Without doubt, the most significant effects on most minerals
markets in 2017 arose from the policing of environmental
legislation in China.
The necessary inspections and eventual shutdowns affected
trade across China and created a supply squeeze in many
markets, raising first domestic prices and then the prices in
The markets for magnesia, graphite, bauxite, alumina,
fluorspar and titanium dioxide were all affected, but so too
have been those for calcium carbonate, andalusite, rare
earths and soda ash.
Those who continue to produce, process and ship materials
have been able to do so by updating equipment, switching to
cleaner fuel sources and securing raw materials supplies.
But the supply shortage is likely to continue into 2018 and
will probably affect more markets.
Supply shortages meant that there were higher prices, and
through 2017 prices in all the markets mentioned above moved
In the lithium and frac sand markets, however, it was not
the environmental legislation from China which forced prices
higher; rather, it was a rise in demand for products.
The lithium markets have been experiencing a boom for
several years now, since demand has risen from the lithium-ion
battery sector. In 2017, prices rose - despite some new
capacity coming online - and interest in the mineral
Industrial Minerals recorded this interest in the importance
given to the new Battery Price report, which launched in
October 2016, and in the record number of delegates who
attended the 2017 9th Industrial Minerals Lithium Supply &
Markets conference, held in Montreal, Canada.
The demand driver in lithum is reported to be the automotive
sector. This year alone, several car manufacturers have either
released a new electric vehicle model or announced their
intention to do so.
In frac sands, there was a flurry of activity in Texas, as
companies sought acreage in the Permian Basin, close to the
expanding shale gas exploration sites.
Frac sand producers are attempting to keep costs down by
exploiting reserves near these sites, instead of those in
Wisconsin or Minnesota, as the high logistics costs make it
uneconomical to mine sand and transport it.
The higher oil price has meant that exploration activity has
ticked up, which has boosted all oilfield minerals markets,
especially frac sand production – but not the
production of ceramic proppants, which are said to be "dead in
It is a slow start – and the market is not anywhere
near the level of the "shale gale" of 2013-14.
As well as the reported supply squeeze, other interesting
partnerships were made as several companies merged or were
Graphite: A year in review
The year 2017 started with graphite prices ticking lower
following the cancellation of a 20% tax on exports out of
At the end of 2016, China suddenly removed graphite and
magnesia from the export tax list, creating confusion in the
market. In the absence of any official government statement,
producers, exporters and traders were initially uncertain as to
whether the tax had actually been cancelled and whether such a
move would have any impact on the already depressed market.
China-based graphite producers decreased their prices by
10-15% at the beginning of January, while uncertainty remained
about the new policy.
However, the environmental tax which was also introduced at
the end of 2016 started to take effect on prices shortly after
the initial dip, meaning that they soon came back up as supply
The Environmental Protection Law was intended to tax
companies that flout environmental measures and in January the
Chinese government intensified its pollution crackdown.
The measure was announced on December 25, 2016, by Chinese
President Xi Jinping and is due to come into effect on January
1, 2018, replacing the current pollutant discharge fee.
While at first glance the new law is similar to the system
it replaced, it is more likely to be implemented as local
governments can no longer intervene on the behalf of
Particular focus was given to updating and expanding the
graphite and refractories industry in China.
In February, officials from Heilongjiang province announced
that there would be a push to enlist graphite as the new pillar
industry of the local economy for the sector to develop
Also in February, Zibo’s municipal government,
in China’s Shandong province, announced a plan to
upgrade its refractory industry in its Zhoucun district by
reducing capacity and steering existing production towards
high-end and added-value materials.
Zibo will establish a high-end refractory industrial park in
Wangcun town, with an annual capacity of up to 300,000 tonnes,
and a dedicated logistics area, covering a total 2.37 km2.
The plan requires the district’s refractory
capacity to be cut by 50% by the end of 2017 from 2015 levels.
By 2020, it is expected that new products will account for over
80% of total production value.
Particular focus will be paid towards developing materials
that follow a number of selected standards such as a low
pollution footprint, long economic life, lightweight and
Operations that fail the assessments will be closed by the
end of June, the government said, and those who will not join
in in the industrial park initiative will have their capacity
In Deyang city, Sichuan province, one refractory company was
forced to shut down while 12 others were asked to rectify their
operations, the local government announced at the end of a
month-long period of environmental inspections.
Government inspectors returned to Shandong for a second round
of checks in May, making production at local graphite
operations run intermittently, as limitations to
acid-purification processes affected high-purity and plus
mesh sizes in particular.
Renewed environmental controls in China’s
Shandong province thus prompted an increase in graphite prices,
with production of high-purity material and plus mesh sizes
particularly affected by the inspections.
In Jixi city, graphite producers came together to announce a
mutually-agreed increase in graphite prices, which they said
was needed on the back of fast-rising costs affecting
At least seven producers in Jixi stamped a jointly-issued
price increase notice, formally announcing their allegiance and
combined effort to capitalize on the tightening supply
situation that has brought about the recent appreciation seen
in graphite prices.
In another graphite producing area, meanwhile, mining
activity ended earlier than expected.
