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.
|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
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
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 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
"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.
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
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
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.