Innovation will lead the way for industrial minerals

By Siobhan Lismore-Scott
Published: Monday, 28 April 2014

Rio Tinto Minerals give innovate keynote; Iluka looks to new era in TiO2 markets

Innovation will be key to driving growth in the industrial minerals industry in the near term, was the overriding message conveyed at IM’s 22nd Congress, held in April in Vancouver, Canada.

The tone was set with an evocative keynote speech by Rio Tinto Minerals’ CEO, Xiaoling Liu, who underlined her own humble background as a working class Chinese student and said that increasing infrastructure and middle class consumerism in China and other emerging economies meant that there would be an increase in the demand for industrial minerals.

“We have all faced significant challenges,” Liu said. “I think challenges can be a good thing. For industrial minerals, challenges can be a saw that swings both ways,” she added.



A difficult two years

Difficult subjects broached by many of the IM22 speakers included the dip in exchange markets, the recession and the subsequent slowing of demand.

While these have been well documented in many companies financial results across the industry, it was obvious that many companies believed that the effects of the recession would be shorter and less severe than they had proved to be.

However, this has not quelled the push for innovation, with several companies explaining the steps they were taking to look at diversifying their markets.

Most underlined that they were continuing to invest in new technologies and in innovation and research in their companies (see p27). Following from Liu’s broad statement that “innovation has been at the core of growing industry”, speakers were keen to show how they had moved to embrace creative ideas in challenging times.

Zeolites

For New Zealand’s Blue Pacific Minerals this meant looking at the resources locally and seeing how these could be used to supply the domestic and international market.

The company is developing the zeolite industry in New Zealand, using it as a substitute for cat litter and floor sweeping chemicals.

“Zeolite is not a curiosity Ñ there’s a market for zeolite,” Bernard Novak, market development manager, told delegates.

The company supplies Australia and is developing markets in South East Asia for cat litter and floor chemicals. But elsewhere, it has also developed new uses for zeolite, Novak continued.

It has been used as a feed additive to improve feed utilisation - this will meet growing demand for formulated feed farming in New Zealand, as the country’s dairy and meat farming markets expand.

Zeolites have also been used to treat turf in stadiums.

“It comes back to innovation,” Novak said, outlining the ground that can be gained by taking an entrepreneurial perspective on long-established markets.

Zeolites have been processed to be used in turf markets, as an alternative to kaolin in paper fillers and also to be used as a replacement for bentonite in cat litter, he explained.

“We don’t want to be a one horse wonder,” Novak said, adding that Blue Pacific is also looking to develop its perlite deposits as well as other ore bodies in New Zealand.

“Perlite has developed from nothing to a business where we have a proven resource,” Novak said.

Iluka looks to innovate

Liu told the delegates that growing urbanisation would build infrastructure and change the way people in emerging economies live.

“Growth is linked to urbanisation and a growing middle class,” she said, adding that that Rio Tinto Minerals thinks demand will double in the markets it serves, or is hoping to serve (borates, minerals sands, lithium and fertilisers).

“This will increase demand for industrial minerals (...) all of which is a good outlook for our industry,” she added.

David Robb, managing director of Iluka meanwhile said that he believed growth would return to the mineral sands industry, but said that it would be in a different market to that which is recognised now.

“We believe in the industry’s future, but things will be different. We believe in our industry and we are investing in its future,” Robb said.

Robb took delegates through the company’s acquisition of Metalysis, underlining that this could “transform demand for titanium metal”.

The $20.3m acquisition of Metalysis, a UK Cambridge University spin out, was announced in the company’s 2013 results. Metalysis has developed a process that can produce titanium powder from rutile.

“This is a potentially disruptive technology if it is successfully commercialised,” Robb said.

Logistics move forward

Logistics service providers to the industrial minerals industry were also eager to showcase innovation, with speakers focusing on ways to mitigate rising costs and avoid bottlenecks in the supply chain.

Rusty Safine, president of US-based FBC Logistics, said that new packaging and container options were needed to compensate for the lack of handling infrastructure at many ports, which in itself is scuppering growth, with one possible solution being the use of larger, intelligently designed bags for transporting dry bulk material.

Port of Amsterdam’s manager of agribulk, minerals and recycling, Marcel Gorris, opened the floor to the IM22 audience and appealed for greater co-operation and communication between mineral suppliers, buyers and logistics providers.

“Amsterdam aims to be a port of partnerships,” Gorris said, “but in order to do that, we need to know what you need”.