"Graphite mines in Luobei are shut down due to mine safety
standards failing to meet the guidelines required by the local
safety inspection bureau. We don’t know when they
will be reopened," one local producer told Industrial
Imports from other countries into China increased. Between
January and June, China imported 525 tonnes flake graphite
from Madagascar. Last year, China imported 181 tonnes from
Madagascar and 207 tonnes from Tanzania. This trend was
expected to increase.
ThyssenKrupp and Tata
Towards the end of the year, steel majors Tata Steel and
ThyssenKrupp agreed to set up a joint venture to combine their
European steel activities.
Each company will have a 50% share in the new venture, to be
called Thyssenkrupp Tata Steel, which would be
Europe’s second-largest steel business.
The deal involves combining Tata’s plants in
the Netherlands and the UK with ThyssenKrupp’s
German assets. There are also plans for Thyssenkrupp Mill
Services & Systems, a steel mill services provider, to be
included in the joint venture.
Pushing up: Good signs for graphite
- Tesla Motors said that it would be finalizing locations
for Gigafactories 3, 4 and possibly 5 "later in 2017".
- Monolithic refractory maker Calderys UK Ltd completed the
acquisition of NG Johnson Northern Ltd, a UK-based company
providing installation and engineering services to the
- US refractory products supplier HarbisonWalker
International (HWI) earmarked $30 million to set up an 80,000
tpy monolithic refractories production facility, which is
expected to be operational by early 2018.
- Imerys Graphite & Carbon completed the acquisition of
Japanese battery anode producer Nippon Power Graphite
- Solvay AG acquired the Energain high voltage lithium-ion
(Li-ion) battery technology from DuPont in
- Construction began on a new rechargeable battery factory
in Germany as Daimler follows Tesla’s lead in
expanding their electric car business vertically. The Kamenz
project, expected to go online in mid-2018, will see an
investment of some €500 million ($579 million) into
quadrupling the existing site’s production.
- All new models launched by Swedish carmaker Volvo will be
partially or completely electric from 2019.
- The Chinese city-level prefecture of Hegang plans to
double its graphite ore mining production to over 3 million
tonnes this year, according to a statement made in August.
The municipal government expects to add new production worth
over 6 million yuan ($892,794).
Fluorspar: A year in review
There was a shaky start to the year for the fluorspar markets
as prices remained low on lacklustre demand and an
Things were so bad that one developer, Tertiary Minerals,
admitted that it was looking to other markets to make profit,
because of poor global market conditions in fluorspar and
difficulties with the development of its Swedish fluorspar
By March the situation was very much changed, however.
Fluorspar prices within China had started to rise as downstream
industries such as steel, aluminium fluoride and hydrofluoric
acid started to perform better when the steel industry
Despite this uptrend for China-origin fluorspar, prices
elsewhere in the world remained largely stable as consumers
were well covered by long-term contracts. Amid improving
demand and the supply cuts in China intended to reduce
pollution levels, however, some were optimistic of a recovery
following six years of depressed demand and falling prices.
Anti-dumping and legal issues
The United States Department of Commerce imposed an
anti-dumping duty on a number of refrigerant materials imported
from China with effect from March 1, 2017.
After launching an investigation in October 2016, the
department determined in April that a series of fluorochemical
compounds commonly known as R-134a was being, or was likely to
be, sold in the US at "less than fair value."
Anti-dumping duties ranging from 148.79% to 167.02% were
imposed on China-origin R-134a imports into the US.
"This is something that we have been lobbying about for some
time. It has been several years; now, it finally looks like it
is going to hold," one US-based consumer told Industrial
In August this year, the US Court of Appeals for the
District of Columbia circuit overturned a ruling by the
country’s Environmental Protection Agency (EPA) in
2015 that would have banned a series of fluorochemicals (R404a,
R134a, R407C, R410A) from use in new products, to begin from
The EPA ruled under the US’s Clean Air Act that
a list of high global warming potential (GWP) fluorochemicals
were classed as unacceptable and would need to be replaced with
alternative low-GWP chemicals.
As a result of the EPA ruling, many companies including
Chemours and Honeywell researched and developed technologies to
produce hydrofluoro-olefin (HFO) to replace hydrofluorocarbon
Chemours and Honeywell said that they intended to challenge
Production cuts bite
As well as a recovery in demand from the steel sector,
Chinese prices were also climbing on curtailed supply, as the
environmental legislation took hold. This was seen in the
process for both fluorspar and in aluminium trifluoride (AlF3)
AlF3 is used as a flux for aluminium metal production, and
many producers worldwide source the raw material from China.
But production in key producing regions in Southern China was
severely reduced due to anti-pollution inspections, which led
to the closure of plants that did not meet environmental
In April, acidspar spot prices increased in Europe after
months of stability, when producers started to raise their
offers following the uptrend in China. Some argued, however,
that the spot market was not representative because it
accounted for a small proportion of the overall business
volume, which is largely covered by annual contracts.
This year saw a new project come online. Canada Fluorspar
opened its 200,000 tonnes per year St Lawrence mine, in the
province of Newfoundland, in October. It is an open-pit mine
with 30 years’ operation capacity and potential
for 40 years of resource development.
Afghanistan fluorspar producer Amania Mining is expected to
start commercial production of acid-grade material (acidspar)
in early 2018.
