According to the Zircon Industry
Association (ZIA), an industry body set up in 2013 to represent
and promote the interests of the zircon industry, zircon and
its derivatives face a number of threats including competition
from substitute materials, such as alumina in ceramics
applications, and ever increasing industry regulation.
Owing to its versatile range of
properties, such as high refractive index, high melting point
and thermal stability, zircon finds applications in a wide
variety of end markets, including ceramics, chemicals and
Although, in the past few years,
the market has been notoriously difficult to predict, less
volatility seen more recently is likely to rebuild confidence
in the value chain, with the general consensus from producers
being that additional supply will be needed in the future to
account for a growing demand, particularly in the ceramics and
Zircon supply is generally
consolidated amongst three producers that between them account
for two thirds of the global production of zircon and high
grade TiO2 products; Rio Tinto, Tronox and Iluka.
Zircon production from Australia of 600,000 tonnes (see
Figure 3), accounted for the largest proportion of the
1.44m global total in 2013, closely followed by South Africa
with 360,000, and China with 140,000 tonnes, according to US
Geological Survey (USGS) figures.
The largest global producer of
premium zircon sand is Iluka Resources with operations both in
Australia and Virginia, US. Between 2010 and 2012, the company
produced, on average, around 452,000 tpa zircon. However,
following the global slowdown in economic growth, the
companys zircon output dipped to 285,000 in 2013, though
its most recent forecast anticipates a rise in its total zircon
production to 360,000 tonnes in 2014.
Although some pressure on price
structures in the zircon value chain has been evident in
Europe, this, Iluka noted, has been associated with competition
seen in the market share of downstream customers, which Iluka
has chosen not to be drawn into.
The company added that zircon sales
year-on-year have been lower than in the previous year, while
second half year sales in 2014 are expected to be greater than
Tronox Ltd is the worlds
second largest zircon producer, accounting for around 20% of
global supply, and is the third largest titanium feedstock
producer, accounting for approximately 10% of the worlds
feedstock production. The companys global zircon
operations have a combined production capacity of 265,000 tpa
Tronoxs mineral sands
operations are based in Namakwa Sands and KwaZulu-Natal (KZN)
Sands in South Africa as well as in Western Australia. Tronox
sources over 770,000 tpa heavy mineral concentrate (ilmenite,
rutile and zircon) from strandlines at Cooljarloo in Western
Australia, using dredging operation and dry mining techniques.
The heavy mineral concentrate is produced 170km north of Perth
and then transported via side tippling triple trailer road
trains to Tronoxs Chandala plant for separation and
Tronox produces approximately
450,000 tonnes of ilmenite, 80,000 tonnes of zircon, 37,000
tonnes of rutile and 20,000 tonnes of leucoxene a year at
Figures from JP Morgan indicate
that zircon supply is expected to balance out in 2014, with
both existing suppliers and juniors keen to develop any
additional supply that will be needed.
Iluka is in the process of
developing additional supply from three projects in Australia;
Cataby, in Western Australia, Balaranld in New South Wales,
both in DFS stages of development, and its JA zircon satellite
deposits, in the prefeasibility (PFS) stage, in Southern
Australia. The company is also developing two US projects; the
Hickory project in Virginia and the Aurelian Springs project in
North Carolina, both in the PFS stages of development.
Other major producers looking to
expand zircon capacity in South Africa include Richards Bay
Minerals, a subsidiary of Rio Tinto Iron and Titanium, and
Tronox Sands, both developing projects in the KwaZulu-Natal
region. The Tronox Fairbreeze mine is already under
construction, and has an anticipated 2015 start-up, while Rio
Tintos Zulti South mine, which has a 25 year mine life,
is expected to come on stream in 2016.
As well as existing producers
hoping to absorb additional demand, a handful of juniors are
also looking to bring new zircon capacity online in 2014. Base
Resources, which is now in production in Kenya, is looking to
produce 30,000 tpa zircon from its Kwale mineral sands project
for the first seven years, and 19,000 tpa zircon for the
following six years.
TiZir Ltd also began mining in
March of this year, with expectations of 40,000 tonnes zircon
production in 2014, ramping up to 85,000 tpa in 2015.
