Not a Cinderella story: Half a century of Industrial Minerals

By IM Staff
Published: Friday, 08 September 2017

Long dismissed as the Cinderella of the commodities world, industrial minerals were regarded as high bulk, low value for most outside the network which makes up our world. But after 50 years IM is looking forward to a glittering future - and so are those at the top of the industrial minerals tree, interviewed in turn about the changing face of the industry.

Since its inception under the stewardship of Peter Rowbotham in October 1967, IM has been unrivalled in its pursuit, research, and writing on the international non-metallic minerals industry. As such, its in-depth articles and news reporting are recognised by the industry as being the authoritative source of market information for industrial minerals. 

IM was born out of Metal Bulletin’s coverage of mineral sands in the late 1960s which, in addition to metals, ores and steel, covered the mineral sands trade and published an occasional column on non-metallic minerals. 

"Serving the world’s minerals industry" was the title of the first issue’s Comment which introduced IM to the world in 1967. 

Here are some extracts from that first Comment by Peter Rowbotham, explaining the role and rationale of the then new title:

Industrial minerals deserve far greater attention

Minerals are very broadly divisible into fuels, metals, and "other", and it is just as vital to identify, and if possible, anticipate developments in the "others" – the industrial minerals – as it is for the fuels or metals. The impression that has been fostered in the past by, amongst other things, the absence of a central trade paper for the industry, is a rag bag of unimportant commodities. While not yet quite the equal of the fuels or metallic minerals either in volume or value of production, the industrial minerals deserve far greater attention as a group hitherto.

Basic statistical and factual data – which for metals and fuels may be had almost for the asking – has not hitherto been available from one source and coverage of news in the field has required an armful of mining and chemicals papers. It is to provide a focus for all this information that "Industrial Minerals" has been created.

Uniquely, emphasis will be on marketing significance

Honest and unbiased comment on topics of major importance will be offered, claiming as our justification for so doing the role of the "onlooker who sees most of the game". Uniquely, the emphasis will be on news of marketing significance.

Industrial Minerals will, we hope, help actual and potential producers of minerals to plan for the future with a better understanding of the markets they serve, while those concerned with their industrial uses will, inter alia, be better able to grasp the significance of the myriad developments which can exert an influence on supply and demand."

Stefan Borgas, MBA, CEO RHI, Austria

CEO1  

What have been the defining changes for your company/sector over the past 50 years?

Many new producers emerged in the course of the past 50 years, together with the dramatic increase in basic industrial production, led by the steel sector. Since the 1990s, the refractory industry started to consolidate in the developed countries driven by a shrinking demand due to improved efficiency and lower refractory consumption per ton of output. Further, we see a shift of industrial production to the emerging low cost countries, especially to China. As far as RHI is concerned, the company was formed by mergers and takeovers. In the future RHI will actively drive further the global consolidation process together with Magnesita.

What will be the biggest challenges/ opportunities you expect to face in the foreseeable future?

A challenge is the continuous decrease in demand due to higher efficiency and improved production technologies in our main customers’ industries. Another challenge will stem from the impact of China. Also, overcapacity in steel supply and regulatory or environmental measures will surely have an impact on our industry. RHI will cope with these challenges with continuous innovation efforts and cost efficiencies. Last but not least, important opportunities will arise from further automation and digitization at all levels of the value chain.

What was the most innovative or unexpected phenomenon you’ve seen in your business?

About 50 years ago the continuous casting was introduced, dramatically changing the steel production and demanding a whole new range of flow control products. Since then, we have not seen any truly innovative changes but only marginal improvements on all levels. However, in the next 20 years, we will see changes alongside the whole value chain, mainly driven by higher automation and other Industry 4.0 aspects. RHI is putting significant effort into these fields, for example into 3D printing solutions.

China is playing a bigger role than ever. How do you think that will evolve in your sector?

For the global refractory industry, China is the most important region. It has around three quarters of the global magnesite supplies and is accumulating half of the world’s refractory market.

China will move from low quality, mass-production to a supplier of higher quality. This will go hand in hand with a significant consolidation of the refractory and steel industry. Currently, the refractory market is highly fragmented, with the ten biggest producers having a joint market share below 15 %. After the closing of our merger with Magnesita, we will be among the world leaders in this business with a focus on cutting-edge technology and innovative services.

Where do you see prices going in your markets in the foreseeable future?

As mentioned, the Chinese market is of crucial importance for the global refractory industry. Earlier this year, we have seen the Chinese government enforcing tight environmental regulations and exercising severe control over its natural resources. This is having a direct impact on the local magnesite and refractory production and thus prices went into a global rally. We believe, that given increasing automation and the need for advanced technologies, RHI can create a significant value-add for our customers by offering complete solutions.