The company was established in 2010 and has been producing
metallurgical-grade fluorspar (metspar) since 2014. The new
acidspar production schedule was later than the initially
South African fluorspar producer SepFluor, meanwhile,
expects to achieve full production in 2019.
Industrial Minerals Fluorspar 2017
- Producers of fluorspar and hydrogen fluoride (HF) face
challenges related to declining ore quality, Thomas Dahlke
of BUSS ChemTech told delegates at the 2017 conference,
held in Amsterdam in October.
- High-quality ore reserves are being exhausted while
newer resources are smaller in size and are often located
in politically unstable regions, Dahlke said.
Guillermo Federico Gallegos, commercial director at Mexichem,
identified a number of trends:
- The scarcity of metspar material.
- Looking at consumption patterns, global metspar volumes
have reduced by 19% since their peak in 2013; the estimated
volume for 2016 is around 2.3 million tonnes, and the
prediction for 2018-22 is growth of around 3% per
- Metspar is no longer only about the product.
- Metspar usage in steel is becoming more focused on
speciality and/or stainless steel products, so customers
increasingly require more stringent metspar
characteristics, such as high quality and minimum
batch-to-batch variability of product.
- Customer’ logistics are also evolving,
especially in Europe and the US, where they want to ensure
the sustainability of their raw materials and are ordering
smaller amounts more frequently, rather than bulk
- Any other applications for metspar will require strong
- New applications for metspar, such as using as a flux
with the cement raw materials in the rotary kiln in order
to speed up the calcination process, may not be as swift as
some might hope.
- Chinese aluminium fluoride production is set to fall by
6% in 2017 after shutdowns and the consequences of
regulatory tightening, Cassie Yan, manager of Do-Fluoride
Chemicals (DFD), said. Yan expects Chinese output to fall
to 670,000 tonnes this year from 710,000 tonnes in
- Fluorspar producers in Canada, Vietnam and South Africa
are ramping up output at the time when Chinese supply has
been curtailed as a result of environmental
- Although China remains a major global supplier of
fluorspar, with a downstream focus that will continue to
rationalize supply, Vietnam’s proportion of
total Southeast Asia supply volumes increased from 0% in
2012 to 77% in 2016; while the remaining 23% largely came
from Thailand, according to Masan Resources.
Iodine: A year in review
Iodine prices continued their march downward through the
first half of 2017, with some producers in Chile producing
material at prices close to cost.
Prices are far from the peak reached in March 2011 of $60-95
per kg, and have been a major concern among producers and
consumers since the global iodine market (crystal, 99.5% min,
drums) crashed to $18.50-21 per kg in November 2016.
The price in 2017 ranged between $20.50-22.00 per kg
(contract) at the beginning of the year and $22.00-23.50 per kg
towards the end of 2017.
Within the low price environment, shut-ins took place. In
Chile, which accounts for the majority of global iodine
production, suppliers were producing at levels close to cost at
the start of the year.
However, by the second half of the year, the market had
started to pick up.
Fines for SQM
In January, Sociedad de Quimica y Minera (SQM), a major
producer of lithium, iodine and potash, was ordered to pay
fines amounting to more than $30 million in an attempt to
settle a long-running investigation by authorities in the
United States into a political payments scandal.
The US Department of Justice (DoJ) and Securities &
Exchange Commission (SEC) will receive penalty payments of $15m
and roughly $15.5m, respectively.
These will be "in relation to the investigations by such
agencies of facts related to payments to providers and entities
that were tied to persons with political exposure between 2008
and 2015," SQM said in a letter to the Chilean Superintendent
of Securities and Insurance (SVS), dated January 13 and signed
by company chairman Eugenio Ponce.
Things quickly looked up for the Chilean producer, however,
as its iodine sales increased over the course of the year while
other producers shut in their production.
Cosayach decreased its production by 40% in March, reducing
iodine production to 250 tonnes per month from 400 tpm
previously. This came weeks after ACF Minera SA laid off 200
employees from its Lagunas operation in Northern Chile in order
to reduce output.
The amount of supply which was taken off the market resulted
in a small price uptick in the second half of the year,
although it still did not reach the pre-crash levels seen in
SQM received approval from the Servicio de Evaluación
Ambiental (Chilean Environmental Agency) for its Orcoma iodine
project in June.
The plant will have capacity for 2,500 tonnes per year of
iodine, and evaporation ponds will produce 320,325 tpy of salts
rich in nitrates. No timeline has been given for production to
In the US, iodine- and halogen-based speciality chemical
derivatives company Iofina confirmed in November that the
construction of its IO#7 plant is progressing on time and
Iofina expects to meet or exceed the upper end of its
second-half 2017 production forecast of 225-240 tonnes of
crystalline iodine due to continued operational improvements at
all Iofina production plants.
These have included increased efficiency due to less downtime
and better process controls, the company said.
Iofina expects that it will achieve its yearly output target
of 475.5 tonnes of crystalline iodine for 2017.
