to typical levels and plant
utilisation ratesÊare also normal.
While Tronox is not the
worlds largest supplier of TiO2, it is the
only completely integrated one, Casey said, following its
acquisition of South Africas Exxaro Resources last
Under the agreement, Tronox
acquired all of Exxaros minsands operations including
Exxaros 50% interest in the Tiwest JV with Tronox in
Western Australia, along with 74% of its KZN Sands and Namakwa
Sands operations in South Africa.
Tronox produces 465,000 tpa
chloride-route TiO2 from three plants worldwide,
which are supplied by its three mine sites in Western Australia
and South Africa.
In 2012, 40% of its TiO2
sales were to the US market, 24% to Europe and 23% to Asia
(excluding China, which took 5%). Latin American markets took
the remaining 8%.
Rio Tinto underscores
commitment to minsands market
According to Anglo-Australian miner
Rio Tinto, the long term fundamentals for the TiO2
industry are strong, even if the market is facing challenging
conditions, James McCullough, the companys manager for
industry told delegates.
McCullough said that Rio Tinto
believed that the TiO2 market has sturdy medium and
longer term fundamentals underpinned by pigment demand in
Demand from the construction,
consumer durables and packaging industries is expected to grow,
McCullough said, but there has been limited investment in new
We expect that continued
higher demand for pigment over 2014 will continue the trend of
reducing inventory levels across the value chain, he
Feedstock inventories were at
around 60,000 tonnes in 2012 while finished pigment inventories
were at around 100,000 tonnes. In 2013, this increased to
90,000 tonnes for feedstock but pigment inventory is estimated
at around 40,000 tonnes,ÊMcCullough explained.
Fatality at Richards Bay
McCullough was giving the
presentation in Hong Kong in place of Rio Tintos chief
operating officer, Andrew Cole, who has flown to South Africa
to assist in an investigation following a fatality at
TiO2 feedstock producer, Richards Bay Minerals
Contractor Sifiso Simphiwe
Praisegod Ngubane was working at the companys Mining Pond
C during a stacker move on 6 November when he was killed.
Rio Tinto is conducting an
investigation alongside the Inspector of Mines and the South
African Police Service into the death.
This type of incident has a
deep and profound impact on all employees across [Rio
Tinto],McCullough said. Operations have been temporarily
suspended at the site.
Rio Tinto has a 74% stake in RBM,
which experienced violent unrest at the mine site earlier this
year when KwaZulu-Natal residents protested about the
companys record of employing local people.
Kenmare Resources to be fully
operational by December
Meanwhile, fellow Africa-focused
operator, Kenmare Resources, confirmed to IM
that following the recent fire at its Moma mine in Mozambique
it hopes to be fully operational by the end of November.
Michael Carvill, managing director
of Kenmare, told IM that the company has been
able to honour all its supply agreements using stockpiled heavy
mineral concentrate (HMC) as well as output from its B plant,
which came online this year.
Our production of finished
product has not been affected, Eamonn Keenan, general
The fire, which began in the
companys trammel screens, a preliminary screening
mechanism, has led to the company reviewing some of its
procedures at the mine site, Carvill said.
Recent tough market conditions in
the mineral sands industry have been felt Kenmares bottom
line, Carvill said, but added that the fall in the ilmenite
price did not stop Kenmare from going ahead with its expansion
It hasnt affected us in
that sense, Carvill said. Prices have gone down
[but] we continued to build.
We are selling all our
products, Keenan added. We have got a diversified
customer base - we have a number of long term contracts that
have been and continue to take volumes. We are not as exposed
as some other producers in the market.
Looking ahead, Carvill said that
his faith in forward projections had been tainted
by the fact there was so much optimism during last years
TZMI Congress, yet the market continued to fall.
There was a view in the
industry that we would see an end to stockpiling and upward
demand, Carvill explained.
The market is better, but the
path to recovery has been slower than expected, he
Speaking to our customers
they are expecting a more normal year this year ,
Carvill told IM.
Carvill said that the company
maintains a good relationship with the local community through
its work with non-governmental organisations. Kenmare has built
several schools in the area, is working with the government to
eradicate malaria in the region and has also built a medical
centre. It also runs a post-graduate programme for local
Its becoming quite
normal to do all this, Carvill said.
Carvill said he decided to get
actively involved with the community from the outset.
You think youre going to change the world that
these people live in [when bringing a mine like Moma
online], he said.
| What else happened at TZMI this
- Cristal commercial and supply
chain executive vice president Thomas van Valkenburgh
announced Cristal would be commissioning the first
furnace at its 500,000 tpa ilmenite smelting plant at
Jazan Economic City, Kingdom of Saudi Arabia, on 1 May
2014. The second furnace is expected to be commissioned
1 June 2014.
Billions deputy chairman of the board
Ruiqing Tan said that Henan Billions will begin the
instillation and commissioning of a chloride-route TiO2
plant in H1 2014, with commercial production earmarked
for Q4 2014.
- Ben Simpfendorfer,
managing director of Silk Road
Associates, showed Chinas contribution
to global GDP growth remains unchanged even as GDP
growth rates slow. Interestingly, he also demonstrated
how the Chinese market is changing - more Chinese
consumers are ordering goods online, he said.
Asia CEO Natalya Tsoi, said that the
Vietnamese government is working hard to develop a
domestic TiO2 processing sector and has from
time to time intervened in order to stimulate
investment in downstream processing. However, she
added, even with an ilmenite export tax of 40%, the
Chinese still continued to export 800,000 tonnes
ilmenite in 2012.
- Ruby Ceramics Pvt Ltd
director Rajvindra Singh Dhami said that dumping of
tiles from China is the biggest problem the Indian
ceramic market faces, followed by imports and the
unorganised tile sector. Rising energy costs are also
affecting the ceramic sector, he said.