Roll up: Borates - an oligopoly with little room for change

Insulation fibreglass is the single largest market for borates and is expected to grow as construction picks up.

Borates is the name commonly given to the group of minerals which contain boron.  Boron combines with oxygen and other elements to form boric acid, or inorganic salts (borates).

The four borate minerals— colemanite, kernite, tincal, and ulexite—make up 90% of the borate minerals used by industry worldwide, according to the US Geological Survey (USGS).

Borates are used in a myriad of end markets (see Table 4) however, the largest market share of consumption is in the detergents, fertiliser and glass markets.

The largest producing country is Turkey, which holds 70% of the global reserves and which sells its borates via its state-owned miner and producer Eti Maden, which has been running since 1935 in various forms.

Global borate reserves are estimated by Eti Maden to be 1.29bn tonnes of boron oxide (B₂O₃), of which Turkey holds 955m tonnes. 

Kazakhstan holds 122m tonnes of boron reserves, but these have not yet been exploited. China meanwhile holds 47m tonnes, Latin America 91m tonnes, North America 40m tonnes and Russia 35m tonnes. Serbia is estimated to hold reserves of 21m tonnes (See Table 1)

Not all reserves are being developed. The mineralogy varies between the reserves and there are often logistical and economic challenges associated with exploitation. 

A tale of two

In borates there exists an oligopoly with two dominate players supplying over 80% of the market. 

Eti Maden is the world’s largest producer of borates. The company was on track to be producing 2.8m tonnes a year by the end of 2016, 50% of the global supply - and therefore is extremely likely to remain so. 

That said, Anglo-Australian miner Rio Tinto currently supplies over 30% of the world’s refined borates from its two boron deposits in the Californian Mojave desert, US and is developing its lithium-borate Jadar project in Serbia.

The miner also has borates refineries and/or shipping facilities in China, France, Malaysia, the Netherlands, Spain and the US.

In 2016 Rio produced 503,000 tonnes boric acid equivalent, 6% up on 2015. This higher output was attributed by the CEO, Jean Sebastian Jaques, to higher market demand in the Americas and India.

The other US producer is Searles Valley, which extracts borates from subterranean brines at Searles Lake as a co-product with sodium carbonate (trona) and sodium sulphate extracts. Searles Valley is owned by India glass and soda ash producer Nirma, which manages the 20-50m tonne Searles Lake deposit in the US and which produces approximately 200,000 tpa tincal/ulexite. 

Eti Maden

It is likely that Eti Maden will remain the dominant producer. The company has ten plants producing boric acid, colemanite, borax (decahydrate, pentahydrate and anhydrous), pyrite, sodium perborate, boric oxide and some detergent end-products. It mines its material, which contains the highest percentage of B₂O₃, from its Bigadic deposit (see Table 2).

Etibor-48 (borax pentahydrate) is produced in a total of five operating plants within the Kirka Boron works complex, including the recently–commissioned fifth Boron Derivatives Plant and the Etimatik Boron-based Cleaning Product, which was taken into production in 2014. 

In Kirka, colemanite ores are extracted in two open pits - namely Hisarcık and Espey - and they are processed in crushing-grinding and concentrator plants. Boric acid production is carried out in the boric acid plant.

Bigadic Boron Works meanwhile comprises of four open pits from which colemanite and ulexite ores are extracted (Tülü, Acep, Simav and Kestelek). The extracted ores are processed in crushing-grinding and concentrator plants.

"Our investment strategies are based on expanding our production capacity in line with prevailing market needs, priorities and future trends; because we committed ourselves to supply global demand in all varieties of all boron consuming industries," Eti Maden management told IM. 

"In line with this, our new processing plant with a nameplate capacity of 500,000 tonnes/year located at our Kırka site in Seyitgazi/Eskisehir has started production," it added.

In 2023, it is targeting a production capacity of 5.5m tonnes and revenues of $2.5bn.

It functions as a global group with European, US, Russian, Chinese and Scandinavian operations via its affiliates and subsidiaries: Etimine SA, AB Etiproducts OY, Etimine USA Inc., Etiproducts Russia, Etimaden Asia-Pacific and Etimine Shanghai (China) Co. respectively.

