South East Asia: Room to grow

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Published: Wednesday, 26 November 2014

Although regulatory difficulties in the past may have discouraged foreign investment, South East Asia is being touted as a region ripe for development with many underexploited resources and demand for industrial minerals in a variety of markets including refractories, glass, ceramics, construction and proppants. Andrew Scogings, IM Correspondant, Kasia Patel, Deputy Editor, and Tran Kim Phuong, Contributor

This year has seen much discussion on the economic situation in Asia and what this slowdown might mean for various industries, with mining of particular interest. One clear message that has been emphasised very strongly by producers, junior companies and investors alike is that it is not all economic doom and gloom in the region.

A positive outlook for the industry was emphasised to delegates at the 4th South East Asian Industrial Minerals Conference in Bangkok which was held in November, with presentations painting a picture of a region ripe with opportunity.

Speakers highlighted the mineral investment and marketing opportunities in a region of over 600m people (excluding China) in a series of lively discussions and debates.

Thailand’s vision

During the ASEAN Plenary session at the South East Asian conference, host country Thailand’s vision for the mineral sector was outlined by Thammasak Pronpasert, director for Primary Industries and Mines, who described the need to substitute fertiliser imports by developing potash resources in two basins in north-eastern Thailand.  

Thailand has a host of industrial mineral reserves as well as other resources including potash, copper, gold and oil shale among its key resources. Other industrial mineral resources in the country include limestone, gypsum, shale and marl for the cement and construction industries, as well as marble, granite, basalt, sandstone and slate.

The country also supplies the ceramic and glass industries with kaolin, ball clay, feldspar, glass sand, dolomite and pyrophyllite quartz, while its fertiliser and chemical resources include rock salt, potash, phosphate and perlite.

Pronpasert told IM on the sidelines of the Bangkok conference: "There is potential for >400m tonnes carnalitite and sylvinite." 

According to Pronspaset, the country has a number of positive attributes that investors should consider, including an advantageous location, growing economy, world-class infrastructure, ease of business and investment promotion policies.

Among the incentives for investment have been regulations from the Board of Investment (BOI), which allow for exemption or reduction of import duty on imported machinery, exemption of import duty on imported raw or essential materials and an exemption of corporate income tax up to eight years.

Thailand also hopes to facilitate mining permit applications by improving regulations and laws, and coordinating with related governmental bodies. The government is additionally looking to promote exploration and mining both from domestic and foreign investors by having no limitations on the size of permitted areas for exploration licences and by creating mining zones for mineral development.

Another government focus in terms of overall policy has been to support downstream high value-added industries and green industries. Specific to the construction and cement industry, plans are in place to develop domestic and regional infrastructure.

According to AECOM’s 2013 Asia construction outlook, Asia is predicted to be the fastest growing market between 2013 and 2020. The Asian construction market has maintained growth while Western economies have slowed, accounting for around 40% of global construction spending in 2012 and resulting in the largest regional construction market worldwide.

Growth in Thailand specifically is predicted at a rate of 3.4% a year out to 2018 by BIS Global Insight, and this is likely to drive minerals associated with construction owing to the use of paint, tiles and a growing infrastructure. 

Backing in the country is also being given to the fertiliser industry in terms of supporting import substitute fertiliser as well as price and income support schemes for farmers. Overall, with particular emphasis on key industrial policies in potash, quartz and asbestos, it is clear that the government in Thailand is moving forward with reducing complicated licensing policies, increasing transparency, as well as pushing for 'greener’ mining.

Figure 1: Thailand’s ceramic and glass mineral resources

Reserves

Million tonnes

Feldspar (sodium)

4,735

Feldspar (potassium)

900

Kaolin and ball clay

844

Glass sand

80

Quartz

65

Pyrophyllite

N/A

Source: Thailand Department of Primary Industries and Mines

Refractories  

According to independent consultant Richard Flook, who spoke at the conference on the refractory industry: "The world economy has been climbing a wall of worry." He added that"most commentators are expecting growth in the US, ASEAN countries and China".  

The huge amount of metal castings (60% of global output) and cement (70%) concentrated in Asian countries are major drivers for refractories consumption.  

Flook noted that whereas paper and plastics manufacturers "look for ways to incorporate 

more fillers in their products, the request from refractory consumers is how to reduce consumption".  

Trends in refractory consumption show a downtrend in the kg of refractories used per tonne of steel produced as evidenced by the current usage of 20kg/t of steel production in China compared with the global average of 15 kg/tonne and as low as 2kg/tonne at an Australian steel producer.   

