Good riddance 2016

By Siobhan Lismore-Scott
Published: Thursday, 15 December 2016

Editor's comment: 2016 will not be remembered fondly by many in our collective industries.

Comment2Sometimes it is difficult to gauge how history will remember an incident, a time, a person. By this I mean that it is not always easy when you are in the thick of it  to notice that you may be witnessing history take place.

2016 will not be remembered fondly by many in our collective industries. In fact, unless you are in one of the handful of markets that has actually prospered (lithium battery markets for example) then you may be forgiven for closing the curtains and stoically waiting for 2016 to finish. I felt like that after learning of David Bowie’s death alone.

In all seriousness, politically, we have seen massive upheaval this year. The refugee crisis continues, the war in Syria continues. And the UK will be leaving the EU. Make no mistake, Brexit has far reaching implications for our industry - we just don’t know what they are yet.

The US election both bored and titillated the public, but once the dust has settled, what does a Trump Presidency look like? A billionaire businessman who swore to break ties with China is now the leader of the free world. It’s too early to tell how terrifying this could be, or how prosperous, but the IM team has spoken to many of you on the ground about what the election means and how it affects different end markets (see pp8-9).

So, 2017 promises a fresh start, a new page. 

It is the year of new beginnings - of Iluka Resources beginning to work in Sierra Leone, after the Sierra Rutile merger completes; of, potentially, the creation of a refractories behemoth following the RHI/Magnesita merger; of Tesla’s Gigafactory gloriously ramping up production; and of what many hope will be the slow creep back upwards for oil prices following OPEC’s promise to cut oil output for the first time in almost a decade. 

This month the IM team has picked apart several industrial minerals’ markets and assessed how they have expanded - or, indeed, much more likely, contracted - in the last 12 months. This is an interesting and informative read (pp49-60) and may lend some insight as to what to expect in 2017.

For us at IM, 2017 marks a very special occasion - our 50 year anniversary. Watch this space to see how we intend to celebrate it!

Graphite’s lull

It has not, however, been a good year for the graphite market. Prices have peddled downwards and the market is still oversupplied, by all accounts. This month, Davide Ghilotti, IM Chief Reporter, looks into the graphite market and assesses the impact of the downturn in the refractories industry (pp26-31). 

What quota?

This issue also tackles the scale of corruption in the Chinese magnesia market (pp20-21) and discusses how several Liaoning companies are seeking to diversify away from refractories, given the downturn in the market (p70). 

Unbelievably, as IM was going to press there was still no indication as to whether or not there would be any magnesia quotas for the six months ahead. The Chinese government has eliminated the magnesia quota and essentially not told told anyone.

It is a massive understatement to say that this surprised and concerned market participants IM spoke to, as local and international companies alike are now at a loss as to what to expect on the market in the coming months and years.

IM was told of instances in which international customers cancelled the orders they had already placed with Chinese suppliers, in the hope of a price decrease next year fostered by a no-quota system.

The effect on prices is at the heart of the debate: the sector has expressed concerns over whether the scrapping of the quotas will lead to Chinese magnesia flood-ing the international market, instigating price wars and oversupply (p62).

Chinese barite

The growth of the Chinese barite (barytes) industry has happened steadily, and, as Ian Wilson, Consultant, writes (pp32-37), the quality and quantity and position to market means that there are companies which can serve the worldwide market, if so required.

We have all of course heard about the downturn in the oil and gas industry  (still the largest market for barite) - which has impacted almost every single sector.  However, there are some indications that oil prices may start to increase, resulting in a pick up in activity in the next six months (p15).

High purity quartz

High purity quartz (HPQ) is another mineral market which has an upwards trajectory. The solar industry has played a big part in HPQ demand in the last decade and its role is set to grow as new large and innovative solar investments are announced. US electric vehicle maker, Tesla Motors Inc., in 2016 announced its intention to acquire Californian solar energy producer, SolarCity Corp., for $2.6bn. The cost of installing solar is also going down. Anglo-Australian mining giant, BHP Billiton Ltd, recently stated that, "on average, wind and solar energy are expected to reach cost-parity with incumbent technologies on a new-build, unsubsidised basis in about a decade".

In some areas, such as Mexico, solar is already at cost parity with conventional energy generation. 

And HPQ is used in many other areas - like the semiconductor market - which are expected to grow in the next 12 months.  Cameron Perks, IM Correspondent, takes readers through the intricacies of the market and speaks to those already supplying the market with HPQ - and those still hoping to.