Kaolin in India: Cracking high value markets

With one of the briskest growth profiles of any of India’s industrial segments, kaolin consumption and production in India has scaled new heights in recent years. Although the last two years have not been the strongest periods for kaolin producers, recent trends in demand and output indicate underlying strength in the sector.

India has some of the largest kaolin resources in Asia. According to United Nations Framework Classification (UNFC) figures, the country hosts around 2.7bn tonnes kaolin. Identified reserves constitute only about 7% of the estimated resources, at 177.2m tonnes. Of the total reserves, 70% (about 124m tonnes) are in the proven category, while the rest (about 53m tonnes) fall under the probable category.

The resources are spread over a number of states. Kerala, in southern India, holds about 25% of the country’s kaolin, and this is followed by West Bengal and Rajasthan, which each host 16%, and Odisha and Karnataka, which have 10% of the resources apiece. 

Despite hosting these large resources, only a minority of Indian material is suitable for major, high value kaolin markets. Out of the total resources, about 22%, or 608m tonnes, falls into the ceramic grade category, while 4%, or 111m tonnes, is classified under chemical, paper filler and cement grades. The remaining 73%, or 1.98bn tonnes, is considered to be mixed grade, other or unclassified material.

India’s central government and some of the state administrations are playing a proactive role in developing the country’s minerals sector, which places a special emphasis on kaolin. 

Kerala hosts some of India’s highest grade and finest quality kaolin and is home to one of the country’s main producers, English Indian Clays Ltd. (EICL). Recently, the government of Kerala’s mining and geology department, launched exploration programmes which identified two major kaolin zones in the state. A southern zone was discovered between Thiruvananthapuram and Kundara (Thiruvananthapuram and Kollam districts) and a northern zone was delineated between Kannapuram Madayi-Cheruthazham (Kannur district) to Nileswarm-Manjeshwaram (Kasargod district). A combined reserve of 172m tonnes (80m tonnes probable and 92m tonnes possible) sedimentary and residual kaolin has been estimated for the discovery. Kerala china clay is one of the finest quality clay available in the country.

Consumption and production

With an annual domestic demand of around 2.14m tonnes kaolin, India has emerged as one of the top consumers of the mineral in the world. The sector is expected to register high single digit growth in the next few years, spurred by increasing demand from a number of different end-user segments.

Kaolin mining in the country during the Indian financial year 2014-15 recorded a growth rate of 3% – lower than in previous years owing to the wider economic slowdown in India. However, a number of domestic industry players told IM that, in calendar year 2015, growth in production and consumption stood at more than 8% compared to 2014. 

The last financial year, 2014-15, was something of a blip for the Indian kaolin industry. In the previous fiscal year, 2013-14, the country produced 4.75m tonnes kaolin, up by 11.6% on the 2012-13 period. 

Nearly 65% of kaolin output in 2013-14 was reported from the state of Gujarat, followed by Rajasthan, at 17%, Kerala, at 15% and West Bengal, at 1.9%, while the remaining 1.3% was contributed jointly by the states of Andhra Pradesh, Jharkhand, Karnataka and Madhya Pradesh.

Growing demand for high quality glazed ceramic tiles in India is helping to drive domestic demand for kaolin. (Source: McKay Savage, via Flickr)

Ceramics industry to drive Indian demand

Record production growth in India’s ceramics industry, which accounts for about 33% of kaolin consumed in the country (see Figure 2), has been one of the main drivers of the sector in recent years. 

With an installed capacity to produce 700m square metres of tiles and 15m pieces of sanitary and tableware, most of India’s and international kaolin producers are putting special emphasis on catering to this segment. 

The expansion of ceramics is important to the health of the Indian kaolin sector since it is needed to offset declining consumption in other areas of the market.

The Indian paper industry has, in the past, been a significant end use for kaolin, however, in step with trends in the global paper market, manufacturers are increasingly replacing kaolin with calcium carbonate, meaning that paper’s share of kaolin’s downstream usage is shrinking.

Major producers and processors of kaolin in India

In anticipation of robust demand growth from kaolin’s various end-use segments, most of India’s kaolin processors have expanded their capacities, or are planning to do so. EICL, the leading producer of kaolin in the country, has streamlined its operations and is capable of processing up to 240,000 tpa kaolin across its three plants in Kerala. 

Another major industry player, Ashapura Group, has expressed its intention to set up an additional kaolin processing plant. Rajasthan-based Popular Minerals invested in a state-of-the-art 130,000 tpa processing plant, which it commissioned in 2015.