*Borgas is set to become CEO of RHI Magnesite once the merger between the companies is completed

Johannes Heckmann, CEO, Nabaltec AG

CEO2  

What have been the defining changes for your company/sector over the past 50 years?

Certainly in 2006 when Nabaltec went to the stock market and turned from a private into a public company. In regard of the sector at least for the last 23 years since I am in business the major changes have been the conversion of all small alumina refineries (< 300,000m tpa production capacity) to change into specialty alumina plants. Further on they changed their feedstocks from bauxite to ATH by closing the Bayer Process or the "red side" of the plant. High costs and no economies of scale forced them to change from upstream to feedstock. Examples are Martinswerke in Bergheim (D), Almatis in Ludwigshafen (D), Nabaltec (D), MAL (HU), SILKEM (SLO), Sumitomo (J), Showa Denko (J). In my opinion an alumina refinery needs a minimum of 1m tpa of output to be somehow economically efficient. Of course the plant has to have good access to cheap energy and a low energy consumption as well as good access to raw material as bauxite otherwise it will not survive.

What will be the biggest challenges/opportunities you expect to face in the foreseeable future?

Our industries biggest challenge in the years to come will be the access to cheap (or affordable) energy as it is one of the major cost drivers besides raw materials (ATH). In Europe there are signs that energy will become a hot topic again. The most energy sufficient plants will be the most competitive. The biggest opportunities will be to become part of the supply chain for new trends, for example, electro mobility, environmentally-friendly non-hazardous mineral flame retardants. Further on we need to be innovative to stay on top of the specialty alumina producers. Our industry is well known for high investments, and for a good return on investment you have to have very high value added products in your product portfolio. This is what drives us and what is our mission for the years to come.

What was the most innovative or unexpected phenomena you’ve seen in your business?

For a fully vertical integrated refinery the biggest change is to switch your feedstock from bauxite to ATH. If you work all the time from processing bauxite and then you are forced to use ATH, this is certainly a milestone in the history of an alumina refinery. If one was not able to adapt, this means the certain end for a plant.

In terms of an innovative phenomena, not unexpectedly, is the variety in which today’s products can be used. For ATH and alumina - as well as boehmite - the way we process it can be applied in many applications starting for ceramics to flame retardants, to electronic equipment or LiB batteries. Our goods have become quite important in making our lives much safer and economically friendlier.

China is playing a bigger role than ever. How do you think that will evolve in your sector?

China has received a certain dominance in the alumina industry by being responsible for more than two thirds of the global production. They certainly will try to participate in the market with more and more value-added products and the market will develop and also need these products. There is one prohibitive factor: the Chinese have no cheap access to raw materials (bauxite) and to energy. Thus their competitiveness is limited and also their possibilities to be economically successful on other continents (Europe or the US).

Where do you see prices going in your markets in the foreseeable future?

In the technical ceramics markets based on specialty aluminas, the performance and the efforts our industry puts in is not honoured by the prices paid. A change of behaviour by all involved parties is necessary! In the flame retardant fillers market we also saw price reductions in the last few years - or in the best case a price stagnation. On the lower end of the qualities prices even eroded. On the higher value products we are starting to see that the industry is beginning to appreciate the value of our products. We have to keep in mind that the request for a higher quality is an ongoing process and thus we permanently will be confronted with higher costs.

Albert L Render, CEO, Foskor Zirconia

What have been the defining changes for your company/sector over the past 50 years?

The mining operations of Foskor in Phalaborwa, South Africa started in 1951 with baddeleyite mined as a by-product of phosphate and copper. The baddeleyite seam was depleted in the early 90’s and an Arc furnace fusion operation was established to process local zircon sand into zirconia. The new plant was commissioned in 1991 and its current capacity was reached by mid-90’s. The competitors at the time United Abrasives in the UK, Kovdor in Russia from around 1998, SEPR and AFM together with Foskor Zirconia were the main players at the time.

Higher levels of activity from Astron in China in early 2003 started the China zirconia revolution with many new players entering the zirconia market - over 33% of fused zirconia is now produced in China.

What will be the biggest challenges/opportunities you expect to face in the foreseeable future?

The biggest challenge and at the same time opportunity is the trend worldwide to move towards lower uranium and thorium containing zirconia. This below 500 ppm restriction has been in place for many years in the US and is increasingly being demanded by specific industries elsewhere, while there are indications that this will be phased in by more countries in the future. In the fusion process of zircon to zirconia the tendency is for the uranium and thorium to be upgraded to above 500ppm in the zirconia concentrate.