Lithium: A year in review
In some quarters, lithium carbonate – the material
used to make lithium-ion batteries and derived from either
hard rock (spodumene) or brines – is referred to as
It is not surprising, then, that the current tally of junior
producers hoping to bring a lithium project online stands at
Indeed, supply is still one of the most hotly debated topics
in the industry. No one now doubts that new supply will be
needed – the nay-sayers have long been silenced on
that topic. But there is some dispute about where the new
supply will come from.
Through 2017, the imbalance between supply and demand was as
prevalent as it had been over the previous two years. Prices
remained strong, much to the investors’ relief
– a softening of the current market prices remains one
of the investors’ and juniors’
greatest fears, as it could threaten the development of
Although the number of developing projects is large, the
know-how of the lithium industry remains underdeveloped.
Producing lithium carbonate or hydroxide requires technical
knowledge, an understanding of the challenges facing the market
Traditional producers such as SQM, Albemarle, FMC, Ganfeng
and Tianqi, among others, have sought to increase their total
output and production capacity to fulfil current market demand
To secure raw materials supplies, several of the traditional
producers have engaged in offtake agreements with junior
lithium producers and have started to participate in their
projects to speed up their development processes.
Fanning the flames
Concerns regarding the safety of lithium-ion batteries have
continued. At the start of the year, the United States consumer
safety watchdog called for heightened safety regulations on
lithium-ion batteries after details were released by Samsung
Electronics Co Ltd, outlining what had caused a number of its
Galaxy Note 7 smartphone devices to overheat and catch fire in
2016, prompting two recalls and a cessation of production.
In April, a train carrying electric vehicle lithium-ion
batteries exploded near the US city of Houston on its way to
Los Angeles, where the batteries were being shipped for
Chile’s state-owned Corporación Nacional
del Cobre de Chile (Codelco) opened a bidding process for the
development of lithium projects at its two salt flats,
Pedernarles and Maricunga, in northern Chile. By the end of the
year, it had still not announced the winner.
GFL International Co Ltd (Ganfeng) agreed to invest $174
million in the Lithium Americas Corp (LAC) Cauchari Olaroz
project in Argentina to secure an offtake agreement and to
ensure the project’s development.
The deal sees Ganfeng, the largest integrated lithium
producer in China, picking up 75 million common LAC shares for
a total of $49 million, as well as the right to purchase as
much as 70% of LAC’s share of
Cauchari’s Stage 1 lithium carbonate production at
Albemarle Corp, the world’s largest producer of
lithium, revealed that it will pay royalties of as much as 40%
to Chilean state economic body Corporación de Fomento de
la Producción (CORFO) under its agreement to expand
lithium production in the country.
The joint venture between Albermarle and Tianqi Lithium
Corp, Talison Lithium, has approved the expansion of lithium
concentrate production at its Greenbushes spodumene mine in
The expansion is intended to more than double lithium
carbonate equivalent (LCE) capacity at Greenbushes from 80,000
tonnes per year to more than 160,000 tpy. Commissioning of the
expansion is expected to begin in the second quarter of
Chinese lithium producer Tianqi Lithium Corp said that it
will not proceed with the exercising of an option that would
have seen it acquire a 20% stake in Rockwood Lithium GmbH, a
subsidiary of US counterpart Albemarle.
Albemarle and Tianqi entered into a deed of termination in
relation to the planned share purchase in February.
Electric vehicle (EV) producer Tesla Motors Inc commenced
lithium-ion (Li-ion) battery cell production at its gigafactory
in Reno, Nevada, US, in January.
Tesla said that, by 2018, it intends to produce 35 GWh per
year of lithium-ion battery cells, nearly as much as the rest
of the world’s battery production combined.
It then revealed that it would be building three further
battery gigafactories, but did not say where.
Japanese car manufacturer Toyota announced that it has
completed the sale of its stake in Tesla Motors following the
termination of the contract at the end of 2016, ending the
previous partnership between the companies.
In 2010, Toyota and Tesla agreed to work jointly on the
manufacturing of electric vehicles, with the Japanese company
acquiring 3.15% of Tesla’s outstanding shares,
valued at $40.5 million (¥4.50 billion).
Nemaska Lithium received a lump-sum payment of $10 million
from FMC Corp as part of a previously-agreed supply deal for
Under the amended agreement, Nemaska Lithium will start to
supply FMC no later than April 1, 2019, and had to supply
lithium carbonate samples to FMC for qualification in 2017.
Breaking with the delivery obligations agreed in the supply
agreement will force Nemaska Lithium to return the full $10
million payment plus an agreed penalty.
Magnesia: A year in review
At the beginning of 2017, the magnesia market was on shaky
ground. Prices slipped lower due to the cancellation of the
export quota system at the end of 2016, leaving some to be
openly bearish about the year ahead.
This sentiment did not last long, however. As the year
marched on it became apparent that the environmental
legislation which was announced in 2016 was going to be more
far reaching and stricter than previously thought.
China is the world’s biggest magnesia producer
and production is focused in Liaoning province.
China’s main magnesia-producing region is
currently split between two places – Dashiqiao in
Yingkou, and Haicheng in Anshan.
Dashiqiao has less magnesite resources but more
processing companies, while Haicheng has larger magnesite
resources and primary processing companies.