Gujarat-based 20 Microns Ltd. has expanded production at its Bhuj plant, meanwhile, to 65,000 tpa calcined kaolin, up from 40,000 tpa. According to 20 Microns, the company exports more than 30% of its kaolin output to the Asia Pacific region, the Middle East and Western Europe.

Ashapura Minchem

One of the largest miners and processors of kaolin in India, Ashapura has been mining and processing kaolin products from its reserves in Gujarat for several decades. Having recognised the high demand and coinciding shortage of high quality kaolin in India, the company acquired mines containing reserves of 2.5-3m tonnes kaolin in Kerala. Ashapura claims that the ore extracted from these mines has a kaolinite content of 96%, meaning it can supply superior quality material in terms of whiteness and other properties. 

The company also operates a kaolin processing plant in Kerala, with a capacity of 180,000 tpa. At present, this plant is only producing around 100,000 tpa, however. 

Kaolin consumption in India by end use. Source: Ashapura Minchem

Speaking to IM, Geetha Nerurkar, CEO of bentonite, kaolin and allied products at Ashapura Minechem, said that even though its processing plant is only operating at 56% of its design capacity, its 500,000 tpa mining rate coupled with its 100,000 tpa processed output makes Ashapura one of the largest players in the Indian kaolin industry, with a substantial international sales network. "Besides supplying domestic demand, we also export a sizable part of our production to countries including Japan, Norway, Latvia, Spain, Italy, Turkey, UAE, Saudi Arabia, Cambodia, Taiwan, China, Sri Lanka and Mexico," Nerurkar said.

She conceded that India still imports a large proportion of its high grade kaolin requirements, but said that this represented an opportunity for domestic businesses to squeeze out foreign competition. "It is true that a significant portion of Indian demand is imported, particularly in premium and higher quality kaolin. Our organisation is trying to develop value-added products to counter such imports."

Nerurkar dismisses the idea that the state should step in to protect India’s domestic kaolin suppliers. "The government should not intervene in kaolin imports, since there is a gap between the supply and demand of high quality and ultra-fine kaolin in India," she said.

A few years ago, Ashapura Minchem’s subsidiary, Ashapura International, announced plans to establish a kaolin powder manufacturing plant in Gujarat. The project was expected to be established close to mineral reserves in Kutch, in northwest Gujarat, from where the company already mines and processes kaolin products. However, the company has since deferred this plan and has not given a date for resuming the project.

Popular Minerals

Rajasthan-headquartered Popular Minerals has emerged as one of India’s most significant miners and processors of kaolin in a relatively short span of time. The company owns 26 mining leases over 20km² at Sawa, in the Chittorgarh district of Rajasthan. 

Popular Minerals operates five kaolin processing units at Sawa and can process between 10,000 and 12,000 tpa washed kaolin from each of its five washing plants, which are located within 10km of its kaolin mines. Last year, the company established a new plant – under the name MS Sawa Clay and Minerals Pvt Ltd – with an installed capacity of 400 tpd processed kaolin. The company also produces 650 tpd high purity, glass grade silica.

With the new plant, Popular Minerals has become the second largest kaolin processing company in India, behind the current market leader, EICL, which has a capacity of 240,000 tpa processed kaolin.

Jayesh Dave, general manager of Popular Minerals, told IM: "Our new plant is the single largest facility to produce kaolin for the ceramics, paint and paper industries." Equipped with a state of the art R&D centre, the plant utilises ore from Popular Minerals’ own mines, which, according to Dave, have high recovery rates and high after-fired whiteness and low yellowness.

"With our new kaolin processing plant, we are able to process premium grades of kaolin, which are used in high end ceramics, paper and paint industries," Dave said. "The Indian ceramic industry, particularly Gujarat-based producers, has added huge capacity for ceramic products in recent years. This has resulted in high demand from this sub-segment. Hitherto, most of the kaolin required for these ceramics production units came from the southern part of the country, which entailed high transportation costs. With our plant, we have been able to reduce this expense, as well as the delivery time to the ceramics manufacturing clusters of Gujarat."

Dave believes that kaolin mining Rajasthan has a better future than it does in other areas. "Kaolin miners in the southern states are facing various problems, including climatic issues, while the recovery of kaolin from deposits in Gujarat is very low," he said.

