leading producer, V.V. Mineral, is planning to expand
feedstock production in the country as prices continue to
rise. (Source: V.V. Minerals)
Mineral sands market players have been tentatively
predicting a sustained improvement in the market for the last
couple of years. But, while end users have seen increased
demand seasonally for some time now, improvements first seen in
paints and coatings and then in titanium dioxide (TiO2) have
failed to trickle down to feedstock producers owing to an
imbalance in the market, which experienced a continued period
However, recent support for higher ilmenite and rutile prices
indicates that the sector may have finally turned a corner,
as TiO2 manufacturers operate at higher capacities and the
market for both pigments and feedstocks continues to
Mineral sands fall under two main categories, zircon and
TiO2 feedstocks, which include a number of products such as
rutile, chloride and sulphate ilmenite and leucoxene. Ilmenite
processing also results in higher grade TiO2 feedstocks such as
synthetic rutile and slag.
Zircon is primarily used in the production of ceramic tiles,
in addition to refractories and speciality applications in the
form of zirconia and zirconium chemicals for use in end markets
such as nuclear fuel rods, catalytic converters and water
Zircon reserves are estimated at a total of 78m tonnes, with
51m tonnes located in Australia and 14m tonnes in South Africa.
According to US Geological Survey (USGS) figures, 2015
production (2016 figures were not yet available at time of
publication) reflected reserve locations, with Australia
leading output at 500,000 tonnes, followed by South Africa with
380,000 tonnes. China accounted for 140,000 tonnes in 2015;
Indonesia with 110,000 tonnes, the US for 60,000 tonnes;
Mozambique for 50,000 tonnes and India with 40,000 tonnes.
TiO2 feedstocks meanwhile are mined mainly as ilmenite and
rutile, and to a lesser extent leucoxene. These usually contain
between 50% TiO2 content (for sulphate ilmenite) up to 95% TiO2
content (for natural rutile).
The main end use for TiO2 feedstocks, accounting for 80-90%
of production, is pigment manufacturing for consumption in
paints, paper and plastics. The remainder of TiO2 feedstocks
are consumed in titanium metal markets and welding flux.
Ilmenite production in 2015, which overall totalled 5.6m
tonnes, was led by China, according to the USGS, at 900,000
tonnes, followed by Australia with 720,000 tonnes, Vietnam with
540,000 tonnes, South Africa with 480,000 tonnes and Mozambique
with 450,000 tonnes.
Rutile production meanwhile at 480,000 tonnes excluding US
production, was dominated by Australia with 144,000 tonnes
and Sierra Leone with 110,000 tonnes.
Changes in the feedstock sector
The difference between the production methods of TiO2
– chloride route and sulphate route –
determines the feedstock used by a pigment manufacturer, and
changes in process technology trends will impact raw material
demand for various grades of rutile and ilmenite.
Feedstocks used for the sulphate process include lower grade
ilmenite and sulphate ore slag, while the chloride process
utilises rutile, synthetic rutile and chlorinadable
Global output is currently led by sulphate route technology
– reflecting the recent strengthening particularly
in sulphate ilmenite prices – in part owing to
China’s growing role in the sector, as currently
only four of China’s 42 TiO2 producers have the
capacity to produce chloride route TiO2.
However, as China adopts more chloride-route technology in
preference to sulphate plants there will be another cross over
sometime in the next 10 years, once again changing the
consumption for feedstocks.
While consolidation in the pigments industry has been
widespread, major changes to the supply of mineral sands have
been comparatively less prominent, with oversupply issues being
addressed mainly by existing producers taking capacity
In December, Sibelco Australia
told IM that the company had decided
to reverse its decision to halt mineral sands mining at its
Stradbroke Island site in Queensland for the following three
months due to improving demand. The company was initially
planning to restructure its Stradbroke Island mineral sand
mining operations ahead of the Queensland
Government’s mining phase-out planned for 2019.
