Business as usual at Kyanite Ming Corp.

By Myles McCormick
Published: Tuesday, 25 August 2015

Kyanite miner trading quietly since 2012 after bouncing back from liquidation order; business unaffected by family feud.

Kyanite Mining Corp. (KMC), based in Dilwyn, Virginia, US, was ordered by a Fairfax County circuit judge to "wind up and liquidate the business and affairs of the corporation," following a 14-day trial in late 2012. 

Today, however, the company reports that things are proceeding as they always have done for the past 75 years.

"Business is good," Guy Dixon, KMC’s president and general manager, told IM. He said it was never the case that the company "had to get back on its feet," because the legal entanglement "wasn’t an issue in the first place".

"There was a family squabble, and we ended up buying out some disgruntled family members (…) Business was not affected."

The 2012 case was taken by a number of members of the extended Dixon family against the Disthene Group Inc. – which owned KMC, the Cavalier Hotel in Virginia Beach and 28,000 acres (113km2) of landholdings – controlled by Guy Dixon and his father, Gene Dixon Jr.

The plaintiffs maintained that they had been denied hundreds of thousands of dollars through management’s reduction of dividends, undervaluation of shares and general operation of the company in a manner that was self-indulgent, rather than value-maximising for shareholders.

IM reported at the time that judge Jane Marun Roush found that the private family-run business had a long history of stock manipulation, exorbitant salaries for company officers and inappropriate use of company assets.

Judge Roush ordered that the company be dissolved, saying that KMC’s management had treated its minority shareholders as "irksome interlopers".

This ruling was upheld following an appeal to the state’s Supreme Court. But in June 2013, the courts approved a $77m settlement on behalf of minority shareholders.

The settlement necessitated the sale of the Cavalier Hotel, but allowed Disthene to retain control of KMC. The agreement removed the receiver from the company, however it did not vacate the judge’s opinion finding oppression and corporate waste.

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Kyanite has the chemical formula Al2SiO5 and is used as a feedstock for synthetic mullite for refractories applications ( source: Jarno)

A family institution

KMC has been mining kyanite in Buckingham County, overseen by the Dixon family, since 1945. It has been a private, family-run enterprise for three generations.

Its integrated mining and processing operations produce kyanite from two hard-rock open pit mines and mullite by calcining the kyanite ore.

Dixon told IM that as a "closely held private company" it was not KMC policy to give out production figures. However, US Geological Survey (USGS) data indicates that it produced 100,000 tonnes in 2014, and similar levels in preceding years. 

Dixon went on to say that while kyanite isn’t a high growth sector, business remains strong.

Kyanite has the same chemical formula – Al2SiO5 – as both andalusite and sillimanite, all of which are naturally occurring, anhydrous aluminium silicate minerals. Different crystal structures in each account for different physical properties, which in turn give rise to different end uses.

Mullite, which KMC also produces, is a mineral rarely found in nature, but is artificially produced by sintering or fusing feedstock materials such as kyanite or bauxitic kaolin. 

KMC produces the world’s largest volume of kyanite. Small amounts of the mineral have also been produced in Australia, Brazil, China, Ukraine and India. 

Around 90% of kyanite and mullite output in 2014 was used in refractories. The remaining 10% served a number of end markets, including abrasive products – for example motor vehicle brake shoes and pads; grinding and cutting wheels; ceramic products, such as electrical insulating porcelains, sanitary-ware, and white-ware; foundry products and precision casting moulds, according to the USGS. 

USGS estimates indicate that 60-65% of the refractory usage in 2014 was by the iron and steel industries, the remainder being used by industries that manufacture chemicals, glass, nonferrous metals, and other materials.

According to the IM Prices Database, Kyanite prices stand at $225-320/s.ton raw (ex-works US, 55-60% Al2O3) and $375-$440/s.ton calcined (55-60% Al2O3, 22 ton lots).

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Buckingham County, VA courthouse where the case surrounding the family dispute was heard (source: Taber Andrew Bain).