Year in Review 2013: Just when we couldn’t sink any further, we did

By Siobhan Lismore-Scott, Kasia Patel
Published: Friday, 20 December 2013

It has not been a good year for the industrial minerals industry. There have been some shining lights, of course Ñexploration continues at an astonishing rate in some markets despite falling demand and, consequently, prices - but on the whole producers and suppliers have felt the pinch.

It has not been a good year for the industrial minerals industry. There have been some shining lights, of course Ñexploration continues at an astonishing rate in some markets despite falling demand and, consequently, prices Ñ but on the whole producers and suppliers have felt the pinch.

One thing that is clear, however, is that there are still moves being made in the industrial minerals space.

Frac sand

The frac sand market experienced a turbulent 2013 as environmental concerns continued to hamper new development. This led to several moratoria being put in place across the US, but did not prevent a significant amount of new activity taking place in North America as well as further afield in Europe, the Middle East and China, which is discussed on pages 54-55.

Kaolin

Meanwhile, in kaolin markets (p47), the ongoing consolidation of the industry was questioned in 2013 as Imerys’ purchase of the last independent UK kaolin producer, Goonvean, was referred to the Competition Commission (CC). After months of waiting, and a provisional ruling that the merger could lead a loss of competition for some UK customers, the CC finally ruled that as the merged company would be the only UK supplier to tableware manufacturers, it would be subject to a price control.

Agrimarkets

In agrimarkets, things started looking up. Specifically, in the potash market, as January 2013 as the potash stalemate was ended with the signing of new Chinese contracts - albeit at heavily discounted rates - however, the rest of the year was an upward struggle for the industry.

Despite assurances by producers that demand was picking up, this was not reflected in company results throughout the year, which mostly showed lower volumes, prices and profits. India also remained a problematic market throughout the year.

In July, Russian producer Uralkali sent shockwaves through the potash industry by announcing it would withdraw from its partnership with Belaruskali and that the increased competition would cause prices to plummet to $300/tonne. Although the price drop failed to materialise, companies suffered as shares plunged and buyers held off on contracts throughout the rest of the year.

While the potash market showed stronger demand at least for the start of 2013, the phosphate market stalled slightly.

A report from US producer PotashCorp. published midyear said that the market had been in a holding pattern as prolonged discussions around Indian phosphoric acid and diammonium phosphate (DAP) contracts caused many buyers in other regions to wait for more clarity.

The fact that India makes up one third of the phosphate customer base remained the biggest issue faced by the market, which was exacerbated by the devaluation of the rupee and the price subsidy issue. Towards the end of the year, the situation only worsened with Uralkali’s shake-up of the potash market causing distributor caution regarding potash to spill over into phosphates, causing further delays to purchases.

Battery minerals

Elsewhere, in lithium and graphite markets the last 12 months have been marked by more exploration and advances in the graphite and graphene space, while lithium has survived one bad headline after another.

Progress is being made in lithium-ion battery markets (see p8) which affects demand for graphite and lithium, but this was also the year that Boeings Dreamliner aircraft was grounded and the year that has seen the most negative headlines around these markets as prices have stagnated or weakened.

Graphite markets meanwhile seem focused on growing demand and new innovations in graphene, which this year moved closer to commercialisation.

Refractory minerals

In refractory markets, demand has stayed low, despite a report which came out in April which told the market demand would receive a boost.

World Steel Association (worldsteel) said in its Short Range Outlook for 2013 that it expected demand for steel would increase by 3.2% to reach 1.5bn tonnes.

However, at this year’s 56th International Colloquium on Refractories in Aachen, Germany, manufacturers told IM about the distance between so-called growing steel production, the main market for refractory products (which, actually, is up year-on-year), and their order books.

In magnesia, while 2013 saw RHI marred with technical problems at its fused magnesia plant in Norway, but it hasn’t really mattered, as markets have remained bearish and demand low. Elsewhere, Magnesita has continued to plug away with its vertical integration strategy, by buying a refractory products plant in China and continuing with its graphite mining project in Brazil.

In bauxite and alumina markets, 2013 saw the emergence of a new tabular alumina producer in Zili Corp. (see IM December issue) and a move away from fused alumina in preference for the tabular variety. Bauxite markets, meanwhile, remained dogged by lacklustre demand, but also uncertainty as Indonesia moved to ban all exports of raw mineral ores and China is looking to significantly clamp down on those companies exporting at a lesser value than bought on the market (see IM November 2014).

All currency conversions over the following pages were made on the month stated, in 2013.