Flook said that he saw the "long term aim as being 5kg/tonne of steel" which will impact negatively on consumption of chromite, bauxite and magnesia products.   

Figure 2: Thailand’s mineral resources 
1  
Source: Department of Primary Industries and Mines 


Proppants  

Given the huge shale gas and oil potential of Asia and, as yet, no good quality frac sand compared with benchmark Northern White frac sand of the US, Joe Roettle of Ecutec Barcelona SL (business unit of MI Sweco), believes there is huge potential growth for ceramic proppants in the region.

At the South East Asia event, Roettle outlined that perfectly spherical proppants may be on the way. Growing proppant markets in Asia (and globally) might offset dwindling refractories demand for aluminous minerals like kaolin and bauxite. 

According to Canadian junior, Prime Meridian, there are only a handful of companies in the region producing high quality ceramic proppants, meaning there is massive underexploited potential for ceramic proppants supply. Demonstrating its belief in the potential of the area, the company recently purchased Hallmark Minerals, a ceramic proppants producer in India, which will enable it to gain a supply foothold in Asia.

"The reason we’re doing this transaction is because we feel there is increased demand in the region, otherwise we wouldn’t be going at this aggressive expansion," the company’s president, Michael Dehn, told IM in an interview (see p62).

Although the industry standard for ceramic proppants is bauxite and kaolin, Prime Meridian is also in the process of testing other materials in Canada for their proppant potential, incuding fly ash, silica, titanium, iron oxide and frac sand. 

Figure 3: Growth in construction spending in Asia 2013-18 (%pa) 
1  
Source: BIS Global Insight (2012) 


Regulatory difficulties in Myanmar

Elsewhere in South East Asia, Myanmar has also been hailed as having a number of opportunities in industrial minerals. 

According to Dennis Meseroll, managing director of consultancy Tractus Asia, the numerous mineral opportunities in Myanmar including dolomite, gypsum, barite (barytes) marble, graphite, bauxite, minerals sands and glass sand. 

These industrial minerals opportunities in Myanmar, were backed up by Kyaw Din, deputy director general, Geology Survey, who also spoke at the South East Asia Conference in November.  

The country has recently started to open up for business, Meseroll explained, describing Myanmar as the "new frontier for minerals opportunities". 

However, the regulatory environment is not easy for foreign investors, something it has in common with other South East Asian countries such as Indonesia and Vietnam, as "raw minerals cannot be exported and Investors encouraged to establish mineral processing or refining plants" explained Kyaw Thet, director, department of mines, Myanmar.  

Thet described that "grass-roots exploration is required by foreign investors, or that they should joint venture (JV) with local licence holders and that production sharing contracts (PSC) can be established with the State."   

"As at October 2014 a total of 2,065 mineral exploration/mining permits had been issued including 138 large scale permits; 1,289 small scale permits and 523 exploration permits," he added, noting further that "foreign investors cannot participate in so-called small licences". 

Despite the current difficulties faced by foreign investors, new mining laws and regulations are expected to be implemented in the near future by the government of Myanmar to invite what it calls foreign investment for mutually beneficial gains.

Medium scale mining and trading licences are expected to be included under the new mining laws, while the land rental fee (dead rent), royalties and PSC ratios will also be revised. Another positive revision is the anticipated creation of environmental and CSR funds and the mine closure plan and EMP will be seriously considered.

Figure 4: Industrial Minerals production in Myanmar, tonnes

Mineral

2011-2012

2012-2013

2013-2014

Gypsum

57069

38579

38579

Clay

3720

3150

2550

Bentonite

170

550

1552

Dolomite

1245

170

400

Limestone

110967

427733

666990

Quartz

3225

68000

455

Gypsum

8160

25500

60510

White clay

550

1200

1700

Antimony

4376

-

-


Source: Tractus Asia

Vietnam chromite

As well as Myanmar, neighbouring Vietnam presents opportunities in barite, graphite, rare earths, mineral sands and bauxite but, as pointed out by Martin Lynch of SON Minerals, "foreign ownership in mining operations is unusual in Vietnam, as mining is dominated by State company Vinacomin".   

That aside, Vietnam is a leading regional exporter of barite for the drilling industry, but it does have to import coal due to depletion of local reserves. 