Additional new supply is anticipated from Kenmare Resources as
its Moma Phase 2 expansion project is rolled out, increasing
capacity from 50,000 to 75,000 tpa, as well as from operations
at Southern Ionics development in Georgia, US, hoping to
produce 5,000 tonnes zircon in 2014 with a subsequent full
capacity of 30,000 tpa.
The zircon industry is expected to
recover as the breadth of zircon end markets has increased,
driven by a growing demand for ceramic tiles as well as its use
in innovative markets, mitigating, in part, a drop in
In 2013, consumer zircon
inventories were running down, and the market is expected to
move back into undersupply between 2015 and 2016. However,
despite the fact that demand for zircon saw a dramatic decline
between 2011 and 2012, according to JP Morgan, it is expected
to grow by an average of 3% a year, reaching around 1.5m tonnes
Rio Tinto meanwhile cited zircon
demand as outstripping supply by 2018, rising to around 1.6m
tonnes in 2020 from under 1.25m tonnes in 2014. Emerging
markets are expected to drive future growth, but the company
expects demand to return in Western Europe and China also.
We estimate that underlying
zircon demand has been reduced by over 200,000 tonnes through
thrifting and substitution, Rio Tinto said in a
presentation given in June 2014.
As stock levels return to
historical levels, market conditions have stabilised and we
expect demand to return to growth based on underlying
drivers, Rio Tinto added.
The company said that the zircon
inventory which was built up in 2012 was largely unwound in
2013 due to production curtailments and firmer
Zircon demand has been led by
China, which accounted for 41% of total consumption in 2011,
while European demand accounted for 25%, Asia Pacific for 18%
and North America for 8%. Production of zirconium concentrates
experienced a slowdown in 2012 due to a reduction in Chinese
consumption owing to a sluggish economy, which in turn led to a
drop in housing construction and inevitably lower demand in the
minerals biggest end market - ceramic tiles and
Despite the drop, figures from
Roskill indicate that China remains the largest
sanitaryware producing country, accounting for 44% of
production in 2012. Zircons major application worldwide
is in ceramics owing to its opaque and hard wearing properties.
Adding opacity, whiteness, and water, chemical and abrasion
resistance, the mineral is used in ceramic bodies, frits,
glazes and engobes.
Figures from TZMI indicate that the
ceramics industry was the largest end market for the 1.4m
tonnes of zircon produced in 2011 (accounting for 55% of zircon
use) increasing by an annual average growth rate of 5% thanks
to drivers such as urbanisation and construction.
The industry is seeing growth in
developing countries where growth in urban population and floor
space mean that an increase in consumption of industrial
minerals such as kaolin, zircon and feldspar are expected over
the next decade.
According to figures from the
McKinsey Global Institute, urban expansion forecasts suggest
there will be an additional 85% of current total floor space,
or an increase of more than 80,000km2, between 2010
and 2025. The majority of this growth is expected in developing
economies such as China, India and Latin America, while
improvements in the construction sector and a booming hotel
industry have also driven up both consumption and production of
ceramics in the Middle East.
Figures from TZMI and ACIMAC also
show that global zircon consumption in ceramic applications
grew steadily from just under 600,000 tonnes in 2003 until it
reached just under 800,000 tonnes in 2011. However, consumption
in ceramic tiles dropped to just over 500,000 tonnes in 2012.
Zircon intensity in ceramic applications has also decreased,
beginning at over 100 grams/square metre in 2003, and steadily
declining to less than 50 grams/square metre in 2012.
Part of the decline in zircon use
is owing to substitution in the industry, with some ceramic
producers opting for products such as alumina in ceramic
applications due to lower costs. However, test work carried out
by the ZIA comparing substitute materials in ceramic
applications have revealed poor results.
According to Chris Barrington,
chairman of the ZIA, when alumina is used as a substitute in
engobes, the flux content must subsequently be increased to
compensate for the refractoriness of alumina. Likewise, tests
yielded poor results in glazes and porcelain bodies.
Substitution of zircon with
alumina is possible [in porcelain tile bodies] but alumina is
less effective as a whitener on a weight basis, and causes the
firing temperature to increase, Barrington said.
Additional testing using a
TiO2-based white frit also led to the ZIA to
conclude that there are no viable substitutes for
zircon-based white frits.