What was the most innovative or unexpected phenomena you’ve seen in your business?

The technology improvement drive of the zirconia fusion industry has been driven by the demands of the steel industry. Zirconia technology improvements have always been pushed in the direction of larger, more solid and dense grains with minimal cracking of the grain. This required more roleplayers to adapt its fusion approach from the conventional single fusion to double fusion techniques to meet the demands of the market. The added challenge was to achieve all these requirements while remaining competitive with the lower-cost Chinese operators.

China is playing a bigger role than ever. How do you think that will evolve in your sector?

The dependency on China that has been driven mainly through lower price strategies by customers is coming to an end, as is being demonstrated in some of the major industries like steel, electrode manufacturing, rare earths etc. The closure of some manufacturing operations has resulted in capacity shortages and has caused prices to escalate out of all proportions. An example of this is the sudden escalation during the past months of electric arc furnace electrodes that have increased in price seven-fold due to capacity being closed in China. This has and will have a profound ongoing impact on many industries, including the zirconia manufacturing industry which will need to get smarter to weather this storm until the situation normalises.

Where do you see prices going in your markets in the foreseeable future?

With the challenges in raw material cost increasing dramatically, market prices are bound to rise significantly in the short to medium term. In the longer-term prices will likely normalise as the world’s manufacturers catch up to the post China era and prepare for the next rally by India, Africa or another emerging economy.

Patricio de Solminihac, CEO, SQM

CEO3  

What have been the defining changes for your company/sector over the past 50 years?

SQM was born in 1968 as part of a plan to organise the Chilean Sodium Nitrate industry which in the early 1900’s represented Chile’s main economic activity, more important than copper mining. 

SQM’s ownership was shared between the state and private capitals initially, became 100% state-owned in 1971, and then went through a privatisation process that was completed in 1988. 

This was an important milestone for SQM since, during 1988-1993, SQM focused on improving its mining and production processes and upgrading its production plants. At the same time, SQM started to develop new products in order to add value to its main products, beyond sodium nitrate and the iodine. SQM entered into the technical potassium nitrate market, and started to produce water soluble NPK blends and iodine derivatives.

During the mid 1990’s, after successfully raising capital via 2 issuances of ADRs at NYSE, SQM carried out an ambitious investment plan to develop its operations at the Salar de Atacama to produce potassium chloride, potassium sulphate and lithium chemicals.

During the following years, SQM has continued investing in capacity expansions, continuously improving and optimising production processes and quality, developing new businesses, pursue opportunities for adding value including vertical integrations, and strengthening its commercial network in order to make sure to maintain a leading position in its main business lines: speciality plant nutrients, iodine, lithium, potassium and industrial chemicals.

What will be the biggest challenges/opportunities you expect to face in the foreseeable future?

From an operational point of view, the biggest challenges that I expect to face are: (1) to timely and efficiently implement our production capacity expansions in order to supply the growing needs of our customers, (2) to continue improving our operational efficiencies, (3) to keep on understanding our resources, and (4) to optimise the usage of energy and water, all under a firm commitment to respect the environment and collaborate with our communities.  

The global markets for our different products are imposing us important challenges in the field of innovation. I am convinced that we need to allocate more resources into this area, both for product and process developments. 

Finally, I see that our human resources are perhaps the most important asset that SQM has, so I see good opportunities by investing in the retaining and training of our personnel. 

What was the most innovative or unexpected phenomena you’ve seen in your business?

I have always been impressed how quickly the technology evolves and the impact that the mass introduction of a new technology may have on the demand of our products, positive or negative. Iodine demand was accelerated in the mid 2000’s following the market penetration of the LCD technology in the display market. At the same time, and within that same display industry, we saw a quick phase out of the CRT screens which used to require potassium nitrate in glass making. 

The eruption of Li-ion batteries for portable devices was also extremely rapid and pushed the demand of lithium. We are starting to witness a new demand boost with the electrification of the automotive industry which may triple the lithium demand in eight years.

China is playing a bigger role than ever. How do you think that will evolve in your sector?

China will definitely increase its relevance in our different businesses, as we have seen over the past years. We would like to enlarge our presence in the Chinese market. 

Where do you see prices going in your markets in the foreseeable future?

I believe in the rules of supply and demand. Prices have proven to follow that logic in our products. 


Pierre Brondeau, President, CEO and Chairman of the Board, FMC Corp.

CEO4  

What have been the defining changes for your company/sector over the past 50 years?