However the plan was scrapped as demand for ilmenite and rutile
improved due to re-stocking from TiO2 producers. Despite the
decision, the company has only three years of mining left at
the facility, as the Queensland government has committed to
ending mining activities in the North Stradbroke Island region
Other supply changes which have helped to rebalance the
market include the shuttering of IRC Ltd’s
Kuranakh mine in late 2015, which produced 144,005 tpa
ilmenite. Meanwhile Australia’s Queensland
Goondicum mineral sand deposit was restarted in April 2015 by
Melior Resources, but shortly thereafter shut down in August of
Iluka-Sierra Rutile takeover
More recently, a major change likely to shake-up the mineral
sands landscape is the takeover of Sierra Leone-based Sierra
Rutile Ltd by leading producer Iluka Resources. The merger was
completed in December 2016 for Australian dollar (A$) 393m
($293m). During the process, Iluka said it planned to evaluate
potential development routes at Sierra Rutile through
definitive feasibility studies on various options.
Production expansion options at Sierra Rutile’s
mineral sands operation in Sierra Leone include a larger
expansion at the Lanti dry mining operation to 500 tph
instead of 250 tpa of ore throughput; a similar, larger
expansion at the Gangama dry mining facility; and the
development of a new group of deposits with around 1,000 tph
The expansions at Lanti and Gangama would increase rutile
production from an estimated 135,000-145,000 tonnes in 2016 to
160,000-175,000 tpa. An expansion at Sembehun could increase
production in excess of 240,000 tpa.
While Iluka has concluded mining in the Murray Basin,
located in the Eastern half of Australia, its concentrate
stockpiles continue to be the company’s primary
source of rutile. Because of this, the company’s
rutile production was around 20% lower than last year. The
company will continue to process existing concentrate from the
Murray Basin this year.
Similarly, mining and concentrating remain idle at
Iluka’s South Australia Jacinth Ambrosia
operation, with stockpiled concentrate to be processed
throughout the coming year.
|Iluka's operations in Murray Basin
Iluka’s Tutunup Mine will continue to run at
100% utilisation throughout 2017, and is the primary source of
ilmenite being fed to the company’s SR 2 kiln. The
kiln, which operated at 100% utilisation through 2016, produced
211,000 tonnes synthetic rutile.
The Tutunup mine is now the only mining operation currently
being conducted by Iluka. This may change soon however, as the
company mulls over the possibility of starting up its Western
Australian Cataby mine. While board approval is still required
in order to go ahead with the commissioning of Cataby, Iluka
has factored it into their 2017 capital costs by assuming its
Cataby is planned to produce ilmenite suitable for sale, or
as a feed source for synthetic production. In addition, Iluka
has said that Cataby will produce "Material volumes of zircon
Other deposits earmarked for commissioning include
Balranald, located in the state of NSW, Australia, as well as
Puttulam, Sri Lanka. Balranald is an advanced project rich in
rutile, and has been the long-term subject of trialing
'unconventional’ mining techniques, while Puttalam
is sulphite-ilmenite rich and is currently undergoing a
While the Balranald deposit was previously being considered
for, and was approved to carry out conventional mining, the
company has now moved away from this, committing to
developing its unconventional underground mining technique.
New developments in Australia
Also in Australia, Sheffield Resources has continued to
undertake a bankable feasibility study (BFS) on its Western
Australian Thunderbird deposit. While the large deposit is
known for its substantial zircon content, the company plans to
also produce substantial amounts of high grade sulphate
ilmenite, as well as lower grade titanium dioxide source
material, known as HiTi or leucoxene.
in Western Australia (Source: Sheffield
The company is anticipating 2017 as the year that
construction will begin at Thunderbird. Once in production, the
proposed processing rate of 7.5m tpa will be carried out from
years 1 – 5 and then at 15m tpa from year 5 onwards.