Cost and flexibility were two of the main issues raised by delegates, who agreed that growth in the industrial minerals sector was sometimes hamstrung by the difficulty of taking product to market.

Borates market potential outlined by RTM

A growing world population, expanding middle class and increase in urbanisation is expected to lead to a rise in demand for borates in agricultural markets accounting for a compound annual growth rate (CAGR) of 6% to 2018, according to the chief commercial officer, Rio Tinto Minerals, Michael Le Page.

Speaking to IM at the sidelines of the congress, Le Page said that growing urbanisation meant that borates used in micronutrient applications for crop growing would increase, as the amount of available arable land dwindles.

Boron is used to improve crop yields and quality where there are deficiencies in soil nutrients.

Borates have been used to grow some crops for many years and now more varieties of cultivated food plants have been shown to benefit from the addition of boron. Other growing uses for boron include in oilfield applications, where it is added to other chemicals as well as proppants to open fissures in rocks to release trapped hydrocarbons.

The production of boro-silicate glass and LCD screens also represent important growth markets, Le Page said.

In total, Rio Tinto Minerals expects a CAGR of 4% from boron’s end market segments.

Tightening supply

Le Page explained that borate supply could become tight in the next few years as demand ramps up from emerging economies. He added that while China’s overall GDP is slowing, the country’s rising middle class will see demand for borates increasing in Asia.

“Strong sodium pentaborate demand in 2013 is tied to agriculture and insulation demand, [while] non sodium borate demand is driven by high end glass and frits,” he said.

“A lot of things that we take for granted - hot water for example - are not part of everyday life in Asia. But demand for things like hot water means an increase in pipes that insulate hot water,” Le Page said and pointed out that consumer goods such as microwaves and washing machines all use borosilicate glass.

Le Page said that during 2013, demand for pentaborate increased by 13% in Asia and 9% in the Americas.

Rio Tinto and Eti Maden are the world’s largest producers of borates, with Seares Valley coming third. Le Page acknowledged that the borates industry is essentially a “duopoly” between Rio Tinto and Eti Maden, however, and said that the aggressive expansion of borates operations by its main rival “was a concern” for Rio Tinto.

As well as a planned capacity upgrade at its boron mine in California, US, Rio Tinto is also conducting exploration in Serbia at its Jadar development - a project which has attracted the attention of a handful of junior companies that are also considering starting operations in the region.

Oilfield minerals discussed

Steve Gray, resource development at Halliburton, told IM that the company is using less bentonite in its oilfield applications, but continues to use solid quantities of barite (barytes).

“There’s a trend away from bentonite as there are substitute products that perform extremely well,” Gray told IM on the sidelines of the congress.

“Halliburton has solutions that require low quantities of bentonite - some have no bentonite at all,” he added.

“Oil based drilling fluids are more important - they will use organoclay which has a low utilisation,” he said.

Companies have moved away from using bentonite as it can seal the side of the well bore, meaning capture can be difficult.

There have also been logistical problems with physically moving bentonite as the extreme cold of the North American winter weather in 2013/14 rendered some rail cars inactive and created bottlenecks, Gray said.

“This year in particular, the extreme cold weather has had a huge impact as it takes more power to move freight in such weather and, as a result, you have a bottle neck - cars just aren’t moving,” he explained.

Oilfield not key

Surprisingly, Gray said that the bentonite in oilfield applications was not key to Halliburton’s strategy for the mineral.

“Around 85% of what we do is for industrial use - as a company, you can’t look at a market from a solely oilfield perspective and say you are going to participate and be successful - we have to look at the entire range of markets,” he said.

“In our portfolio cat litter is extremely important - it’s our single largest market,” he added.

Prices

Gray said that bentonite prices have remained relatively stable in recent years, whereas barite prices are more volatile.

This is because there is no substitute for barite, so more is likely to be consumed as oilfield drilling increases.

“Barite is still being used, there’s not really a replacement for barite that provides such utility,” he said.

Halliburton has its own supply of barite but also sources some from the global market, so is exposed to price fluctuation.

“Like any commodity, prices are determined by availability. Back in 2010, there was much concern about the availability of barite which led to price escalation,” Gray said.

Look to Istanbul 2016

There were many predictions for the next two years given over the course of the week. Many said that they believed the market would turn around, but that things would be more challenging in the near term.

What was highlighted is that there is no shortage of investment for the right project - and that innovation and research and development are more important than ever in these challenging times.