Fluorspar miners look to divest operations

By Shruti Salwan
Published: Thursday, 22 October 2015

Companies try to offload low profit assets as acidspar available at rock bottom prices; New supply makes up for South African closures.

Tough competition from emerging low-cost fluorspar suppliers in Southeast Asia is making it difficult for producers elsewhere to sustain mines that cannot match these new market entrants on opex, IM learned at the Marrakech fluorspar meeting.

Weak demand for fluorspar and downward pressure on prices saw some operations close down last year, and the market has since been further stifled by increasing competition from new low-cost supplies.

The negative market trend, which accelerated in the second half of last year, has forced some mining companies with fluorspar deposits to divest assets.

Conference attendees told IM that it is hard for operations with high production and/or logistics costs to survive in the current climate, especially when better quality acidspar material is available from some sources at market-bottom prices of $230-$250/tonne.

The projects most at risk of cancellation or divestment are those with higher impurity levels, high processing costs and longer distances to ports.

Nevertheless, the industry has seen some strong new players entering the market recently, with Vietnam-based Masan Resources, emerging as a major supplier despite the tough market conditions, led by China’s increasing dominance in fluorochemicals and its slowing economy. 

Further, Thailand and Myanmar have also joined the supply chain, with both the countries selling material within Asian free trade zone countries at a highly competitive price levels.

Supplies from this region compensate to some extent for the closure of the Witkop and Buffalo fluorspar mines in South Africa and the potential mothballing of Okorusu in Namibia, which faces being shut down owing to poor demand for its production. Competition from China remains the main challenge for these projects. 

Although the industry remains pessimistic over the demand outlook for fluorspar, delegates in Marrakech agreed that the key to sustainability is lowering costs, in order to cope with reduced margins in the current buyer-driven market.