As the world’s largest producer, Eti Maden also develops and researches into new technologies. Later this year the company will release a new flame retardant product.

However even Eti Maden has faced headwinds this year as it was confronted with  fierce competition in the market in the Asia-Pacific region, especially in the Chinese market, Eti Maden management told IM, adding that it had learnt from this and has now reorganised its distribution network and sales structure within the region.  

"We will be close to and side by side with our customers, prefer to call them partners, to understand their needs and priorities in order to be able to respond rather swiftly", the company told IM. 

Eti’s Bigadic mine in Turkey is the largest boron-producing mine in the world.  Source: Eti Maden

Latin American producers

Across Latin America there are several established boron producers. Chile’s Quiborax is the largest, with an output of around 580,000tpa ulexite.

Other producers in Latin America include Inkabor in Peru, Tierra SA in Bolivia, and Mineria Santa Rita SRL and SQM in Argentina. Most of the deposits are found at altitude and are ulexite (sodium calcium borates).

SQM produces boric acid as a by-product of the production of potassium sulphate, by extracting the brines from the Salar de Atacama and processing the material at its 15,000 tpa boric acid plant located there. The boric acid is then transported by trucks to the Tocopilla port terminal.

The company doesn’t have a set output for boric acid, rather it responds to market demand.

Inkabor mines its products at an open mine located 78km from Arequipa, Peru, in Laguna Salinas. It only operates its mine six months of the year, due to heavy rainfall in the region affecting work for the other half of the year. The ulexite is transported and then processed at one of the company’s five plants in Rio Seco, Arequipa, into boric acid, ulexite concentrate, borax, speciality borates and sodium-based borates. It also has a calcination plant in Oruro, Bolivia, which breaks down the ulexite using an organic evaporation process.

Quiborax has the capacity to produce 580,000 tpa of 20-25% B₂O₃ ulexite from its Salar de Surire brine, which lies over 4,000 metres above sea level near Arica, Chile, and is estimated to contain 1.5bn tonnes of ulexite, or 30m tonnes B₂O₃. The company transports its raw material to Arica, where it is processed into boric acid, using sulphuric acid, or different agrochemical products. Boric acid capacity is 36,000 tpa. It ships worldwide via its Arica port.

Little is known about Tierra SA. The company runs out of the Lipez region in Bolivia and extracts borates from its Capina salar, which is processed to form boric acid. It also mines ulexite from an open pit at Challviri, within the Eduardo Avaroa nature reserve. The ulexite is processed for borax decahydrate. It is also developing the Pastos Grandes salar, which contains both lithium and boron mineralisation. It produces boric acid, borax and other derivatives from its Apacheta Hill plant.

Newcomers

Amid the established producers in Latin America are two newcomers: Orocobre and Bacanora Minerals. However, while Orocobre - which manages its borates arm under its 100% owned subsidiary Borax Argentina - may be relatively new to the borates field, they acquired an already-working mine and plant from Rio Tinto in 2012 and are now working on modernising and upgrading the other facilities. 

Borax Argentina produced 35,426 tonnes of boric acid, refined product and minerals in 2016 and expects to produce between 40-50,000 tonnes in 2017/8.

The minerals historically produced by Borax Argentina are ulexite, colemanite and hydroboracite.

It hopes to be able to produce between 100,000–120,000 tpa borax decahydrate equivalent at Tincalayu and to add an integrated 25,000 tonne boric acid plant.

"It is anticipated that the potential expansion will further enhance efficiencies in the production of refined borates at Tincalayu and contribute to improved manufacturing unit costs. Approvals have been received for a new gas pipeline to supply the expanded plant and initial cost estimates are under review," a spokesperson for the company told IM.

The Borax Argentina plant at sunset  Source: Orocobre

Borax Argentina operates three open pit mines at 4,000m in the Puna region of north west Argentina: Tincalayu, Sijes, and Porvenir, a borax decahydrate manufacturing plant in Tincalayu, concentration plants in Sijes and Porvenir (currently unused), and refinery facilities in Campo Quijano. Additionally, the considerable deposits at Diablillos and Ratones are essentially undeveloped. With the exception of the Porvenir mine which is located in Jujuy Province, all of Borax Argentina’s operations are located in Salta Province in northern Argentina.