A total of 685.6m tonnes of ore is to be mined over the
Others have also be been spurred on by increasing TiO2
feedstock prices. Image Resources has doubled its mineral
resource tonnages for its Boonanarring Project as part of its
own BFS. The Boonanarring project, located North of Perth in
Western Australia, has 43.7m tonnes of ore, with 5.6% heavy
minerals. Of the 5.6%, zircon makes up 18.1%, rutile 2.6%,
leucoxene 2.2% and ilmenite 49.1%.
MZI Resources ramped up production of its leucoxene and
zircon in the final 2016 quarter, achieving design heavy
mineral concentrate recoveries and grades at its concentration
plant. The company announced a 17% increase in quarterly
saleable production, but said that mining volumes were 12%
lower in the December quarter compared to previous
MZI noted that "pigment producers are now seeing improvement
in both volume and price" which is in turn depleting global
inventory. MZI states that "Chinese producers have been most
aggressive announcing 13 rounds of price increases in 2016".
The company added that a "strong painting season" in the
northern hemisphere would place "considerable pressure on
high TiO2 feedstock prices in 2017" and that chloride pigment
demand is expected to force chloride pigment producers to
"increase production by either restarting idled capacity or
utilising higher grade feedstock to increase yield".
Diatreme Resources meanwhile has also been pushing to develop
its Cyclone Zircon Project in Western Australia. The company
has recently acquired final environmental consent for the
development of the project, meaning that Diatreme can now
focus on "discussions with project partners, potential
funders, and potential product off takers for direct project
Positivity in TiO2 to drive feedstocks
TiO2 prices began to see a recovery in the second half of
2016, thanks to which some mineral sands prices have also seen
an uptick, particularly sulphate ilmenite and rutile.
CFR Asia TiO2 prices now range from $2,400 to $2,600/tonne,
with one Chinese supplier telling IM at the
start of February that prices in the country were averaging
at around $2,500-2,600/tonne, with lower ranges at $2,400 for
"The buying price of TiO2 has also increased in Europe," the
producer said. "But European buyers are also saying that the
Chinese price to Europe is higher than the European price from
some major companies."
Both Western and Chinese producers announced price increases
towards the end of 2016, which were implemented at the start of
this year – although according to some sources not in
their entirety – with more expected in the second
quarter of the year.
At the time of publishing, Chemours had announced an
additional price increase for all of its Ti-Pure TiO2 products
effective 1 March 2017 or as contracts allow.
TiO2 grades sold in North America will increase by $0.06/lb,
while the price for Ti-Pure grades sold in Asia Pacific will
see an increase of $150/tonne. In Latin America, the Middle
East, Eastern Europe and Sub-Saharan Africa prices will see a
net increase of $200/tonne. A net price increase of
€200/tonne will also apply for Ti-Pure grades sold in
Western and Central Europe, Turkey and North Africa.
Chemours’ price announcement was quickly
followed by similar notices from other major producers such
as Huntsman Corp. and Cristal.
"We will see if the price increases will lend themselves to
the market and if they do with the Western producers then the
Chinese price is likely to go up again," the Chinese seller
While it has taken a couple of years, the trickle-down effect
of high paint and coatings output has finally made its way
down to TiO2 and manifested itself in higher prices for
However, the Chinese source warned that higher TiO2 prices
– and mineral sands demand – hinge on this
high output from their end consumers.
"Coatings producers keep manufacturing at high rates, but if
they limited their output demand would drop suddenly," he
told IM. "There were a lot of coatings
plants closures in China in 2016 and especially towards the end
of the year, so it still remains to be seen what effect this
will have on TiO2 demand and pricing."
Concerns have also been expressed by market participants of
a TiO2 supply shortage, with one European buyer noting that
lead times were getting longer for TiO2 deliveries.
"There has been no change right now, but there are already
indications that price increases will be seen in Q2," the
European buyer said. "We are currently in talks with
suppliers negotiating prices for Q2 and have been notified
that lead times are increasing. We’re now
looking at a 60 day lead time for any supply because of a
tightening in the market."