Inspections started in Liaoning province, Anshan city, in
January. A total of 64 local companies were covered and four
inspection teams from the Anshan municipal government announced
a number of irregularities found at Youyan Wanyou Mining
Company, Shuangli Mining Company and Wanning Mining
The officials said similar issues related to environmental
practices and pollution levels were found in several other
companies that were inspected, leading to fines being issued on
site and operations being immediately shut.
Haicheng city, under the municipal management of Anshan,
completed inspections of all local magnesia companies,
according to Anshan Bureau of Environmental Protection. There
are 95 companies operating 1,700 magnesia kilns in Haicheng. Of
these, 142 kilns were shut in January.
Then, in March, the Haicheng government announced that
production would stop at all major magnesia companies, because
their environmental objectives had not been met on time and
they were now operating without permission, greatly damaging
The ban affected 527 kilns in 34 companies —
including 383 caustic calcined magnesia (CCM) kilns, 42 dead
burned magnesia (DBM) kilns, seven fused magnesia (FM) kilns,
52 middle-class magnesia kilns, 37 high-purity magnesia kilns
and six tunnel kilns.
In a double blow, and adding to the problems resulting from
the environmental inspections, Haicheng was also reportedly
considering restrictions on magnesite mining activities,
contacts in Haicheng told Industrial Minerals in March.
Producers were understood to be facing restrictions on selling
material outside their local area – even to nearby
By May, almost all magnesia producers in Haicheng and
Dashiqiao were shut amid ongoing environmental controls; and
while European magnesia prices were stable market participants
are wary of impact to the market should the situation in China
As expected, magnesite mining was also severely restricted
because no dynamite was being sold.
Fused magnesia (FM) was, by May, no longer available in
In Deyang, three refractories manufacturers based in the
city carried out an upgrading process of local operations to
comply with the stricter environmental norms.
One refractory company was forced to shut down while 12
others were asked to rectify their operations in Deyang city
in China’s Sichuan Province.
Elsewhere in the world
Brazil and the European Commission meanwhile approved the
proposed acquisition of Brazilian refractory maker Magnesita
Refratários by Austria’s RHI, but on
condition that the latter divest its dolomite business, the
authority said in June (See pp31-32).
In Europe, prices of European fused magnesia (FM) surged to
exceed the $1,000 per tonne mark in June, following repeated
upticks in Chinese prices and extremely tight availability of
material reflecting on international demand flows.
While the European magnesia market as a whole somehow
managed to stave off the rapid price uptrend that was seen in
China since the second quarter, the widespread shortage of
fused magnesia has now taken the price of the commodity up by
over 50% against earlier levels.
By September and at the UNITECR conference held in Santiago,
Chile, delegates heard that the supply tightness affecting
magnesia markets is expected to persist for the foreseeable
Sources were adamant the issues of supply shortage and price
volatility that have been seen in China over 2017 will continue
to bite, they told Industrial Minerals at the event.
Customs officials at Huangpu Port in southern China
announced the discovery of a magnesia smuggling case involving
some 15,000 tonnes of material at the start of the year.
It is alleged that the material was smuggled through Huangpu
port and Nansha port in Guangzhou, and Shanghai port, between
June 2014 and October 2016.
The magnesia cargo was being exported under other product
labels, including calcium carbonate, barite and flatting
agent. In this way, the sellers bypassed the required export
certificate for magnesia products, keeping prices lower than
they would otherwise be.
R&D in Yingkou
Yingkou’s municipal government, in
China’s Liaoning province, announced a
wide-ranging plan to promote supplier-side structural reforms
for seven local industries including magnesia, aiming to cut
overcapacity, pollution and to foster R&D in new
Yingkou plans to boost the new materials sector for magnesia
with the aim of developing new refractory products based on
To deal with the overcapacity problem, Yingkou plans to
speed up the process of closing backward capacities that have
high pollution and high energy consumption levels.
Additionally, the city wants to impose output control on all
magnesium production. As such, the annual mining volume of
magnesite will be limited to 5 million tonnes.
The number of magnesite companies will be consolidated to 20
in 2017 and further reduced to 17 by 2020. The proportion of
non-refractory use of magnesium products in China is expected
to increase to over 20% by 2020.
New capacity will be strictly controlled, especially for
steel, cement, flat glass and electrolytic aluminium.
As regards pollution controls, an online monitoring system
will be installed to assess pollution levels and energy
consumption of the local magnesia industry.
By 2020, the target is to reach a 60% recycling rate of
industrial solid waste.
TiO2: A year in review
The year started with a bleak outlook after Iluka Resources
told investors during an earnings conference call that
"we’ve entered 2017 with less volume contracted"
after foreseeing price increases in 2016.
Matthew Blackwell, head of mineral sands marketing, warned
that "sales in 2017 compared with 2016 will be lower, and lower
again in 2018".
Mineral sands miner Base Resources said it expected further
improvements in ilmenite prices throughout 2017 due to an
improving TiO2 market. It also expected disruption to ilmenite
exports from India and lower ilmenite production in
China’s Sichuan province due to environmental
inspections to buoy prices.
"Base Resources’ expectation is for rutile
prices to start trending upwards during 2017," the company
While ilmenite prices subsequently tracked higher, they fell
back in July although they remained above 2016 levels.
