In terms of sentiment, it does not get much bigger than one
of the world’s largest oil companies bidding
$1.1bn to buy the world leader in high technology batteries.
And that is just what happened with Total SA in May as it filed
what it called a friendly tender offer on all of the issued and
outstanding shares in battery maker Saft Groupe SA (for
€36.50/share), with the French Financial Markets
The acquisition, in simplistic terms, does not necessarily
mean more raw materials will be needed in the near-term to sate
an insatiable demand for energy storage, but it points to a
market moving up, which is good news for the minerals that
supply it – notably lithium, graphite, cobalt,
manganese (and in some cases even rare earths and
Lithium prices remain elevated and sentiment is still
bullish. Spot prices are way above contract levels and the
market is excited. Graphite prices meanwhile remain low and
stable, rare earths prices are ticking down on weak
While the move towards renewables is a positive one for the
markets, the question remains; does this indicate that oil
majors are turning away from their bread and butter of fossil
fuel exploration? A market which affects minerals such as
bentonite, barite (barytes) and silica (frac) sand?
A recent revision upwards in the barite price would suggest
that the oilfield minerals market is not as depressed as
expected, although this is by no means a recovery, according to
The barite price edged up in early May, but market
participants told IM at the time this was in
response to more expensive freight costs and a slight uptick in
the oil price. However, sentiment remains low.
If the production results from US proppant manufacturers are
anything to go by, the frac sand market also appears to be
depressed. Carbo Ceramics, a leading producer, said that the
average price of its Northern White Sand is down to $0.02/lb,
or $45/tonne (approximately) from $67.5/tonne over the same
period last year.
Stockpiling of rare earths by China’s six
largest producers has pushed up prices in the country over the
Following the completion of the first stage of a national
inventory-filling effort in mid-April, China’s
domestic rare earths prices have seen increases almost across
Praseodymium-neodymium oxide has jumped from Chinese
renminbi (Rmb) 310,000/tonne ($47,554/tonne*) to Rmb 315,000
tonne ($48,321/tonne), and dysprosium oxide has risen from Rmb
1.3m/tonne ($199,420/tonne) to 1.32m/tonne ($202,488/tonne),
while a number of other groups have seen price increases of up
Yttrium oxide was the only rare earth oxide product not to
see a month-on-month price rise.
Export markets have yet to register a price improvement
however. While the quantity of rare earths exported by China
increased 90.1% year-on-year (y-o-y) in April, to 3,696 tonnes,
the average price of exported material continued to
Given that the effects of the stockpiling process, which
began on 30 March, weren’t felt until late April,
overall Q2 export prices should register an increase,
Industry participants were largely bullish about the
prospect of a continued uptick, pointing to the sustained rise
in prices following previous stockpiling efforts in recent
Others remained more pessimistic, describing the stockpiling
effort as a national support policy and insisting that only an
improved level of market demand can bring sustained price
increases. They argue that the focus should rather be on
supply-side reform efforts.
They have pointed out that the effects of the stockpiling
process should in theory be felt downstream in the markets for
applications that use the materials, such as
neodymium-iron-boron magnets, which make use of praseodymium,
neodymium, dysprosium and terbium.
But factors including overcapacity, an ongoing price war and
strong competition, mean that many downstream companies are
reluctant to participate in stockpiling themselves and so
continue to place orders as before.
Metspar to recover
A rebound in Chinese and US steel output in the first four
months of 2016 has insulated the metallurgical-grade fluorspar
(metspar) market with increased enquiries signalling a recovery
Registering 0.5% y-o-y growth in crude steel production in
the month of April this year, China’s consumption
of lower purity grades of fluorspar has increased, further
boosted by an increase in US raw steel output.
Sources told IM that enquiries for metspar
have increased on the back of growing consumption in steel
production, with the new league of suppliers from Afghanistan,
Pakistan and Iran emerging as low-cost suppliers.
Shipments into China, however, have been mainly concluded
from neighbouring producers including Mongolia and Myanmar,
accounting for 80% and 20%, respectively, of the total metspar
imports into the country in Q1 2016.
Nevertheless, the upturn in steel production in China has
been matched by a downturn in international markets, especially
within Europe, which registered muted growth last year, with
the European Union (EU) bearing the brunt of overcapacity in
some of the low-cost producing regions.
As a result, domestic consumption has served to stabilise
rather than enhance the Chinese market and is likely to prevent
a further drop in prices.
Used primarily as a flux for smelting and refining of steel,
the metspar market is driven by industrial end-markets.
With few signs of an upturn in these markets
internationally, domestic consumption is likely to continue to
prop up demand entering H2 2016.
However, IM learnt from its sources that
an increase in volumes of low-cost metspar is
being traded from several small scale suppliers in areas such
as Afghanistan, Iran and Pakistan. This is likely to put
downwards pressure on prices as high-cost producers in other
regions struggle to compete.
Although shipments from these markets are currently
irregular, the prices offered for material with CaF2
content varying between 80%-85%, are $50-$70 cheaper than other
Views on the equilibrium of the lithium market in the coming
years are diverging, leading to differences of opinion on what
might happen to the price of the battery mineral.