Mineral sands pricing trends
Prices for ilmenite, CIF China (min 54%) were reported at
$140-180/tonne in the first couple of weeks of February,
according to the IM Pricing Database, having started seeing
an increase in mid-2016.
Sulphate ilmenite prices have seen a stronger increase than
chloride ilmenite prices, although these have also seen some
movement according to some IM pricing contacts, with rises
One chloride ilmenite producer noted that while sulphate
ilmenite prices have seen a large rebound, chloride ilmenite
prices have remained relatively flat owing to the other options
available for chloride TiO2 producers.
|Ilmenite prices, bulk concentrates, 54% TiO2,
The supplier however pointed to tightening in the TiO2
market, noting that the lack of additional TiO2 supply coming
online was likely to support higher chloride ilmenite prices.
The producer also pointed to the recent Iluka/Sierra Rutile
merger as a potential factor that could push up both high grade
ilmenite and rutile prices in the near future.
"Iluka is a price leader and likely to be disciplined in
that. If rutile prices go up then customers could turn more to
chloride ilmenite," the producer added.
ASX-listed Mineral Commodities Ltd (MRC) – which
produces mineral sands from its South African operations
– also predicted that momentum in ilmenite prices
would continue, after the company announced the signing of new
contracts for the sale of up to 83,000 tonnes ilmenite in the
first quarter of 2017 to Chinese buyers.
"There is an evident increasing demand for ilmenite
concentrate and finished ilmenite products due to a combination
of the tightening of global ilmenite production within China
and India, due to environmental and economic cost of production
factors," the company said, adding that the price for its
ilmenite concentrate products had strengthened in Q4
In its most recent market update, Iluka predicted an
increase in rutile prices of up to 4% in the first half of 2017
as a result of the dramatic improvement in market conditions
for pigments, creating a favourable environment for feedstocks,
particularly rutile and synthetic rutile.
|Rutile concentrate min 95% TiO2
large volumes for pigment FOB Australia
US $ per tonne
The drawing down of pigment inventories below seasonal
norms, normalising of plant capacity utilisation and the
success of pricing increases for Western chloride pigment
producers were all listed as positive drivers for high grade
According to the IM Pricing
Database, at the start of February, rutile concentrate prices
(min 95%) for TiO2 large volumes for pigment on an FOB
Australia basis stood at between $710-770/tonne, while bagged
rutile concentrate (min 95%) on an FOB Australia basis varied
between $770 and $850/tonne.
"There are positive fundamentals in the rutile industry,"
another producer told IM at the
start of January. "Last year pigment producers increased prices
because they were going to go broke and they had to, but then
these increases started to be supported by higher demand."
According to the producer, restocking is continuing to occur
with pigment producers, who are running low inventories and
finished 2016 at low capital and inventory levels, which has
caused tightness in the feedstock market.
"This is demonstrated by the fact that when feedstock
shipments are delayed, producers are looking to the spot market
for feedstocks," the supplier said, adding that these market
fundamentals are expected to strengthen and support further
price increases in the future. "I’ve spoken to
people who have been in the industry for years and this is the
only time they can remember that inventories were down or
stagnant for two winters in a row."
|Rutile prices, 95% TiO2
bagged, FOB Australia
Zircon prices have also seen a slight uptick after bottoming
out in mid-2016. Although the price of zircon fell by around
$160/tonne in the first half of the year according to Iluka,
the company raised its zircon prices by $60/tonne in the third
quarter of 2016 – the first increase for the company
in several years.
In its quarterly production report, Iluka advised customers
that the company would be increasing its zircon prices by
$50/tonne from 15 February, having already secured volumes at
higher prices in Q1.
While the company noted that demand for the mineral was
varied across different geographies at the end of 2016, it
added that "there was a material destocking of the producer
supply chain over the course of 2016, with market information
that some zircon suppliers had fully committed their volumes or
were having difficulties in filling some customer orders". As
such, the company expects positive momentum to continue in
demand and pricing.
