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.