Figures from Alkane Resources
indicate that the zirconium chemicals market made up only 18%
of zircon demand in 2011, but the company expects the market to
grow by 11% year-on-year over the next decade, from 194,000
tonnes in 2011 to 239,000 tonnes by 2020. According to the
companys managing director, David Ian Chalmers, this
means that there is an ever pressing need for premium
Though the ceramics sector is the
largest end market for zircon, it is not expected to grow by
more than 5% CAGR, meaning the chemicals sector is the fastest
growing end use for the mineral. By 2020, it is expected to
account for 21-25% of all zircon demand; an increase of between
48 and 72%.
Additional supply of around
160,000-180,000 tpa premium zircon will be required, with low
Al2O3 and a minimal particle size of
<45 micron. Additional issues faced by the industry are
increasing environmental OH&S cost pressures, as well as
the consolidation of the Chinese fused and zirconium chemical
industry, the production of which accounts for around 75% of
the market, according to Alkane.
Based on the expected demand
increase, the company hopes to become a major supplier of
zirconium materials and other critical metals and oxides by
developing its Dubbo zirconia project in New South Wales,
Australia. Feasibility for the project has been completed and
financing is in progress. Construction of the project is
scheduled for the end of 2014, while first production is
anticipated by 2016.
China imports over 80% of its
zircon requirements, importing just over 300,000 tonnes zircon
sand in 2012, down from 2011 imports of around 430,000
according to TZMI data. The largest proportion of these imports
come from Australia, accounting for more than half of Chinese
imports, followed by South Africa. However, despite a weaker
zircon demand, zircon concentrate imports increased slightly
between 2011 and 2012, from around 440,000 tonnes to 455,000
TZMI figures for Chinese demand in
2013 estimate that the ceramic industry accounted for 48% of
zircon demand, while speciality chemicals and materials
accounted for 30% of demand. This includes applications such as
industrial and auto catalysts, dielectric and piezo electric
devices, TiO2 pigment coating as well as other
zirconia and zirconium chemicals.
Both glass and steel making
refractories accounted for 15% of demand in 2013 in China, with
an additional 5% from foundries, used in investment and sand
casting. The remaining 2% accounted for other applications.
According to Iluka, the industry
has suffered from a prolonged period of poor upstream industry
returns, which have been exacerbated by contracts. Volatility
in demand and pricing has also led to minimal new investment
and a limited pipeline of new supply options, as well as
limited technology contributions.
Sales projections of major zircon
producers like Iluka and global Tronox indicate that demand for
mineral sands is stabilising and even increasing in some
markets, although mineral prices are still lagging behind this
recovery (see p21).
Prices for zircon weakened slightly
during May 2014, but industry participants now expect that
prices will remain at current levels until at least the end of
the present quarter. Offer prices for Australian zircon sand
(min 66% ZrO2, bulk, CIF) are reported to be between
$1,200-1,300/tonne, with suppliers settling for prices at the
lower end of the $1,200-1,250/tonne (CIF) range for large
Meanwhile, prices for Indonesian
zircon sand (min 66% ZrO2, bulk, CIF) stand at
around $1,150-1,200/tonne, slightly above China where prices
have slipped below $1,100/tonne, although dwindling producer
inventories and reluctance to sell is reportedly stopping
prices from falling further.
Chinese producers are also said to
be standing firm over prices as margins are under pressure from
high operating costs and the recent softness in selling
Zircon prices are also expected to
firm up in 2014 as ceramics markets return to the mineral sand
after substituting into less effective, cheaper alternatives in
response to the price spikes of 2011 and 2012.
According to TZMIs outlook
for zircon, the market has bottomed out from the pricing drop
it experienced in 2012, but despite a recovery in volumes,
pricing remains flat and weakness remains in the market. The
housing market in China, however, remains a good source of
growth for the mineral and, TZMI added, volumes appear to be
holding up in the industry.
While industrial markets remain
weaker, with some thrifting continuing in refractory and
foundry materials, consumer markets remain a source of latent
Though the fastest growing end
market remains the chemical industry, in terms of actual
volumes, the ceramics industry, driven by population growth and
in turn increased expansion in housing and construction, will
remain the biggest opportunity areas for zircon producers. The
industry is seeing a revival, albeit largely geographically
varied and focused in developing or emerging markets where
urbanisation is taking place in countries such as Brazil, the
Middle East and China.
In Europe some slow demand recovery for zircon is expected
over the course of 2014. Chinese demand is also expected to
improve as stockpiles are depleted, although India remains an
important emerging market.