The zirconium chemical industry has been the fastest growing
zircon end-use sector in China, a fact easy to miss if
you’re only reading company announcements.
Iluka’s 2017 investment day presentation
revealed that the ceramics market demands 50% of zircon supply,
the largest end-use for the mineral. Iluka is on track to
produce 310,000 tonnes of zircon in 2017 after producing
347,000 tonnes in 2016. In that year, Iluka sold 65% of its
zircon into the ceramics sector.
In 2012, Iluka had estimated that zircon in the use of
ceramics constituted approximately 55% of global demand. That
year, Iluka produced 213,800 tonnes of zircon, a 58.4% decrease
from the year prior, a downshift in demand that would prove
hard to shake off.
Looking back to 2006, the company had produced about 450,000
tonnes of zircon and estimated ceramic demand was around 52% of
It’s not until you look back to 2000 that Iluka
estimated that less than 50% of total demand was being derived
from ceramics. In 2000, Iluka was producing about 33 per cent
of the world's zircon at 315,000 tonnes.
By the time we arrive back in 1990, demand from ceramics was
at around 40%, in 1985 it was 32%, and was below 20% in 1980.
At this point, zircon demand was dominated by refractory and
Demand for zircon has been heavily linked to the fortunes of
the ceramics industry since the turn of the 21st century, when
Chinese ceramic and zirconium chemical industries expanded, and
the Japanese economy strengthened.
The Chinese economy has continued to grow, and with it,
demand for ceramics. However, due to process modernization,
substitution and thrifting, this has not translated into
continual growth in zircon demand.
However recent developments may be about to change this
trend, with Iluka stating in its most recent announcement that
the "decline of zircon intensity in ceramics has now
stabilized," and that the growth of digital printing "remains a
positive development for zircon consumption".
The current market is also characterized by declining supply
due to reserve, resource and inventory depletion as well as
deposit grade and assemblage decline; this has resulted in a
strong zircon price for suppliers.
What is not mentioned in this most recent investor
presentation from Iluka is the continuing rise of the
manufacture of zirconium chemicals, particularly in China. In
2012, Iluka said boldly that "it is possible that
zircon’s use in zirconia chemicals may supplant
its use in ceramics over the next five years".
In a presentation in Perth earlier this year, Dr Xue Wang
said that consumption of zirconium chemicals in China has more
than doubled over the past seven years to reach
138,000 tonnes in 2016.
Dr Xue Wang also added that China accounts for 90% of the
world’s capacity, and that about 80% of
China’s zirconium chemicals capacity is accounted
for by zirconium oxychloride (ZOC). According to the Zircon
Industry Association (ZIA), ZOC
(ZrOCl2.8H2O) is "primarily used in white
TiO2 pigment application, antiperspirants and
catalysts. It is also the most popular precursor for
manufacturing other zirconium compounds".
According to a 2015 report by Reg Adams, world capacity for
zirconium chemicals currently amounts to 523,000 tonnes per
year, with ZOC amounting to nearly 420,000 tonnes of this.
In order to get this into the right perspective for primary
producers, Murray Lines of Stratum Resources noted in a
presentation from 2010 that the production of 100 tonnes of ZOC
requires 65 tonnes of zircon.
Alkane Resources, a gold miner known for its zirconia and
rare earth Dubbo Project in New South Wales, Australia, said
that zirconium chemical prices at end 2017 financial year were
40% higher than end-2016, "particularly due to the Chinese
government-led clean-up of the industry, which resulted in
reduced production of ZOC, and also due to the increased prices
of the raw material zircon."
The announcement goes on to say that "further increases in
ZOC price seems likely, as China increases the focus on ZOC
Alkane sees a likely decline in production coming out of
China’s Shandong province, but stresses its
overall importance as a chemical, in that "ZOC is the primary
precursor for producing downstream zirconium chemicals and
zirconium dioxide products worldwide".
Alkane therefore sees itself as an "important alternative"
to ZOC production in China.
The fact remains that there has been a rise in demand for
ZOC that shows no sign of stopping. While this may influence
global demand for zircon, it is worth noting that not all
zircon is made equal. Premium zircon is typically used for
ceramics manufacture such as tiles and sanitariware, as well as
in high-end foundry applications and additive
On the other hand, a standard or "universal grade" zircon
may be used more widely in zirconium chemicals. Iluka also
notes in a briefing paper dated June 2016 that digital printing
and low-quality ceramics may also utilize standard grade
The switch in Iluka’s sales compositions since
2011 reiterates this point; in 2011, 88% of zircon sales were a
premium grade, in 2015 only 60% of sales were premium grades.
Meanwhile, standard grade zircon has increased to 27% from 5%
as a proportion of sales in the same period.
While a rise in ZOC demand, the end to increasing
substitution, and the switch to digital printing are positive
signs, these changes will also have an unknown impact as
end-users search for lower prices and manufactures search for
ways to provide this.