Albemarle Corp., the world’s largest producer
of lithium products, has said that it foresees balance in the
supply and demand dynamics of the lithium market in the medium
Responding in May on an earnings conference call to a
question on whether increased demand might lead to additional
price hikes in the coming years, company executives said they
were confident the market would remain relatively steady.
"We see supply-demand in balance through the midterm, say,
through the next five years or so. And so given that the market
is in balance, we think that we should not see a lot of
volatility in pricing," said John Mitchell,
Albemarle’s president of lithium and advanced
But other participants maintain the current price rise is
likely to continue.
"The underlying price pressure from China will not change.
Even the sceptics are turning around on this story. They are
optimistic about the future [of lithium]," one source at a
major battery producer told IM.
Lithium carbonate contracts closing during Q2 saw prices of
$10-$15/kg (large quarterly contracts, min. 99-99.5%
Li2CO3, del US), while lithium hydroxide
contracts are closing between $14-20/kg (large quarterly
contracts, 56.5-57.5%, packed in drums or bags, del Europe or
On the spot market meanwhile, lithium carbonate (min.
99-99.5% Li2CO3, CIF China) is selling on
a broad range of $20-28/kg, with lithium hydroxide (56.5-57.5%
LiOH, CIF China) prices between $25-30/kg.
Mitchell said that it is Albemarle’s position
"to continue to support the market and its growth" and as such
is "not seeking to exploit any kind of spot market pricing that
people seem to talk about, where they see that type of spot
market prices in China".
Albemarle’s view echoes that of a number of
sources, who told IM that prices should not be
allowed to reach levels that might "kill electrification".
Others have suggested that it is not in the interest of the
current major producers – traditionally limited to
Albemarle (/Rockwood), Sociedad de Quimica y Minera SA (SQM)
and FMC Corp. in South America – to allow prices to
escalate to levels that makes it cost competitive for
competitors to bring projects online.
Yet participants say it will no longer be possible for the
big players to keep prices down.
"I think at the moment it is no longer possible to keep the
price low. All these new entrants won’t be scared
by the price of operations. There will be volume coming online
in the coming years, but it will not be enough," one source
Then there’s the argument that what goes up
must come down, that the boom is in fact a bubble.
"Absolutely it’s a price spike (…) Look
at uranium. Look at rare earths," said another source. "In each
case you had the narrative of supply not being there, while
demand was booming, and look what happened."
This month, IM heard from market
participants that chromite sand prices were narrowing.
While investigations into the perceived price move are
ongoing, news that US refractory and speciality minerals
company Minerals Technologies Inc. (MTI) will discontinue its
Ruighoek chromite mine and sand plant in South Africa, is a
bearish indicator to the industry.
The decision comes as part of the partnership agreement that
MTI struck with Glencore South Africa last year to facilitate
supply of the latter’s chromite products to a
number of markets, including the Americas.
"In early 2015, MTI announced a strategic realignment of its
South African chromite business through a partnership with
Glencore that would generate improvements in quality,
efficiency and cost. Part of this strategy was to take
advantage of Glencore’s manufacturing capability.
As this partnership has progressed, MTI is now winding down its
chromite operations in South Africa," the company told
The chromite opencast mine and processing facility is
MTI’s only chromite operation. IM
understands the plant has a production capacity of up to
In the future, the supply of chromite products to
MTI’s existing customers will be handled by
Glencore Corp., while MTI will provide assistance and technical
help for all metalcasting applications.
The latest move marks a different direction compared with
previous intentions to expand the South African operation.
Under the former ownership of Amcol International Corp., the
company had earmarked $5m to upgrade and expand the plant back
in early 2012.
The stockpiling process
According to the China Rare Earth Association, the
stockpiling effort will have three stages, taking a total of
5,200 tonnes rare earths off the market and transferred to a
national warehouse, broken down as follows:
Stage 1 (completed by 15 April):
Yttrium oxide – 700 tonnes
Erbium oxide – 300 tonnes
Total – 1,000 tonnes
Stage 2 (to be completed by 31 May):
Praseodymium-dysprosium oxide – 1,250 tonnes
Dysprosium oxide – 250 tonnes
Terbium oxide – 46 tonnes
Europium oxide – 54 tonnes
Total – 1,600 tonnes
Stage 3 (to be completed by 31 August):
Praseodymium oxide – 260 tonnes
Neodymium oxide – 330 tonnes
Pra-neo oxide – 750 tonnes
Dysprosium oxide – 580 tonnes
Terbium oxide – 214 tonnes
Other – 466 tonnes
Total – 2,600 tonnes
PRICING NOTICE: Launch of lithium carbonate spot
Industrial Minerals will publish spot lithium carbonate
prices from Thursday May 26th.
Specifications for the assessment are below:
Description: Lithium carbonate, min
99-99.5% LiC2O3, spot price, packed in
bags, CIF China, $/kg
Deal type: Spot price
Currency/Unit: US Dollar $/kg
Assessed: By Industrial
Mineral’s London and Shanghai office
Publication: Thursdays between 3pm and
For queries on this price, contact pricing reporter
Myles McCormick at
Questions relating to Industrial Minerals pricing
methodology and policy should be sent to Metal Bulletin market
data and compliance manager Paolo Sorze at