Fluorspar in 2015: Changing of the guard

By Shruti Salwan
Published: Friday, 16 October 2015

Falling prices and weak downstream demand for fluorochemicals are threatening to cap the ambitions of would-be new entrants into the fluorspar mining industry, but new low cost suppliers from Vietnam are beating the market odds, albeit to the detriment of existing producers in South Africa, Namibia and Russia.

Nosediving fluorspar prices caused by soft demand for fluorochemicals and competition from new low-cost suppliers make for a grim outlook in a sector, which just three years ago saw prices at historic highs accompanied by a flurry of exploration activity.

Fluorspar El Hammam Mine Morocco_Managem Group 
New low-cost producers are looking to exploit opportunities in a weak fluorspar market (pictured: fluorite ore from Managem Group's El Hammam mine in Meknes, Morocco). 

The tough market has to date forced the closure of a number of fluorspar mines, including the Witkop and Buffalo projects in South Africa and Okurusu in Namibia. How those companies which remain in operation intend to deal with the ongoing slump remains unclear.

Jess Roberts, senior analyst at UK-based Roskill Information Services, suggests that the industry cannot necessarily rely on producers to react to current low prices and overcapacity by scaling back or mothballing production, which is usually the norm under such conditions.

Citing the example of the Chinese molybdenum industry, she suggested that fluorspar producers that are currently making a loss might choose to stay in production in order to meet fixed costs. This strategy is an optimistic one, based on assumptions that the market has scope to improve and that prices can recover far enough to put operators back in the black.

Ensuring businesses are sustainable and capable of riding out lower pricing and demand conditions as well as reaping the benefits when the going is good is key to survival in the long term, particularly as the level of competition only looks likely to increase. Producers able to leverage cheaper cost structures are bound to see gaps in the market left by capacity closures elsewhere.

Once established as profitable in a market which is at, or near, rock bottom, these new suppliers are likely to be in for the long haul.

Vietnam’s Masan Resources, Thailand’s SC Mining and Germany’s EFS and Nickelhuette, are among those moving to become the next generation of low-cost producers of acid-grade fluorspar (acidspar).

Dominic Heaton, CEO of Masan Resources, which is developing the Nui Phao project in Vietnam, emphasises the need to work closely with local communities in fluorspar mining areas, addressing any environmental, health and safety or social issues arising from project proposals. Taking note of these factors has helped Masan to advance its project rapidly, he said.

He added mining a polymetallic deposit had turned impurities into opportunities for Nui Phao. The presence of minerals other than fluorite in the deposit, which include bismuth, tungsten and copper, had added by-product value streams to the project and supported the economics of the core fluorspar business.

"Separating these minerals, which are otherwise impurities for fluorspar’s downstream application, proved beneficial for Nui Phao, making its material quality-competitive in a struggling market," Heaton said at the recent IM Fluorspar 2015 Conference in Marrakech, Morocco.

On the metallurgical-grade fluorspar (metspar) side of the industry, rising Asian producer Amania Mining Co. expects to bring an additional 50,000 tpa metspar to the market from its Bakhud reserves in Afghanistan by the end of this year. In 2016, Amania plans to further develop the project for acidspar production.

Regulation

Further downstream, in the fluorochemicals market, industry players are waiting nervously to see how new regulations and tougher environmental laws designed to curb global warming emissions are going to impact their businesses and fluorspar consumption rates.

The phasing down of the use of hydrofluorocarbons (HFCs), corresponding with a rise in production of next-generation flurochemicals, hydrofluoroolefins (HFOs), in key markets like the US, is one of the main trends facing the industry.

"Nearly every country or region – including Americas, Europe, Asia and Africa – is already making HFO introductions in limited models, which will push the shift from HFC refrigerants to alternative refrigerants including HFO, hydrocarbons and other not-in-kind alternatives," said Ray Will, director of inorganic and speciality chemical consulting at HIS, said at the conference in Marrakech.

IHS projects that the HFC phase-outs and the rise in production of HFOs will create direct and indirect demand for acidspar from 2015 to 2019, mainly in the US and Europe.

UAE-based Gulf Fluor LLC, which last year began production at its aluminium trifluoride project (AlF3), is now targeting the refrigerants and coolants market, according to Rami Musleh, the company’s commercial manager.

Serving largely the needs of aluminium smelters in the Gulf Cooperation Council (GCC) region, Gulf Fluor is aiming to produce a new generation of refrigerants for the local mobile air conditioning market.

Aside from coolants, pharmaceuticals also represent an opportunity for fluorspar. At present, 25% of all marketed drugs contain fluorine, but this accounts for merely a fraction of fluorspar demand in terms of volume.

Existing and new producers alike are actively engaging in R&D into growing existing applications for fluorspar as well as identifying new uses – a trend common to both acidspar and metspar, as the industry looks to innovate its way out of the current market trough.

 



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