TiO2 World Summit 2014: Dawn of a new era in TiO2

By Kasia Patel
Published: Wednesday, 29 October 2014

Impact of industry consolidation; More innovation needed

The titanium dioxide (TiO2) industry is at the dawn of a new era, delegates at the TiO2 World Summit 2014 in Montreal, Canada, heard in October.

Reg Adams, managing director of UK-based minerals and pigments intelligence provider, Artikol, explained that one factor likely to have an effect on the industry in the near future is the wholesale change underway at many of the world’s largest TiO2 plants.

He highlighted the merger between Tronox and Exarro, which was completed in 2012, DuPont’s decision to spin off its TiO2 business in 2013, changes in ownership of shares following the death of Kronos’s former CEO, Harold Simmons, last December and privatisation of plants in Eastern Europe.

Despite this, Adams told delegates that following the finalisation of the acquisition Rockwood Holdings Inc.’s pigment division by Huntsman Corp., further major changes in TiO2 supply are unlikely in the near future.

“Other potential threats to supply are what I call existential factors,” Adams said. “These include a larger focus on health and environmental effects of production as well as a bigger concern by companies about their carbon footprint.”

In terms of pricing, Adams outlined that Artikol agrees with forecasts published by IM indicating that TiO2 prices are unlikely to trend upwards before the end of 2015, after which they may see a slight increase.

More positively, Artikol predicts that there are still opportunities for the TiO2 industry, with growth in TiO2 pigment demand expected to be around 4% per year to 2020.

“Even though Chinese demand has slowed, as has been very much discussed, growth here is still expected at around 6.55% a year,” Adams said, adding that a slowdown was inevitable owing to the very low demand base which then expanded very rapidly in a short space of time.

Changes in China

China’s increasing role in the TiO2 industry is likely to have a large impact on developments in the market, as the country now accounts for a third of global production. The landscape of the TiO2 industry in China is rapidly changing, owing to industry consolidation, expanding production and the adoption of new processing routes, according to analysis by one leading paints and coatings producer.

Speaking at the conference, Laurence Wang, business manager at Tinox Chemical LLC, confirmed that industry consolidation in China is ongoing, and that another two or three producers in the country are likely to become bankrupt before the end of 2014. This means that China’s top six TiO2 pigment producers now account for over 50% of the market, he said.

While ownership of existing capacity continues to change hands, delegates were also told that expansions in Chinese production of both feedstocks and pigments are also occurring.

“Because of titanium feedstock shortages in China, there were very quick expansions. Prices of TiO2 feedstocks have also dived and so this limits feedstock imports, not because of quality reasons, but due to higher prices outside of China,” Wang said.

The rapid expansion of TiO2 feedstock output in China over the last three years has meant that around 64% of local TiO2 finished product is now supplied by local titanium ore sources, compared with around 35-50% previously.

However, this has led to a steep decline in China’s ilmenite prices - steeper even than that outside of China. Rutile prices, on the other hand, face a more certain future. In contrast to predictions for rutile prices outside China, these are expected to begin to see improvements by the second quarter of 2015, Wang said.

Additionally, these developments have meant that while domestic TiO2 pigment demand in China has remained flat, exports have soared to record highs as consumers view China as a competitive source of good quality pigment.

Environmental pressures

In order to compete with material from outside the country, companies like Xinli, Billions, Luohe, Jinzhou, Wanji and Pangang are investing into less wasteful and more environmentally friendly pigment production routes.

“Companies are investing into the chloride process, but it will take a long time for more high quality chloride feedstock processes to come online,” Wang said.

Currently, there are only three plants in China using the chloride route process, according to Wang, although pressure to shift from the sulphate processing route is also being felt owing to more stringent environmental regulations.

“Plants are sometimes forced to decrease capacity to as low as 30%, because they cannot have pollution at these high rates and environment is a top priority now.”

This has, however, led to the closure of smaller, more polluting plants, accounting for between 8,000-10,000 tpa TiO2 pigment, and, according to Wang, these are unlikely to come back online.

Further, with natural gas becoming more expensive in China, energy, sulphuric acid and ilmenite on average now account for over three quarters of the total cost of pigment production, meaning that producers cannot afford to operate at such low rates.

“Environmental regulation is limiting operation rates and this will continue to kick some producers out of the industry,” Wang said.

Only the innovative will survive

According to Bill Eibon, director of global colour technology platform at global paint maker PPG Industries - who also spoke at the conference - the global pigment market is expected to grow at compound annual growth rate (CAGR) of 4.7%, while speciality pigments are expected to grow at a CAGR of 5.4%.

Eibon said that innovation and investment in new products and processes will take the pigment industry forward, and that those who are investing in new technologies will have the advantage over other market players.

“Investment in process innovation can create innovative products that disrupt the status quo,” he told delegates. “Right now there is more innovation in replacing TiO2 than there is within the [TiO2] industry itself.”