The country also hosts vast deposits of chromite, of which those with the greatest economic value are found in areas around the Nui Nua Mountain in the Nong Cong district, Thanh Hoa province. The mines are located 18km from Thanh Hoa City and 80km south of Ha Noi. 

Originally discovered by French geologists in 1927, chromite mining at Co Dinh began in 1930. Production reached its peak in 1963 with 36,084 tpa, and between 1965 and 1984, 353,629 tonnes concentrate of 46% Cr2O3 had been exploited, though production fell to 10,000 tpa between 1985 and 1995.

Chromite ores exist in two forms, the primary and the placer, although the majority are found in the placer. Chromite placer is widely spread in the Quaternary Basin close to the northeast of Nui Nua Mountain, at around 9-13km long, 4km wide and covering an area of about 36.5km2. Three areas have been prospected so far; Tinh Me to An Thuong, My Cai to Hoa Yen and Mau Lam to Ban Ang.  

The small size of the chromite placer grades causes some problems when used for chrominium metallurgy, although it works well when used in the chemical, refractories and foundry industries. The majority of chromite grades fall between 0.07-0.7mm, which is very favourable for the refractory industry. 

Test results show that the chromium-magnesium bricks manufactured from the Co Dinh chromite ore always meet high quality standards, corresponding very favourably to some brick grades of Austria, the Czech Republic and Russia.

Figure 5: Geological section of Co Dinh chromite deposit (Thanh Hoa province) 
1  
Source: Dinh Van Dien and Tran Xuan Duc, 1980 


Sustainability in Vietnam

In the Co Dinh deposit area there are many mines and processing plants with outdated technology and with little concern for the environmental impact that such activity leaves as a consequence. The total amount of ore actually recovered is very low at about 35%, and the considerable resource loss has a significant environmental impact. 

The mining, washing, sieving and panning out of ores is mostly carried out using intensive manual labour and the resultant product is generally low in content (about 40% Cr2O3). Better management of mining activity should be the most important consideration in any solution that might contribute towards economic growth and social development for the region.

An agreement is already in place with the Vietnamese government for a strategic mining and processing target, which was set up as early as 2006. The Vietnam Group of Coal and Mineral Industry (Vinacomin) coordinated with UK-based Archipelago Resources Plc (ARP) to implement the results of a study for the development of mining and processing of the Co Dinh chromite deposit. 

In 2006, ARP completed a study and estimation of the total resource available in Co Dinh, stating that the estimated result of the reserve available is 'satisfactory’. On the basis of these results, the Vietnamese government supported both Vinacomin and ARP in putting forward plans for a JV company specialising in mineral mining and deep processing using advanced technology and modern mining techniques. 

By July 2006, the JV was expected to supply all the professional means for the development of the Co Dinh chromite mine, as well as Thanh Hoa, following permission to be granted for mineral mining in the area to be issued by the Ministry of Industry (now known as the Ministry of Industry and Trade) for the member company belonging to Vinacomin, to develop an area of 16.6 km2 with an anticipated reserve of 4.2m tonnes and an average content of 3.44 % Cr2O3.

The agreement included conditions for the mining companies to adhere to international rules on the sustainable development of mining activities, as well as resource development in the Co Dinh mine. 

Vinacomin and ARP realised the project with the aim of implementing clear steps for the development of mining, recovery and deep processing of mineral resources in the Co Dinh chromite mine, extracting material together with a means to both protect and restore the environment. 

On the basis of the estimated chromite resource in the north eastern area of the Nui Nua mountain range, the recovery of the mineral resource is to be carried out in two main zones within the permitted area of 16.6 km2

The recovery consists of two main project areas 1 and 2, with five further identified zones, projects 3 to 7, and a further mining development, project 8.  All of the zones were planned to be implemented in a three stage project development, covering all of the eight development zones.

Mining of the chromite resource from the Co Dinh deposit is now anticipated to be implemented in three stages, with each stage taking up to five years to complete. Output of mining and production of chromite concentrate is expected to increase over a definite plan, showing in Table 5.

Studying ways to perfect the mining of chromite ore using deep mining and processing technology alongside ways to protect the environment is a strategy that has gained universal agreement for continued chromite mineral development in Vietnam. 

The implementation of the Co Dinh chromite project is expected to meet all of the criteria that have been agreed for sustainable development with economic benefits for all connected partners, both in terms of natural environmental protection as well as environmental and social development, with the overall development being supported by one management structure.

