Fluorspar 2015: Improving efficiency key to survival in weak market

By Shruti Salwan
Published: Thursday, 22 October 2015

Prices below production cost in some areas, although slowing output rather than mothballing may cut losses;Masan Resources eyes chance in tough market.

The survival of fluorspar producers in a punishing market was the key theme of discussion at the opening of IM’s Fluorspar 2015 Conference in Marrakech, Morocco, in October, with miners in some regions intimating that selling prices for the mineral are already lower than the cost of production.

Under the industry’s present governing circumstances of weak demand and oversupply, it has become more important for producers to improve processing technologies to bring down operating costs.

News8  

Fluorspar miners will need to employ efficient 
production methods to stay afloat in the industry’s 
current challenging climate. Some operations, 
like Vanoil Energy’s Witkop mine in South Africa 
(pictured), have already been put on care and 
maintenance. (Source: Vanoil Energy)

According to Jess Roberts, senior analyst at UK-based Roskill Information Services, 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. In some cases, Roberts said, fluorspar producers that are currently making a loss might choose to stay in production in order to meet their fixed production costs, as has been seen in the Chinese molybdenum industry.

"Although fluorspar prices are likely to face further drops by the end of the year, long-term views remain optimistic," Roberts said, adding that Roskill predicts an upward price swing in 2017, "which will revive market sentiments."

At present, the fluorspar industry is stuck in a cycle of weakness, owing to limited demand and easy access to high quality, low cost material from several global sources.

Roskill estimates that fluorspar prices, which were around $440/tonne in 2012, averaged just $300/tonne in H1 2015 and Roberts said that further decreases moving into 2016 cannot be discounted.

According to the IM Prices Database, acid grade fluorspar (acidspar) prices are hovering around $260-$280/tonne on FOB China basis, although some delegates indicated that these prices are now indicative of CIF ranges.

Roberts’ views were echoed by Dominic Heaton, CEO of Vietnam-focused Masan Resources, who outlined that it has become more important to deal with impurities in the polymetallic ore from the company’s Nui Phao mine to make its material quality-competitive in a struggling market.

Masan now accounts for over 20% of the acidspar traded across the world, Heaton said. Highlighting plans to develop a fully integrated fluorine supply chain, Heaton said that, at present, the company intends to focus on enhancing its market presence in raw materials, although downstream expansion could be in the pipeline.