Mexichem optimistic on acidspar, fluorochemical industry conditions

By Shruti Salwan
Published: Monday, 25 April 2016

Transition to HFOs unlikely to impact acidspar Questions for GulfFluor’s AlF3 plant in GCC Solvay to use tailing for the graphite market

Ongoing regulatory changes in fluorspar’s downstream markets are unlikely to have an impact on acidspar demand as Mexichem believes that the new generation of refrigerants and fluorochemical products will be growth drivers for the acid grade material.

With a reduction in greenhouse gas (GHG) emissions becoming a priority for many countries, regulatory changes as a result of increased environmental concern have created a shift towards eco-friendly substitutes in the fluorochemical space – a trend likely to create sustained demand for acid grade fluorspar (acidspar), according to fluorochemical producer Mexichem SAB de CV.

The environmental regulatory changes pertaining to the restricted use of hydrofluorocarbons (HFCs) and hydrochlorofluorocarbons (HCFCs) in the refrigerants segment in Europe and the US, has seen a transition to hydrofluoroolefins (HFOs) and lower global warming potential (GWP) refrigerants to some extentent, keeping acidspar consumption rates stable, Mexichem told IM.

Mexichem added that the transition towards HFOs and the new generation of low-GWP refrigerants is unlikely to impact acidspar consumption rates from the HFC phase out.

While the reduction of GHG emissions through the phasing out of HFCs remains a priority for many countries, a change is occurring in the types of refrigerants commonly used, with a move towards low and reduced GWP fluorochemical products.

This will see a phase out of higher GWP refrigerants gradually, while some existing reduced GWP refrigerants such as R-407A and R-32, will continue to play an important role in the transition, Mexichem said.

This means demand for acidspar is likely to be sustained in the sector, as acidspar will  remain the main component of the "new generation of chemicals", such as HFO-1234yf and HF-1234ze, the company believes.

Speaking to IM about the toughening legislation by the US Environmental Protection Agency (EPA) on the consumption of HFCs, Mexichem said that the move instigated by regulation such as the EPA’s SNAP is one away from higher GWP refrigerants.

It is important to recognise that while HFOs will certainly be important going forward, there are reduced GWP products on the market today, such as R-407A and R-32 that will have an important and increasing role to play, Mexichem explained.

While regulations and environmental concerns have renewed the focus on next-generation chemicals, namely HFO alternatives, the impact on acidspar consumption will be limited, with demand mainly coming from Asian countries including China and India.

Questions for GulfFluor’s AlF3 plant in GCC

With downstream demand slowing and challenges in the aluminium industry increasing, questions hover around whether Gulf Fluor’s AlF3 capacity continues to benefit from regional demand from GCC or is adding on to existing stockpiles in an oversaturated market.

Abu Dhabi-based chemical company, Gulf Fluor, which came on-stream last year with an additional capacity of 60,000 of aluminium fluoride, is aiming to continue operating at 80% of the capacity in 2016 despite the end-market slowdown.

The company has been producing 48,000 tpa of aluminium fluoride (AlF3) mainly serving the needs of aluminium smelters in the Gulf Corporation Council (GCC) region, IM learnt.

While growth in the GCC region has emerged as a beacon of hope in light of dwindling industrial demand, regional growth projections were largely pacified due to global macro-economic uncertainty, growth slowdown in China, a stronger US dollar and falling oil prices.

These worries have been further compounded by benchmark aluminium prices falling by 30% last year, tumbling to six-and-a-half year lows.

With Gulf Fluor aiming to operate at existing capacity, the demand for additional output remains uncertain in today’s tough market conditions.

However, sources told IM that aggressive undercutting of AlF3 prices from the Middle East and Europe is currently prevailing in the market as producers from the regions compete against low-priced Chinese material by offering significant discounts.

Subsequently, major volumes of fluorspar imported into the Middle East are likely to be influenced throughout 2016, as surplus of supply in the AlF3 market continues to discourage upstream demand.

Solvay eyes graphite processing at Okorusu fluorspar mine

Solvay’s Okorusu mine in Namibia, which stopped fluorspar production in 2014, plans to start processing graphite ore from the Okanjande graphite mine, owned by Gecko Graphite, while aiming to rework mine tailings for the production of metallurgical grade fluorspar (metspar) at the existing facility, media sources reported in April.

Magnetite mining has also been proposed within the two approved mining licence areas at the Okorusu mine, along with the development of a Tailings Storage Facility (TSF) for metspar at the existing processing plant.

There has been speculation over Solvay’s plans to spin off the Okorusu mine after it stopped production, taking over 80,000 tpa of acidspar capacity off the market, owing to weak market conditions.

Solvay’s Okorusu operation was the sole fluorspar mine in Namibia, and the second largest producer in Africa, behind the Vergonoeg mine in South Africa.