Scarcity in the supply of raw materials and continuing
consolidation are among the leading concerns for market
participants active in refractories, Industrial Minerals
heard as the industry got together for its annual gathering
in Germany in mid-October.
At the 60th International Colloquium on Refractories, held
in Aachen on October 18-19, delegates in conversation with
Industrial Minerals highlighted how operators feel they are
being squeezed by appreciating raw materials while, at the same
time, the composition of the industry is evolving to have
fewer, and bigger, companies.
"On the one hand, you have raw materials that are getting
more expensive and shorter on the ground," one attendee
commented. "On the other, you have large players joining
forces, which is also a cause of concern for reasons of
The much-discussed M&A activity this year included a
merger of equals between Austrian refractory group RHI and
Brazil’s Magnesita, which was due to be completed
when the new company – RHI Magnesita – began
trading on the London Stock Exchange on 27 October.
The other main deal of 2017 to date has been
Imerys’ buyout of alumino-silicate cement maker
Kerneos, which was concluded in July.
|Aachen delegates told
Industrial Minerals that the
industry was changing
"Small and middle-sized players are worried they will feel
new pressure after these takeovers," a refractory maker told
Industrial Minerals. "Large companies getting larger means it
will be harder to compete to secure deals."
RHI and Magnesita brought together a pool of more than 50
facilities globally, with strong presences in the Americas,
Europe and Asia, as well as direct access to their own raw
materials such as magnesia and dolomite.
For its part, Imerys, already one of the largest market
participants, will be strengthening further its role in
speciality cement end businesses, which require large and
consistent volumes of calcined bauxite, among other
A second delegate said: "[As large companies expand
further,] it could mean that, at times of shortage of raw
materials, the smaller buyers are left dry, unable to source
[materials] and thus to operate fully."
Others see a degree of opportunity in the situation,
"There are also opportunities for the smaller ones," another
source said at the recent UniteCR 2017 refractories conference.
"While the big guys are busy integrating and getting their
operations together, we can be faster to respond to customers
and do business."
Either way, consolidation and vertical integration are seen
as crucial to secure stable access to raw materials.
Another delegate in Aachen said: "Only a year or so ago, not
many were thinking this could happen and we would all suddenly
run around to source material. Now it’s happening
and [this issue] will be with us for some time. If you can
cover your requirements through your own deposits, this can
solve a few problems."
And then, of course, there is China.
The situation in the country as regards both issues
– raw materials and industry consolidation –
is a major source of concern at the moment, Industrial Minerals
was told at the German event.
Many markets where China is a main supplier are now facing
shortages and higher prices, with a few examples being bauxite,
alumina, magnesia and graphite. Shortages in these markets is
creating a need for alternative sources, with indirect
consequences for the supply chains of other minerals.
Delegates questioned where future supply will come from if
China is unable or unwilling to supply the volumes it did in
the past. In magnesia, its exports of CCM, DBM and FM exceeded
1 million tonnes per year.
In graphite, China accounts for more than 60% of global
supply, and it has a major role in bauxite and fused alumina
materials, particularly brown-fused alumina (BFA).
Consolidation in the Chinese magnesia industry is one
development to watch. Local governments in magnesia-producing
areas are seeking to reduce the number of scattered players by
setting up a government-controlled consortium of companies that
will control mining output and processing. This is also
intended to facilitate a more orderly exploitation of deposits,
ensuring longer mine lives.
Several local companies are said to have signed up to the
initiative, although the numbers vary widely, depending on who
As reported by Industrial Minerals throughout 2016, several
bauxite mining operations and processing facilities have been
shut, many of them permanently. With restrictions to dynamite
use in mines, new production is intermittent. BFA
availability is even shorter, pending Beijing’s
continuing environmental inspections and deadlines given to
The current situation is unlikely to improve much in the
coming months, according to sources, who cited the National
Congress in Beijing, the imminent winter during which mining
activity is reduced or temporarily halted, and the Chinese New
Year holiday in early 2018.
"I have been going to church [to pray] every day recently,"
one delegate quipped. "We look to 2018 and we hope."