In terms of logistics, Orocobre told IM that "the company holds sufficient inventory in at Campo Quijano, near Salta, to sustain deliveries to customers during occasional rain events around the mine sites which can have a short term impact on road access."

Although there are several producers in South America, Orocobre told IM that "Borax Argentina is the only South American based boron producer with a wide range of refined products and relatively unique mineral products". 

"The value proposition to customers is that it is a local high quality manufacturer and supplier of boron products well positioned to provide value particularly in the form of security of supply to businesses both large and small, not only in South America but also to the operations of these companies based internationally and other key customers and markets located offshore. Key markets in South America include Brazil and Argentina and in particular the agricultural markets," a spokesperson for the company told IM.

Bacanora is a London-listed company developing a borate play in Latin America, as well as lithium resources in the US and Mexico. It does however appear to be focusing its efforts on its lithium plays. The company owns the Magdalena Borates project in Sonora State, Mexico.  It is a developing project made up of seven concessions, of which one - El Cajon - is the most advanced with an NI 43-101 indicated resource of 11.06m tonnes at 10.6% grade for 1,170,000 tonnes of B₂O₃. 

Bacanora intends to develop the project in order to supply a potential 50,000 tpa boric acid to the Mexican market.

It has processed and sent samples of 99% boric acid to potential off take customers and says ongoing metallurgical testwork based on higher value boric acid will commence in late 2016/2017.

Serbia and Jadarite

In 2004 Rio Tinto geologists uncovered a new mineral, Jadarite, which is a lithium-borate mix while exploring near the town of Loznica in Serbia. Since then it has worked on developing the project with a view to exploiting both the lithium and borate mineralogy.

Named by some as the 'Superman’ mineral, Jadarite famously holds almost the same chemical composition as the fictional kryptonite.

Rio Tinto’s project is currently in prefeasibility phase. During Rio Tinto’s presentation of its annual results, CEO Jean Sebastian Jacques underlined that the company was "studying very carefully the Jadar project," adding: "the study is underway and when we have something else to share with the market we will do it. I think it is a broad range of products here."

Bold Baatar, chief executive, energy & minerals meanwhile told IM: "Jadar could be central to a more energy-efficient world".

Earlier this year, in March, Rio Tinto updated its Mineral Resource Estimate, increasing the resources by 19m tonnes, to 136m tonnes*. Equivalent borate product resources, it said, were 21m tonnes of B₂O₃.

The site has an estimated mine life of over 50 years and Rio has previously indicated it could supply roughly 10% of global lithium demand.

In an analyst presentation, Rio Tinto explained that the company was "well advanced on delivering a pre-feasibility study by the end of 2017, adding: "We’re excited by the potential we see today. This discovery aligns very neatly with the incubator concept focusing on a new commodity, in the case of lithium, and on new markets."

The company said it was "presently advancing technical studies to complete pre-feasibility by end 2017".

But, where Rio Tinto discovered the jadarite, other prospectors have followed. TSX-V listed Erin Ventures, Ultra Lithium and Pan Global Resources are three Canadian juniors seeking to develop similar projects in Serbia. Of the three, Erin Ventures is the more visible, as it is being followed by several analysts and is keen to keep its shareholders up to date with information on the Piskanja borate project.

It released its independent preliminary economic assessment report (PEA) in October 2016, which estimated the Life of Mine at 6.9m tonnes with an average 27.8% B₂O₃. 

The following month it released an updated mineral resource estimate, which increased the contained B₂O₃ in the Indicated Mineral Resource category by 41.2% or 700,000 tonnes (from 1.7m tonnes to 2.4m tonnes); the Indicated Mineral Resource by 39.3% or 2.2m tonnes (from 5.6m tonnes to 7.8m tonnes) in the updated maiden mineral resource estimate (MMRE) vs the maiden MRE (filed in 2013) and the grade of B₂O₃ was also increased by 2%.

