Grinding out: China’s GCC sector needs to work hard to change

By Albert Li
Published: Monday, 18 July 2016

Valued as a plentiful source of cheap, basic ground calcium carbonate materials, China now wants to tackle its overcapacity problems by shifting its emphasis onto higher value products – a familiar story with an uncertain ending, as Albert Li, IM China Analyst, explains.

China is the world’s largest producer of ground calcium carbonate (GCC), but the rapid expansion of this sector has been at the expense of sophisticated development, leaving it overburdened with cheap materials and a lack of high quality products. 

Companies producing GCC in China have been urged to follow the example of top international calcium carbonate producers in order to ensure Chinese products are given equal preference in terms of quality in the global marketplace.

Speaking at the China Calcium Carbonate Industry annual meeting in Shijiazhuang, Hebei province in May, Guangchao Qin, a leading scientist at the Hefei Cement Research and Design Institute (HCRDI) cited GCC market leaders Swiss group Omya AG and France-based Imerys SA as examples of businesses Chinese suppliers should emulate.

Both of these companies have constructed or acquired several calcium carbonate factories in China over the past two decades and have devoted significant resources to R&D as well as imposing strict controls on raw material quality.

"We need to make Chinese GCC brands famous outside China and make GCC customers stay in China," Qin told the meeting.

Some of China’s top GCC companies, such as Hezhou Kelong Micro-Powder Co. Ltd, Jiangxi Guangyuan Chemical Co. Ltd and Sichuan Jufeng Powder Co. Ltd are already looking for international models to follow as they attempt to restructure their businesses and upgrade their technical capacity. 

Generally, however, there is a reluctance among small and medium sized producers to make the investments necessary to enhance the value of their products and China’s GCC sector is going through a familiar phase of coercive consolidation as a result.

Analysis of GCC industry by specification, application and equipment

Specification

<325 mesh

325-800 mesh

800-1,250 mesh

>1,250 mesh

Share of production

35%

33%

20%

12%

Applications

• Filler in low quality paper making

• Interior decorations/home furnishing

• Dry-mixed mortar

• Fertiliser

• Flue gas desulphurisation

• Paper coating

• Plastic profiles

• Rubber

• Non-woven fabrics 

• Artificial marble

• Paper coating

• Non-woven fabrics

• Paints

• Water-based coatings 

• Medium and high end plastic/rubber  master batches

• Paper coating

• High quality plastic/rubber  master batches 

Functions 

• Reduce costs as filler

• Increase strength

• Anti-abrasive as raw material

• Reduce costs as filler

• Increase strength

• Anti-abrasive  and improves whiteness as raw material

• Reduce costs as filler

• Increase strength

• Anti-abrasive, improves flexibility, stability, water resistance and whiteness as raw material

• Increase strength

• Improve flexibility, stability, optics and breathability

Processing equipment

• Large Raymond mill

• Vertical roller 

• Large Raymond mill

• Vertical roller

• Ring-roll mill

• Ball grinding and categorisation

• Vertical roller

• Ring-roll mill

• Ball grinding

• Functional equipment 

• Vertical roller

• Twice-grading

• ring-roll mill

• Ball grinding and grading

• Functional further processing equipment

Product analysis

Overcapacity by 8%, low value added single-type product

Overcapacity by 10%, same quality problems, low characteristic development, low value added

Overcapacity by a little, same quality problem, imperfect functional development, normal value added

Insufficient capacity, import needed for high end product, insufficient functional R&D, high value added


Expansion of China’s GCC industry

China’s GCC industry developed swiftly in terms of scale between 2011 and 2015, but this expansion also brought problems. According to Qin, the three main challenges facing the sector are excessive consumption of domestic limestone resources to produce GCC via inefficient methods; ecological deterioration due to low environmental standards; and downstream imbalance, with gluts of some kinds of product and shortages of other kinds of GCC material.

GCC is the main ingredient in fillers and sealants and is also widely used in coatings, cement, ceramics, flue gas desulphurisation, animal feed and food. Limestone, a sedimentary rock composed primarily of calcite, is the main raw material for making calcium carbonate, although marble can also be used.

The US Geological Survey (USGS) does not give a figure for global limestone reserves, stating simply that they are "very large". China hosts some of the biggest limestone reserves in the world and last year produced around 2.3bn tonnes out of a world total of 3.6bn tonnes, USGS figures show.

In 2000, China’s GCC capacity stood at 17m tonnes. The industry expanded at a fairly moderate pace to reach 19m tonnes by 2011, before growing more rapidly to 21m tonnes by 2012 and peaking at 25.8m tonnes in 2013. After this point, output began to contract and in 2015 Chinese GCC capacity had fallen to 20m tonnes, according figures compiled by the HCRDI. 