Environmental legislation in China hit several small
producers, causing supply disruptions, and there was also a ban
on heavy mineral sand mining in Tamil Nadu, India.
Elsewhere, the closure of Sibelco’s Stradbroke
Island became a concern, especially for welding producers,
which rely on rutile from the mine. The
operation’s shut down will take around 35,000
tonnes of rutile from the market by 2020.
TiO2 company price hikes
Cristal, Huntsman and The Chemours Co all raised prices over
the year by $225-250 per tonne.
Away from the western producers, Chinese TiO2 producers also
raised their prices over the year.
Ishihara Sangyo Kaisha Ltd, one of Asia’s
largest TiO2 producers, announced in March that it would raise
its TiO2 price by $150 per tonne from April 1.
Lomon Billions announced a TiO2 price rise at the start of
the year, citing the rapid price increase of source materials
and logistics costs. The company subsequently raised prices a
further six times.
Other companies quickly followed suit.
Luoyang Yuxing Chemical Co and Luohe City Xingmao Titanium
Industry Co raised prices 700 yuan tonne for chloride route
rutile type TiO2 for the domestic market and $100 per tonne for
the export market.
Yunnan Metallurgical Xinli Titanium Industry Co raised its
chloride route TiO2 prices by 1,000 yuan per tonne for the
domestic market and $150 per tonne for the export market.
CNNC Huayuan Titanium Dioxide Co, Anhui Annada Titanium
Industry Co, Guangxi Shunfeng Titanium Industry Co, DoGuide
Group, Fangyuan Titanium Industry Co, Dawn Group, Guangdong
Huiyun Titanium Industry Corp, Yunnan Xinli Nonferrous Metals
Co, Panzhihua Iron & Steel Group Titanium Industry Co,
Lomon Billions and Panzhihua Dongfang Titanium Industry Co
raised prices by 500-1,000 yuan per tonne in March.
Lomon Billions suggested the market would continue to rise,
citing increased demand from developing countries such as
India, Brazil and South Africa due to rapid development of
infrastructure as well as continued demand growth from China.
If it was an interesting year in terms of pricing, it was
also a year when many companies made bold moves either to
consolidate or earn a greater market share of the TiO2
In February, US-based TiO2 producer Tronox Ltd signed an
agreement to buy Cristal’s TiO2 business for
Tronox sold its Alkali business, which includes soda ash
production, to Genesis Energy in September as part of the
The combined company will operate 11 TiO2 pigment plants in
eight countries, with total capacity of 1.3 million tpy, as
well as titanium feedstock operations in three countries with
capacity of 1.5 million tpy. Tronox described the future
operation as "the world’s largest and most highly
integrated TiO2 pigment producer".
The acquisition, unanimously approved by the boards of both
Tronox and Cristal, is subject to approval by Tronox
shareholders as well as regulatory approvals. The transaction
is expected to close before the second quarter
In February, Huntsman Corp said it would spin off its
pigments and additives business into a separate company,
Venator Materials Corp.
Venator comprises two main business groups: titanium
dioxide, which will produce TiO2 pigments; and performance
additives, which includes iron oxide, barium sulphate, complex
inorganic coloured pigments, zinc sulphide, metal carboxylate
driers, timber treatment chemicals and water treatment
In May, Huntsman and Clariant announced a merger by the end
of 2017, combining two speciality chemical companies, with
interests in a range of industries, including pigments such as
titanium dioxide, as well as bentonite, into a new company
The new company was expected to deliver sales of around
$13.2 billion and adjusted Ebitda of $2.3 billion, valuing the
company at around $20 billion.
But the deal was scuppered by activist investors who acquired
a sizable stake in Clariant, suggesting that the best value
for shareholders was away from the Huntsman deal.
Lomon Billions acquired ilmenite producer Panzhihua Ruierxin
Co for 190 million yuan to secure raw material supply.
AkzoNobel and PPG Industries Inc
Dutch paints and coatings manufacturer AkzoNobel rejected
unsolicited, non-binding and conditional takeover offers from
US paints giant PPG Industries Inc in March.
PPG made three bids for the Dutch company. The last, made in
late April, valued the European paint company at €26.9
billion (£22.8 billion).
Akzo rejected it, saying it undervalued the company, and
accused PPG of a "lack of cultural understanding of the
Akzo then put forward an alternative plan to the merger,
promising to give shareholders €1.6 billion. It also said
it would spin off its chemicals subsidiary, which represents a
third of sales and profits.
This was to placate shareholders, namely Elliot Advisors,
the largest shareholder, which repeatedly tried to unseat Akzo
chairman Antony Burgmans.
Investors, led by Elliot, were angered by the rejection of a
takeover bid from PPG early in 2017. Akzo at the time cited the
forecast €100m of earnings among reasons to turn down the
offer and suggested its spin-off plan offered better value.
A truce was agreed in August - the company moved forward
with plans to spin out its speciality chemicals segment from
its coatings business.
Oilfield minerals: A year in review
After an extremely bearish two years in the oilfield
minerals markets – defined here as the group of
minerals that find their main use in the oilfield services
industry, chiefly in drilling oil wells or in extracting shale
gas through hydraulic fracturing (fracking) – things
started to look up in 2017.