Since then, Erin has started discussions with the Serbian authorities, via its wholly owned, Serbia based subsidiary Balkan Gold, regarding a potential commercial contract for the Pobrdje boron mine. The Pobrdje boron mine is licensed and operated by the Serbian state owned company Ibar Mines, and is located approximately 1.5 km from Balkan Gold’s Piskanja boron project in southern Serbia.

Under the proposed terms of the agreement, Balkan Gold would provide the capital, technical expertise and management oversight required to refurbish, upgrade and operate the Pobrdje mine at a capacity of approximately 30,000 tonnes of colemanite per year until depletion. In return, Balkan Gold would have the exclusive rights to all of the colemanite produced at the mine, at a fixed price, for the life of the mine.

It has also entered into the due diligence process with a potential partner for the Piskanja project.

"This prospective partner meets Erin’s criteria because of its ability to provide capital required to advance the Piskanja project towards production, as well as mining expertise, and boron-specific expertise," the company said in March 2017, without revealing who it was.

Erin seeks to compete with the Latin American producers as it believes it can do so on a cost basis (according to an analyst presentation Erin’s opex at Piskanja is around $135/tonne, which places it at the low-cost end of the spectrum). The company is seeking to bring 200,000 tpa online, which is a market penetration of < 5%

It also indicates that, as its colemanite contains less arsenic than that supplied from Turkey, it is in a position to take some of Eti Maden’s market share.*

Boron crystal  Source: Orocobre

China

Borates are mined in underground deposits in Gaotaigou, Zhuanmiao, and Wengquangou, which are in the Liaoning (also known as the 'magnesia capital’ of China) and the Jilin Provinces in China. The primary borate ore produced is szaibelyite, a magnesium borate, which is then processed into borax or boric acid. Proven reserves from a number of deposits total more than 30m tonnes, according to the USGS.

Elsewhere, boron is also produced from brines taken from salars near the Qinghai-Tibet plateau. The Qinghai deposits contain inter-related mineral groups including boron, lithium, and potassium mined from three lakes.

According to China Customs data, natural borates and concentrate exports from China totaled 2,124 tonnes, while the country imported 369,656 tonnes. The import value of the borates was around $127.5m.

End markets

In terms of end markets the largest sector is glass, which in 2014 accounted for a 51% share of the market. Specifically, according to Eti Maden, insulation fibreglass is the largest single use for borates.

"In insulation fiber glass (IFG) and reinforcement fiberglass (RFG), use of boron improves the fluxing capabilities of the batch, reduces glass batch melting temperatures and increases the fiberizing efficiency by lowering the viscosity,’ Eti Maden explained.

"It controls the relationship between temperature, viscosity and surface tension to create optimal glass fiberization. Boron also reduces the tendency of crystallization and increases the strength of the fibers and resistance against moisture."

But of course borates are also used in the manufacturing of other types of glass and in recent years demand for borosilicate glass (used in LCD screens, solar panels, laboratory glasses, pharmaceuticals, ) has also grown.

Borosilicate glass has boron oxide (B₂O₃) content between 5-30%. Anhydrous borax and Borax pentahydrate are the borate products most often preferred for borosilicate glass.

Boron is also used in fiber optics, which enable luminary photons to be transferred effectively in communication systems. Fibre optics are formed of two different parts: an inner core and outer sections. The inner core is made of glass with high index of refraction, whereas the outer section is made of glass with low index of refraction.

In agriculture (14%) boron is used in small concentrations as micronutrients in fertilisers. When used in large concentrations they function as herbicides, algaecides and as a pesticide. Several producers manufacture their own boron-based products directly to the agricultural market (SQM, Eti).

"The consumption of borate products as micronutrients in agriculture sector has grown significantly in recent years due to the need for increasing crop yield in order to supply global food demand which is the result of growing global population," Eti Maden management told IM. 

"We will particularly be more present in the South-East Asia market with new brand names to be placed as micronutrient in fertiliser sector. It is also scheduled to expand our product portfolio with new granular/compacted forms of boron products for blended NPK fertiliser applications by the beginning of 2018," the company added.