Between 2011 and 2013, China significantly outpaced all other countries in terms of GCC production growth, with output expanding at an annual rate of 11%, compared to an average of just 5% in other GCC-producing nations.

The reasons for the exponential increase include the fact the local governments in parts of China with rich limestone resources actively promoted investment in GCC plants, while demand for GCC as a filler in rubber, coatings and artificial marble surged during this period.

According to Qin, the industry was allowed to expand unchecked and without planning or discipline, meaning that China’s GCC sector now faces structural problems that will be difficult to solve.

Breakdown of China’s GCC market

In an attempt to address these challenges, researchers at the HCRDI analysed data collected on the Chinese GCC industry between 2010 and 2014, breaking it down by capacity share according to product category, application and equipment used to process the material.

This analysis was used to help identify what needs to be done to improve the industry and GCC producers are being encouraged to innovate and adjust the structure of their businesses to make a bigger proportion of higher value products, rather than large volumes of basic materials. GCC is generally considered to be a low carbon, environmentally friendly functional filler which not only cuts production costs for manufacturers but also imparts strength, flexibility, breathability and water resistance to materials. However, many higher value applications now require more from fillers.

For example, in the paper making industry, GCC has largely replaced kaolin and titanium dioxide (TiO2) as an additive. In plastics, GCC is added to matrix resins to increase volume. But as paper and plastics develop, fillers added to product mixes need to be able to be more dispersible and improve heat, ageing and ultraviolet-ray resistance, while matching the whiteness imparted by TiO2

In China, the ratio of GCC and precipitated calcium carbonate (PCC) used as filler is generally only up to a maximum of 2:1, compared to as much as 14:1 in more mature manufacturing economies, meaning there is plenty of potential for demand to increase in this application area.

Manufacturing equipment and techniques

The sophistication of processing equipment used to produce GCC has progressed significantly in China, especially in terms of large scale production, but there are still some flaws in the fine grinding, grading and energy consumption parts of the manufacturing cycle. Normal dry method equipment for producing GCC includes Raymond mills, vertical roller mills, ring-roll mills and ball mills. Wet processing, on the other hand, generally involves vertical or horizontal sand mills. 

Scope for improvement in this area covers enhancing processing throughput capacity from a current average of around 1-18 tph by around 10%, optimising particle sizing to ensure that most processed products consist mainly of 2 micron material and improving mesh distribution.

HCRDI’s Qin explained that dry GCC processing is advantageous for large scale production of material with a mesh size below 2,500, but is unsuitable for producing finely ground products. Wet processing is better for producing fine and functional GCC with mesh sizes between 2,500 and 6,500 or a high proportion of 2 micron particles. However, wet processing is more expensive and energy intensive than the dry method, meaning that the latter is generally preferred by Chinese companies. 

Both techniques can be improved, Qin said, and suggested using wet methods to further process material produced from the dry process to reduce operating costs and add value to basic products.

Structural adjustment

Altering the ratio of high to low value GCC products made in China will require rebalancing the emphasis of the industry and changing the manufacturing set up within individual companies. One of the most important measures is the elimination of inefficient manufacturing capacity with the aim of cutting volumes of basic, low value GCC materials and replacing them with higher value products.

Today, cheap basic GCC accounts for 65% of China’s production capacity and there is an average 8-12% overcapacity in most product lines.

As with the majority of China’s industrial minerals industry, the GCC sector has the problem of too many small producers, most with production capacities of less than 50,000 tpa. In recent years, some parts of China with rich limestone resources have begun consolidating their local GCC industries, cutting the number of individual companies and increasing the capacity of production lines. 

For example, Changxing county in Zhejiang province, east China, recently shut down 343 GCC powder producers and regrouped them into 13 large scale companies, including Jinding Powder Co. and Huayuan Chemical Co., which have emerged as two of China’s leading GCC producers.

Hezhou city in the Guangxi autonomous region of southwest China, has said it plans to follow Changxing’s example and promote the development of a local calcium carbonate manufacturing base turning out products with a total value of Chinese renminbi (Rmb) 100bn ($15.3bn*) annually. 

But roadmaps to upgrading China’s raw materials industry to compete with the best international products on the market have been on the table for some time across a wide range of industrial mineral sectors. It is certainly true that moving Chinese industry away from high volume, low value manufacturing is a cherished target of China’s State Council and is a central pillar to the country’s 13th Five Year Plan, which runs from 2016-2020.

Realising these ambitions and the efficacy of consolidation measures to achieve them remain difficult to track, however, and the country is still yet to get a handle on its sprawling raw materials industry and overcome international perceptions that Chinese GCC is desirable merely for being cheap, rather than its quality.

*Conversion made May 2016