The recovering oil price meant that the US was interested in
fracking once again and US frac sand demand was forecast to
rise to at least 70 million short tons in 2017, compared to 34
million tons in 2016.
However, as the oil price did not recover by a significant
amount, it was indisputably a race to the bottom for frac sand
producers this year, as demand grew for cheap, basin frac
It has been a take of quantity over quality, as frackers
strive to get as much sand as possible into wells.
Looking ahead, US Silica chief executive officer Bryan Shin
forecast a continued rise in US frac sand demand, to as much
as 90 million short tons in 2018 thanks to "continuing
improvement in North American well economics, partially
driven by greater proppant usage."
Basin sand rush
Investments were made by several leading sand producers in
new frac sand mines. The most notable examples were those in
the Permian basin, where Hi Crush Partners LP, US Silica and
Unimin Corp pushed for new capacity in the Texas play, after
oilfield activity in the state boomed.
The Permian basin is attractive because of its proximity to
the massive oil and gas fields in Texas. More than two thirds
of the cost of delivered frac sand from Wisconsin, the
traditional heartland of sand production, to a Texas wellhead
consists in freight cost.
In-basin production has the potential to reduce freight
costs, delivering a more competitive product at a time when
margins are shaved paper thin due to low oil prices.
In February, Hi-Crush paid $275 million for Permian Basin
Sand Co, and its 3 million short tons per year capacity.
This was followed in June by US Silica announcing a $225
million investment, to establish 4 million short tpy of
capacity in the basin. In September, the company added another
acquisition to the list, when it announced it would build a
second frac sand mine in the Permian basin.
The mine is expected to have capacity of some 2.6 million
short tpy, with production commencing in March 2018.
Frac Sand 17
At this year’s IM Frac Sand 2017 Conference, in
Denver, US, delegates heard how ceramic proppants were "dead in
the water" as raw sand wins out.
"It’s clear, the data is in: today raw sand is
the choice," Joel Schneyer, managing director at banking
services provider Headwater MB, told attendees.
One attendee told Industrial Minerals that ceramics were
still being used in fracking, but only as a way of clearing
stocks accumulated by the industry when demand was expected to
Elsewhere, new US regulations on dust exposure for workers
are opening up opportunities for equipment and sand producers
servicing the fracking industry, delegates heard. Regulation
on silica dust exposure for workers came into force in
September for construction companies.
Elsewhere in the world
While frac sand opportunities were clear in the US,
elsewhere the picture was more muted.
This was true not just of frac sand markets but of the
overall gas and oil market. The Baker Hughes Rig Count,
released every month, showed that while activity was creeping
up in the US, it was stagnating in other parts of the
In January, a new study published by trade body UK Onshore
Oil and Gas (UKOOG) showed that the development of 400 well
pads in the UK could reduce its dependency on gas imports by
50% with a limited impact on countryside areas.
However, this did not translate into public support or more
wells being taken on. In fact, sentiment around fracking was
cool in 2017 – a survey* undertaken by the Business
and Energy Department revealed that public support in the UK
for fracking had fallen to 16%, from 21% in the previous
Also, at the beginning of the year, the Scottish government
launched a public consultation on the extraction of
unconventional oil and gas in the country.
Scotland placed a moratorium on hydraulic fracturing
(fracking) in January 2015, while the government investigated
the potential impacts of the practice.
Over the year, the Scottish government carried out a
comprehensive period of evidence gathering, public engagement,
and dialogue on the issue. This culminated with a
four-month public consultation, "Talking
'Fracking’", which closed on 31 May and received
over 60,000 responses.
On October 3, 2017, in response to the publication of the
consultation responses, the Minister for Business Innovation
and Energy made a statement to the Scottish Parliament on the
future of unconventional oil and gas.
The statement set out that the Scottish government does not
support the development of unconventional oil and gas in
Indeed, in August, BHP warned that fracking opportunities
"do not exist" outside the US.
The comments were made as the Anglo-Australian mining giant
put its shale oil business up for sale just six years after it
made a surprise entrance to the sector.
Speaking to investors, BHP boss Andrew Mackenzie suggested
that the $20 billion investments made back in 2011 had been
"The shale acquisitions were poorly timed," Mackenzie said.
"We paid too much and the rapid pace of early development was
*2,000 people polled
Headwinds for frac sand
- Wisconsin state Senator Kathleen Vinehout introduced a
package of bills in July to increase environmental oversight
of the frac sand mining sector, and to restrict the opening
of new mines. A package of nearly identical bills failed to
pass in 2016.
- US frac sand usage may be easing for the first time in
years, Halliburton’s CEO Jeff Miller said in a
conference call with investors in June.
- "For the first time in years, in the second quarter we
experienced our first decline in average sand pump for well,"
Miller said. "We believe current sand price levels have
encouraged operators to optimize their completion design
using more science as opposed to simply maximizing sand and
trade for increased production," he added.
- A small lizard, the dunes sagebrush lizard, once again
threatened to be a large headache in the rush for Permian
Basin frac sand development.
- "We believe Texas mine opportunities won’t
come without its obstacles, including the following, access
to wire, roads, electricity, trucking and labor and potential
serious environmental issues and questions relating to the
sagebrush lizard and its habitat," Smart Sand CEO Charles
Young said, in June.