"Subject to global economic settings and restoration of
confidence in some downstream sectors, the demand outlook for
zircon in 2017 and 2018 is for moderate growth," the company
said. "This will also be a period during which industry
participants will be required to make critical decisions on
the commitment of significant capital necessary to maintain
and replenish existing supply."
In January this year, mineral sands producers MRC and Base
Resources also noted a modest increase in zircon prices in the
last quarter of 2016, with Base Resources predicting "ongoing
upward momentum in zircon prices through 2017".
One zircon producer pointed to dwindling supply on the
market, higher demand for the mineral in India and lower
stockpiles in China as factors pushing up pricing.
"[The higher prices are] due to the enigma that there is a
diminishing production of zircon as very few of the big players
are producing the same amount of zircon as they were previously
producing," the source told IM.
"In addition, the Indian market has strengthened, taking up
any surplus zircon and at better pricing. Furthermore,
stockpiles of zircon concentrate in warehouses in China have
also diminished. Effectively what you have seen is a
rebalancing of the supply/demand chain," the source
Expanding in India
A number of producers have noted the strengthening of
ilmenite prices from India, and India’s largest
producer, V.V. Mineral confirmed its ilmenite prices were
increasing in line with global price rises.
"China seems to be the key driver for this. China has more
than 50 TiO2 production plants, almost all (except two plants)
are sulphate-based units. Their market is picking up, therefore
the TiO2 production, therefore the ilmenite requirement and
therefore the sulphate ilmenite price increase," the
company’s director, V. Subramanian, told IM,
adding that currently he sees a balanced market for rutile and
ilmenite, rather than the oversupply situation seen
The company produces rutile, zircon and four grades of
ilmenite, producing around 350,000-400,000 tonnes ilmenite a
year depending on market conditions, Subramanian said. While
the move by China to produce increased amounts of
chloride-grade TiO2 is a threat to chloride-grade TiO2
producers outside of China, Subramanian does not expect
sulphate ilmenite demand to be greatly impacted.
For zircon, Subramanian noted that the price in India
previously saw a "slight reduction" but has been stable for the
past few months, seeing neither a decline nor increase in
Rather, the biggest challenges to Indian producers lie in
unfavourable government policies, he said, pointing to the
recently imposed export duty of 10% for ilmenite according to
the Atomic Mineral Concession Rule (AMCR) and the
discontinued anti-dumping duty for TiO2 pigment.
However, despite these difficulties, Subramanian said the
company is looking to expand its production.
"V.V. Mineral is planning to expand in other states of India
from Tamil Nadu and Andra Pradesh where we are currently
operating. We also looking for mining opportunities in
neighbouring countries," he told IM.
Mineral sands investment to continue
The positivity seen in pigments and the resulting uplift in
the mineral sands industry is likely to facilitate continued
investment into new mining projects, demonstrating that the
sector may have well and truly turned a corner.
According to financial advisor Hannam &Partners LLP,
more financial funds could invest in mineral sands mining
projects as the sector outperformed other commodities towards
the end of 2016.
"Everyone else is struggling to make profit in the last
quarter, [but] the mineral sand producers outperform the rest
of the sectors," Ingo Hofmaier, a partner at the firm, said at
the TZMI congress held in Hong Kong in November. According to
Hofmaier, shareholder return from the top five mineral sands
producers – Iluka, Tronox, Kenmare Resources and
Sierra Rutile – increased by 54%, compared with the
38% increase in copper returns.
He added that the upswing in prices for ilmenite, rutile and
zircon was likely to run for the next couple of years, noting
that brokers such as Deutsche Bank, Macquarie, Credit Suisse,
UBS, JP Morgan, Canaccord and Mirabaud have all forecast a
market recovery and price increases in rutile, ilmenite and
Meanwhile, the expectation by both buyers and producers of
TiO2 and its feedstocks that prices will continue to rise paves
the way for a future where additional price increases are
likely to be more easily accepted on the market.