“This doesn’t do anything for supply chain security,” Eibon said, adding that feedstock supply security is still a part of the puzzle that needs to be dealt with.

The maturation of Asian suppliers in the pigment industry is also a cause for concern for existing producers.

“If you think that these companies can’t compete then you’re in for a rude awakening,” Eibon warned.

However, as industry participants at the TiO2 World Summit emphasised that more innovation is needed in pigments, Gerry Colamarino, senior consultant at TiPMC Solutions LLC, argued that that, right now, TiO2 is not synonymous with research and development (R&D).

Although current price levels are much higher than historic averages, the industry is in a depressed state with earnings and margins at unhealthy levels, Colamarino explained. This means that reinvestment economics continue to be unfavourable.

“That’s why we really need R&D to expand these opportunities,” Colamarino said. “In terms of industry breakthroughs I don’t want to say that innovation is dead, but the innovation pipeline is relatively bare in comparison to where it used to be.”

According to TiPMC, the goal then for the industry is to focus on improving the production process to cut costs.

“We’ve pushed the boat out on grade development, so I don’t think that’s the answer. This is a production intensive industry, so that’s where we need to focus R&D to bring those costs down - I’m not talking about just cost cutting, but innovation along the supply chain to come up with something new,” Colmarino said.

“The innovation pipeline is there, but it’s not reflective of the opportunities,” he added.

Mineral Sands News Review

Kenmare-Iluka negotiations continue

Kenmare Resources Plc. has confirmed that its discussions with Australian miner Iluka Resources Ltd continue to centre on valuation of the company’s assets.

Michael Carvill, Kenmare’s managing director, said that problems affecting the company’s mineral sands production in the third quarter of this year were not a factor in the ongoing negotiations.

“The issue Kenmare is facing is one of market valuation, rather than production,” Carvill told IM.

He added that output at the company’s Moma mine in Mozambique had “not moved with the same alacrity as in Q2”, but that the decline in production was “nothing significant”.

Kenmare reported a 24% year-on-year (y-o-y) increase in total shipments of finished mineral sands products to 183,200 tonnes in Q3 2014 from Moma, as US markets continued to improve.

Total sales comprised 166,100 tonnes ilmenite, 13,800 tonnes zircon and 3,200 tonnes ilmenite.

Production of ilmenite, zircon and rutile from Kenmare’s Moma mine increased y-o-y by 6%, 156% and 167% respectively for the quarter, although heavy mineral concentrate (HMC) production saw a decrease of 9%.

Market still lagging, says Rio Tinto

Rio Tinto’s mineral sand output slipped 11% in the first nine months of this year when compared to the same period in 2013, the Anglo-Australian miner confirmed in its Q3 production results, released in October.

The slip in production across the RTIT business reflects soft market demand, the company added, as production at its different resources continues to be optimised to align with market demand.

Quarter-on-quarter (q-o-q), production slipped 2% to match shipments.

Rio Tinto produced 365,000 tonnes TiO2 in Q3 2014 and 1.12m tonnes in the first nine months of this year.

For the full year the company expects to produce 1.5m tonnes of TiO2 feedstock.

Ebola impacts Sierra Rutile

Rutile, ilmenite and zircon mineral miner Sierra Rutile released an operational update for Q3 2014, which indicated that it had increased its ilmenite production over the quarter, but that rutile output had remained flat.

Rutile production, at 27,078 tonnes, was 3% lower than during the previous quarter, while ilmenite production, at 9,986 tonnes, was 19% up on Q2 2014. Zircon concentrate production was at 444 tonnes, down from 488 tonnes the previous quarter.

For the FY 2014 the company has advised that it expects to produce 120,000 tonnes rutile at an all-in cash cost of $645/tonne.

The decrease in the FY production was attributed by CEO John Sisay to the fact that the plant had to disrupt production for three days due to a restriction on production imposed by the Sierra Leone government because of the Ebola outbreak. This caused a production loss of 1,500 tonnes rutile.

Group DF TiO2 production suspended

Group DF has confirmed to IM that its titanium dioxide (TiO2) business operations in Volnogorsk, Ukraine, are still suspended, following a seizure of control at the company’s facilities at the end of September.

On 22 September 2014, the facility was taken over by a group of armed men accompanied by officials of the Dnipropetrovsk Regional State Administration and the Ministry of Interior of the Dnipropetrovsk region.

“Failing to show any permits, a group of unidentified people used physical force to break into the company’s territory in an unauthorised, illegal and rude way under the pretext of transferring property, which is on the balance sheet of Crimea TITAN JSC, to the earlier created United Mining and Chemical Company,” Group DF said.

As a result, the company’s activities at the facility have been completely disrupted as Group DF’s management was forcefully suspended from administration.

Group DF’s TiO2 business falls under Crimea TITAN, which is the largest TiO2 producer in Eastern Europe, supplying around 2% of global consumption.