Bauxite and alumina: A year in review
The main non-metallurgical bauxite markets, such as
refractories, abrasives and brown-fused alumina (BFA), source
their materials in China, where the repeated shutdowns of
industrial operations imposed by Beijing due to high smog
levels created low availability of product through the
Local companies attempted to work through their stocks, but
by the end of January, these were depleted.
And supply problems intensified from there. Numerous bauxite
and fused alumina plants that did not meet environmental
standards were shut down and the operating rates at many of the
remaining producers were restrictedThis severely disrupted
bauxite and fused alumina output in China, which affected
supplies to many refractories in Europe.
Not only were there stoppages on environmental grounds, but
also Chinese white fused alumina (WFA) producers that did meet
environment standards were increasing their sales volumes to
the domestic market to meet local demand, leaving less material
available for the export market.
The ongoing supply disruption in China pushed many European
buyers to seek alternative supply to meet their
In February, European WFA spot prices jumped due to higher
freight rates and production costs.
The disruption also affected the brown fused alumina (BFA)
market. Chinese output was hit when the Chinese government
started to clamp down on polluting plants in Henan – a
main hub of fused alumina production in China.
Although some production returned to normal in
early-to-mid-February following the end of Chinese New Year
holiday, many plants that did not meet environmental
standards have not reopened, according to market sources.
Further environmental clampdowns
Concerns built up of a renewed wave of anti-pollution checks
at the end of February, after the Tianjin government announced
further plans to "greatly enhance" the city’s
environment in 2017.
As a result, producers rushed to produce as much as possible
before any potential disruption, one Tianjin-based trader told
Fears were realised, when, in March, a wave of mass shutdowns
was imposed again on fused alumina and bauxite production
facilities in parts of China, following air quality checks by
the Ministry of Environmental Protection.
Elsewhere in Shanxi, the local government banned coal-fired
energy generation in the provincial capital city of Taiyuan as
part of an anti-pollution campaign on March 1.
Most refractory minerals’ production in China
is traditionally powered by coal, but under
China’s natural gas policy, industries were only
to operate using the natural gas.
As a result, most bauxite calcining operations to make
refractory-grade bauxite ceased.
Tianjin processing plants
As part of the ongoing environmental controls, processing
plants located in Tianjin port were forced to relocate in July.
Industrial Minerals heard of eight crushing and processing
plants around Tianjin port that were forced to relocate, many
of which supplied global refractory makers and Europe-based
Major bauxite supplier China Mineral
Processing’s (CMP) plant in Tianjin (see p17)
was not affected as the facility met required environmental
standards and received government approval to operate.
There was much speculation at the 23rd Bauxite and Alumina
conference in Miami, the United States, in March over the
extent that China’s reliance on imports would
Even without the pressure of the environmental controls,
delegates argued that maintaining the required purity standards
of bauxite raw material is becoming harder within China since
best-quality ore in known local resources was becoming scarcer
after many years of extraction.
This was reflected in the increased need for volumes from
outside the country. While China has steadily imported bauxite
(around half of national demand is covered by imports), sources
claim the ratio of local resources vs imports could change as
domestic supply declines.
Australia is expected to strengthen its leading position as
supplier of alumina and bauxite to China in the coming years,
Just over half (56%) of all alumina imports into China were
shipped from Australia in 2016, Andrew Wood, group executive
for strategy and development at Alumina Ltd, told delegates
during a presentation.
Monolithics seen as a growth area
This year saw the growth of interest in monolithics, with
several refractories companies making moves into this field, or
expanding (see box).
"Monolithics are a growth area, and the new plant will
enable us to further elevate product quality and consistency,"
Carol Jackson, senior vice president and general manager at
HarbisonWalker International, said. "From a broader
perspective, the new plant represents an overall strategy to
reinforce our […] position in refractories."
This was a position which was emphasized by John Maxwell,
general manager at Calderys, during the 23rd Bauxite and
Company News in 2017
- In January, Imerys announced it would divest its
newly-acquired Alteo ARC La Bâthie and Beyrède
fused alumina operations into an independent business as
part of the asset acquisition condition set by the European
- Also, in January, Orbite Technologies received its
first two customer orders of high purity alumina (HPA) from
its newly-opened facility in Cap-Chat, Quebec. However, in
April Orbite announced it had filed for a stay of
proceedings on creditors under the Bankruptcy and
- Monolithic refractory maker Calderys UK Ltd completed
the acquisition of NG Johnson Northern Ltd in February, a
UK-based company providing installation and engineering
services to the refectory industry.
- US refractory products supplier HarbisonWalker
International (HWI) earmarked $30 million to set up an
80,000 tpy monolithic refractories production facility in
Ohio, which is expected to be operational by early
- German specialty materials and flame retardants
supplier Nabaltec AG acquired total ownership of its
US-based subsidiary, Nashtec LLC.
- Imerys received the "unreserved approval" of the
European Commission on its proposed acquisition of French
specialty cement maker Kerneos.
- Alteo increased its specialty alumina products prices
in September due to rising raw material costs, citing
higher freight rates, and bauxite, caustic soda and energy