The lithium industry has truly benefited from the evolution of technology. Demand for lithium has grown steadily since the 1990’s as smaller, lighter batteries continued to enable the development of smaller and more powerful computing devices. We are now at an inflection point where demand for lithium is accelerating again. As battery manufacturing costs continue to decline, electric vehicles with features that are attractive to consumers can now be manufactured. We see that the growth for lithium over the next 10-20 years will be greater than the industry has seen to date, and from a higher base.

FMC’s lithium business began producing lithium products in the 1940’s and we’ve been developing expertise in the manufacturing of high quality lithium products ever since. We have been heavily involved in the development of battery chemistry since the inception of lithium-ion batteries. FMC’s lithium hydroxide is a product of choice for high energy density battery technologies. Our fully integrated network of manufacturing facilities ensures that our customers can rely on FMC to supply their growing needs. It is this focus on being the reliable supplier of choice that is driving us to invest heavily in our lithium business. By setting FMC Lithium up as an independent, public corporation by the end of 2018 we will be more able to focus solely on being a leader in this rapidly growing space.

What will be the biggest challenges/opportunities you expect to face in the foreseeable future?

We must be ready to support the rapid growth in demand. FMC is committed to expanding our capacity in order to support our customers’ growth. Our investments over the past year have nearly doubled our hydroxide capacity, which is now 18,000 tpa and we expect to reach the targeted 30,000 tpa capacity by the end of 2019, as we announced last year.

In order to respond to the strong worldwide demand for lithium products we are also investing to expand output from our mining and processing operations in Argentina. This expansion will ensure we remain a fully integrated lithium producer with a low cost lithium source to supply our downstream production facilities.

What was the most innovative or unexpected phenomena you’ve seen in your business?

We are beginning to see that self-driving vehicles are not only possible, but are also likely in the not-too- distant future. This innovation will change how vehicles are manufactured, it will change global automotive supply chains and it will change consumers’ vehicle purchasing and use behaviours. The entire value chain will need to understand and adjust to how consumer habits change as a result of this innovation. This shift is likely to be another positive for lithium, as the resulting self-driving vehicles will all likely operate using substantial battery power.

China is playing a bigger role than ever. How do you think that will evolve in your sector?

Clearly China is progressing rapidly to electrify transportation. The government and the private sector are aligned to support the increased use of electric vehicles in China as a means of reducing emissions. This includes buses and commercial vehicles, not just private transportation. Currently China accounts for about half of the global pure electric vehicle sales.

Overall, this is a positive for the entire industry, as battery manufacturers benefit from the increasing scale of production, and the owners of electric vehicles benefit from the drive to improve the vehicle charging infrastructure.

Where do you see prices going in your markets in the foreseeable future?

Going into 2018, we expect prices to increase from current levels for the foreseeable future as demand continues to increase by over 30,000 tpa. To meet this demand, multiple new mining and processing facilities will need to be brought online every year. History shows that starting up new lithium production sites is incredibly complex and expensive, and we do not expect all of the announced projects to start up on schedule or on budget, creating continued upwards pressure on lithium carbonate and lithium hydroxide prices.

Stephen Riddle, CEO, Asbury Carbons Inc.

CEO5  

What have been the defining changes for your company/sector over the past 50 years?

Asbury has been involved in the graphite & carbon business for over 122 years. I’ve personally been engaged for nearly 40 years. 30 years ago I thought that the development and use of the fax machine would be the greatest invention for ease of doing global business. Well was I wrong! The development of digital technology and general global connectedness has been the biggest defining change in last 50 years. 

Not far behind or equal to that has been the development of China as both a miner/producer of graphite & carbons and as the world’s largest consumer. 

Additionally, massive globalisation, increasing environmental stewardship and evolving customer demands for tighter quality control and consistency have been developing trends in the market over the last 50 years which Asbury has been successfully navigating.

The net result of all these developments has led to substantial growth and continuing opportunities for Asbury Carbons capitalizing on our ability to be dynamic, engineering solutions and collaborating on applied development with our global customers.

What will be the biggest challenges/opportunities you expect to face in the foreseeable future?  

We will continue to face challenges from competitors who receive preferential treatment in their local markets...subsidies if you will.  

Further, responsible and sustainable environmental policies will continue to be a challenge, as we face competitors globally who do not share Asbury’s #1 core value: "the health and safety of all of those we engage with inside or outside or our organisation." 

As for opportunities we continue to focus on development of highly technical solutions that require the use of our material portfolio.  Asbury being a privately owned business affords us the ability to be dynamic in terms of responsiveness to customers needs while operating more efficiently than most of our competitors in the markets we serve.  This results in engineered products that are cost competitive in the targeted market.

What was the most innovative or unexpected phenomena you’ve seen in your business?