The benefits expected from the development of the Co Dinh mine include: a minimum impact on the environment, overcoming the serious pollution to the environment that existed prior to the new agreements, giving back approximately 10km2 of land for agriculture, creating many new jobs - more than 8,000 - and training professionals from the local population as well as the creation of new infrastructure to facilitate integrated social development.

Figure 6: Development zones and anticipated ore output

Stage

Development (project) name

Mining steps

Anticipated output (concentrate of content 46% Cr2O3)

Stage I

Project 1

2011-2016

2011 - 2012: 3m tpa of crude ore

(111,000 tonnes of concentrate per year)

2013 - 2015: 6m tpa of crude ore

(221,000 tonnes of concentrate per year)

Project 2

2017-2021

2016 - 2017: 12m  tpa of crude ore

(443,000 tonnes of concentrate per year)

2018 - 2021: 19,250m tpa of crude ore

(710,000 tonnes of concentrate per year)

Project 3

2022-2026

 2022 -2026: 19,250m tpa of crude ore

(710,000 tonnes of concentrate  per year)

Stage 2

Project 4

2027-2031

2027 - 2031: 19,250m tpa of crude ore

(710,000 tonnes of concentrate  per year)

Project 5

2032-2036

2032 - 2036: 19,250m tpa of crude ore

(710,000 tonnes of concentrate  per year)

Project 6

2037-2041

2037 - 2041: 19,250m tpa of crude ore

(710,000 tonnes of concentrate  per year)

Project 7

2042-2044

2042 - 2044: 19,250m tpa of crude ore

(710,000 tonnes of concentrate  per year)

Stage 3

Project 8

2045-onwards

2045 - onwards: 19,250m tpa of crude ore

(710,000 tonnes of concentrate  per year)



Chromite mining and processing

Most of the mineral reserve from the Co Dinh chromite project zones lies under a thick layer (20 to >40m) that requires careful planning for large scale deep mining to guarantee effective mining and recovery of the mineral resource. 

Before the mining of each zone takes place, a report on the estimated environmental impact needs to be submitted to the Ministry of Natural Resources and the Environment for approval. Once approval has been granted, the mining processes must abide by the conditions outlined for each project. Following the mining of each zone, work needs to be carried out to level the area, returning the land to pre-mining conditions and restoring the environment that has been impacted by each mining project. 

Vinacomin and ARP are planning to carry out a feasibility study for the possible implementation of a ferrochrome plant to be constructed with the capacity to process 150,000-200,000 tpa from concentrate from the mines. 

Both companies have acknowledged that the first difficulty that needs to be faced in the mining and processing of ore from the Co Dinh mine is that of the clay content, which is very high in chromite ores, and has at least a content of 40% of ore volume. 

The adhesive quality of the clay requires further study of the loose clay striking method, separating the concentrate of fine grain chromite from the coarse clay. Detailed studies have already shown that this can only be achieved by separating grains in the layers within the grain band of under 300µ. The scale of recovery is expected to increase to its maximum only if the coarse ores are separated into the many different grain classifications and then processed for chromite from each size independently. 

A study of processing technology that was used before 2009 revealed that the recovery rate for chromite was between 30-35% of concentrate with final content recovery in the region of 40% Cr2O3. However, the processing technology that was tested and finally put into production in between 2009 and 2010 using a combination of  gravity and  magnetic processing methods, produced a recovery rate of 46% Cr2O3 of the concentrate or higher, with a real  recovery rate of over 62%.

Bentonite as a by-product in Vietnam

Additional returns in Vietnam are expected to come from by products such as nickel, cobalt and bentonite as a result of chromite processing.

The electrolyte method of nickel and cobalt concentrate recovery is expected to be applied as part of the processing of the mined ores, producing metals for both the domestic market and for export. With a total expected output of 200,000 ferrochrome tpa being recovered, a recovery of about 9,500 tonnes of metal nickel and 1,400 tonnes of corresponding metal cobalt is also anticipated.

Nontrolite (bentonite) clays are expected to accumulate in concentrate form in the rejected mud produced during processing before the implementation of the magnetic and gravity processing steps. 

Processing nontrolite clay as a by-product of the chromite mining process is expected to produce a better overall return of quality products compared with the clay being produced at present at Co Dinh with coarse grains of over 20µ being rejected. 

The resultant method of increasing the surface area of the clay (BET) by increasing its water absorption capacity also forms a product that is hoped to form part of a development in agriculture by using the subsequent by-product as a soil conditioner or fertiliser.