In the ceramics market (13%) borates are chiefly used in tile glazes in roof, wall and floor tiles. Tableware also uses some borates. According to Eti, frit and glaze formulations can contain concentrations as high as 25% borates.  Borates improve glazes in a number of ways: facilitating the production process; ensuring a good fit between the glaze and the item it covers; and enhancing the chemical and mechanical strength.

Boron is also used as a cleaning and bleaching agent (3%), controlling the alkalinity of soaps and synthetic detergents as well as lowers the heat of the washing and prevents the corrosion of the metals or machines used. It is in this market that borates have faced some headwinds as, in 2009, a number of boron compounds were listed as "toxic to reproduction" on the European Union’s (EU) classification, labelling and packaging (CLP) regulation. And since then, the borates industry has faced an uphill battle to stave off impending restrictions on the minerals in the EU’s member states.

Customers in different parts of the world require borates for different purposes, according to Eti Maden.

The company demonstrated its reach to IM by listing the markets and demand trends of their customers: "The insulation grade fiber glass (glass wool) customers are primarily located in North America and Europe, whereas the textile grade fiber glass customers are placed in Asia, predominantly China and Taiwan," Eti Maden management explained. 

"Most of our TFT-LCD glass customers are mainly located in Korea, Taiwan, Japan and China. As for the ceramic industry, the frit/glaze consumers are located mostly in China and India in Asia and Spain in Europe. We have many customers active in fertiliser market in India, Indonesia and Malaysia which can be cited amongst the leading countries in agricultural sector.  Africa has been a promising export market in recent years driven by demand growth in micronutrients."

Other markets make up quite a significant 19% share of total demand and are myriad and complex in their applications (see Table 4).

Pricing

Boron products are priced and sold based on their boric oxide content (B₂O₃), varying by ore and compound and by the absence or presence of calcium and sodium. The four borate minerals— colemanite, kernite, tincal, and ulexite—make up 90% of the borate minerals used by industry worldwide.

According to reports released by Erin Ventures, pricing is "generally $500/tonne for colemanite and $800/tonne for boric acid."

During Orocobre’s annual report Chairman  Robert Hubbard admitted that pricing for borax products "appeared to be at the low end of the cycle", adding: "With our production expansion plans, we are confident that we are well positioned when economic conditions and market prices recover."

"In recent times market conditions have been challenging which has provided significant motivation to achieve cost reductions and efficiencies in production," a company spokesperson told IM.

However, Eti said that its prices were stable, telling IM "we do not expect the current price levels to change considerably in the global borates market over the next years and we intend to keep the same pricing approach intact for the years to come to avoid  radical  fluctuations in prices  jeopardising price predictability in the market." 

Outlook

Demand for borates remained stable globally in 2016, according to Rio Tinto. It noted "robust demand in the Americas and India partly offset by weaker growth in China and weather-related demand constraints in South East Asia.

China is the largest consumer of boron, where consumption has risen by 15% pa from 2000 to 2010 and is currently growing at their GDP growth rate of 7%, according to the USGS. The US market is the second largest, growing at a rate in excess of GDP growth, driven by housing recovery.

"Our global sales increased by double digit in the first quarter of this year over the same period of the previous year. In the meantime, our production has also increased in line with the growth in our sales," Eti Maden management told IM.  

"It is estimated to continue growing also in 2018 with the increasing demand in the global market predominantly driven by Asia Pasific region, which is the largest boron consuming market in the world despite its unprecedented, relatively subdued demand experienced mainly over the last couple of years due to structural adjustment period of overall economy to the new economic policies," the company added.

Eti believe that increased demand for borates and associated products is expected
to "steer up quite rapidly," telling IM: 

"There [Asia Pacific] and also in some other parts of the world like in the US, we expect that it is the right time for the overall demand to steer up rather rapidly. As a natural consequence of this, our production can only be expected to follow
the said trend in global demand for boron products."

*The updated Mineral Resource estimate comprises: • Indicated Resource:52.4 Mt @ 1.79% Li2O, 19.2% B₂O₃ • Inferred Resource: 83.3 Mt @ 1.90% Li2O, 13.0% B₂O₃ • Total Mineral Resource: 135.7 Mt @ 1.86% Li2O, 15.4% B₂O₃