I have been pleasantly surprised by the current expected pace of growing demand for graphite and carbon used in energy management (Batteries).  As this market demands grows so will the growth of graphite supply. 

That said the energy management market represents the only large volume "growth market" for graphite today and as such it is attracting a large amount of speculative capital. With the low CAPEX flake graphite mines experience (especially compared to most other mining investments) l expect new supply to continue to outpace even the most aggressive demand forecasts for many years to come. The net result is low prices as the new graphite mines coming online will bring further pressure to an already oversupplied market.

Graphene is a new amazing material very early in its market evolution. Will it find large scale commercial application or will it be the next Fullerene (AKA buckyballs) or carbon nanotubes type story – a lot of interest in their potential but massive problems with upscale and commercial application challenges. It’s unlikely that the graphene market will make a significant impact on the overall consumption of graphite worldwide for many years to come.

China is playing a bigger role than ever. How do you think that will evolve in your sector? 

We all know China has grown to become both the world’s largest supplier of most minerals including graphite and other carbons and the world’s largest consumer of these same materials. In doing so China has encountered major environmental issues that they must overcome and overcome fast.  We see that push beginning today. 

China also has two different types of buyers: Companies that buy raw materials such as graphite and carbons on price only vs. companies that purchase raw materials on value. I believe over time the Chinese companies that purchase solely on price will "evolve or die" as customers continue to move towards higher value graphite with tighter quality control and consistency.   

Where do you see prices going in your markets in the foreseeable future? 

I could write a book on this question. Future price trends will depend on supply versus demand as well as customers evolving technical demands.  Mined natural flake graphite concentrate, used as a key precursor graphite mineral for producing graphite anodes for instance, should remain low for many years to come in the "commodity" space. However as companies/consumers continue to demand and expect suppliers to develop highly technical solutions outside of typical commodity markets, be it tightly controlled, unique particle size distributions or shapes, exacting chemistry control etc, there is opportunity for significant value added "engineered solutions" sold on total engineered value.  Obviously the higher the engineered value required the higher the price per unit volume.

Peizhai Mo, President, Qingdao Hensen Graphite Co., Ltd.

What have been the defining changes for your company or sector over the past 50 years?

We have grown from a family run small workshop to the leading enterprise in China graphite industry; from primary graphite mining business to fine and further processing business. 

What will be the biggest challenges/opportunities you expect to face in the foreseeable future?  

The biggest challenge is the company’s upgrade and transition. For decades we have created traditional graphite products, but the pressures we are facing grow bigger and bigger with fierce market competition and with rapidly increasing costs - of every kind. We need to make more value-added products, level up company management, grab new market opportunities, and strengthen our competitiveness and vitality.

For opportunities, we think that over a decade of spherical graphite business development has brought the best growing opportunity for the Chinese graphite industry. We were one of the first and earliest companies to enter this field and began to produce spherical graphite in 2003. Our technology and management level has been lifted significantly and has set a solid base and accumulated space for further development in future. That’s why we are now actively communicating and cooperating with both customers and competitors, seeking for opportunities for more value-added products and markets. 

What was the most innovative or unexpected phenomena you’ve seen in your business?  

I think it should be graphene. Graphene development speed and scale exceeds my expectation farther than I could imagine. There is a huge development prospect and potential for graphene industry, but there is also a lot of hype. The material is facing several difficulties: market sales, high cost being just two. We are currently deep in research of this market, and are considering whether to make our first steps into the graphene market. 

China is playing a bigger role than ever. How do you think that will evolve in your sector? 

On one hand, and for decades, China has been the most important and main graphite production base. In the foreseeable future, China will remain the main global producer. On the other hand, as the Chinese economy and technology evolves, the Chinese market demand for graphite has evolved. We have seen that many Chinese customers constantly request graphite products with higher technology standards.  

In this trend, our company must keep advancing ahead, increasing technology and management level, to satisfy the growing requirement and demand from both domestic and foreign customers. 

Where do you see prices going in your markets in the foreseeable future? 

The price of graphite in China will never be as low as before, because now all kinds of costs keep increasing, including source materials, labour, and the environmental cost. Therefore as the general production cost has increased significantly, it is highly unlikely that price would fall back again.

In the last few months, we saw graphite prices were increasing fast. The direct cause for this is the strengthened environmental protection enforcement by the Chinese government, resulting that a large number of small sized companies were shut down who couldn’t meet the environmental standards.

Under this condition, the graphite mines outside China, such as the mines in Africa, will be facing unprecedented market opportunities, and likely to occupy a large market share from the Chinese graphite industry of primary processed products. However, as for further processed graphite products, China will be still dominant.   

All these will bring a result that China graphite prices will remain at high level.