India has several large kaolin mining areas, with companies operating in the states of Gujarat, Rajasthan (pictured) and Kerala. (Source: Popular Minerals)

Kerala Ceramics

The oldest company in the Indian kaolin industry, state-controlled Kerala Ceramics was established in 1937 as a private business. Acquired by the state government in 1963, the company produces about 30,000 tpa processed kaolin. Located in Kollam, Kerala, it exploits the vast kaolin resources within the state. As well as supplying the domestic market, Kerala Ceramics also exports kaolin to Malaysia, Australia and a few Middle Eastern countries. 

The company’s commercial manager, Harinder Krishnan, told IM that Indian kaolin is suitable for only a few market segments. "Most of the paper producers are dependent on imports, as higher quality kaolin is required for this industry," he explained.

"During the last three years, imports of kaolin into India have increased. Shipments, particularly from China, have skyrocketed. Other countries’ exports to India, such as the US, Ukraine and some other European countries, have dropped as Chinese producers have started supplying material at comparatively low prices," he said.

English India Clays Ltd (EICL)

Incorporated in 1963 in collaboration with UK-based English China Clay (ECC) (now part of France’s Imerys SA), EICL is the leading miner and processor of kaolin in India. EICL’s relationship with ECC ended in 1992, after which the company formally changed its name from English India Clays Ltd. to EICL.

EICL’s clay division has three manufacturing locations in Kerala, at Veli, Thonnakkal and Kollam, in Thiruvananthapuram district. It specialises in mining and processing high grade kaolin and operates one of the largest integrated clay facilities in India. 

The company is expanding its operations to other countries with high grade kaolin resources. In 2015, it entered a joint venture (JV) with Tanzania-based MAC Group for mineral prospecting in the east African country. The main object of JV is to assess the feasibility of setting up a kaolin mining and processing project in Tanzania. EICL holds 70% of the shares in the JV, while MAC Group holds the remaining 30%.  

Imports

Despite having vast resources of kaolin, India is still dependent on imports of the clay to serve its domestic needs. Industry participants disagree over the proportion of Indian kaolin consumption supplied by imports and official figures are inconclusive.

Popular Minerals’ Dave estimates that 6-8 % of total Indian kaolin demand is imported, mainly to serve the ceramic glazing industry and some segments of paper and paint markets. He said that the main exporters of kaolin to India are Ukraine, the UK, Germany, China and Iran. 

Kerala Ceramics believes that the import figure is higher, however, at around 15 % of overall Indian consumption.

Ivan Tokarev, sales manager at Ukrainian kaolin supplier Prosco Resources Ltd, told IM that India was an "exciting" kaolin market. "We have just started to develop [our share of the] Indian market. We are selling kaolin for glazes and engobes for ceramics to a very big ceramic tile cluster at Morbi in Gujarat."

Prosco is a leading Ukrainian mining enterprise and its business includes mining and marketing refined kaolin and silica sand products. Ukraine is estimated to hold 7% of world reserves of some of the highest quality kaolin available – material which it seeks mainly to ship abroad.

"With end using industries [in India] growing at a very healthy pace, you will see a huge jump in imports of kaolin in the country in coming years," Tokarev said.

If India is to compete with hungry international suppliers, it will need to boost its value-added processing capacity and invest in developing more, high grade deposits. A growing middle class in India is spurring demand for better quality ceramic products, but ceramic manufacturers are eager to maintain margins, so Indian suppliers will also need to ensure that they are cost competitive with imports.

Given that the country is one of a few with reasonably robust economic growth, many foreign companies are eager to take advantage of Indian custom, and it will be a race against time for India to increase its share of higher value markets before its GDP decelerates and kaolin demand begins to slow down.

*Conversions made January 2016

Chinese kaolin

Chinese kaolin is a significant competitor to Indian material in India’s domestic market. However, given that high quality kaolin resources are scarce in China, with most material containing impurities such as feldspar, quartz, brucite, iron and titanium, a lot of Chinese imported material competes with low to mid-value Indian kaolin for non-premium applications. 

The dissemination particle size of iron in Chinese kaolin is very fine, making de-ironing difficult. Magnetic de-ironing is important for producing pure material. 

Kaolin from Huaibei, in China’s Anhui province, is a major supply source, but the material is coal-series kaolin, with high iron content and a grey-black colour, giving it a low market value. But Chinese companies are investing in upgrading their processing capabilities to produce better quality material and could present more competition on international markets. Huaibei-based Jinyan Kaolin Co. recently established a 10,000 tpa kaolin production line using magnetic separator technology, which has successfully reduced the material’s Fe₂O₃ content to below 0.5% and increased its whiteness to 93%.