Zirconium chemical market gains traction

By Paul Rackstraw
Published: Thursday, 14 December 2017

The chemical market could take over from ceramics as the principal end-user of zircon, Cameron Perks reports.

The zirconium chemical industry has been the fastest growing zircon end-user sector in China, a fact that is easy to miss if you only read company announcements. 

Iluka’s 2017 investment day presentation revealed that the ceramics market demands 50% of zircon supply, making it the largest end-user 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 estimated that zircon in the use of ceramics constituted about 55% of global demand. That year, Iluka produced 213,800 tonnes of zircon, a 58.4% decrease from the year before, a downshift in demand that would prove hard to shake off.

Looking back to 2006, the company produced about 450,000 tonnes of zircon, and estimated ceramic demand was around 52% of the total. 

It is 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% of the world’s zircon, a volume of about 315,000 tonnes.

Looking back as far as 1990, demand from ceramics was around 40%, in 1985 it was 32%, and it was below 20% in 1980. At this point, zircon demand was dominated by refractory and foundry industries.

Looking up

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.

But 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 earlier this year, Dr Xue Wang, of Leeds University in the UK, said that consumption of zirconium chemicals in China has more than doubled over the past seven years to reach 138,000 tonnes in 2016. 

Xue 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 Artikol’s Reg Adams, world capacity for zirconium chemicals currently amounts to 523,000 tonnes per year, with ZOC accounting for nearly 420,000 tonnes of this.

Zircon demand

To get this into the right perspective for primary producers, Murray Lines of Stratum Resources noted in a presentation in 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 the end of the 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 went on to say that "further increases in ZOC price seems likely, as China increases the focus on ZOC waste streams."

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.

Zircon grades

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 sanitary ware, as well as in high-end foundry applications and additive manufacturing.

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 use standard-grade zircon. 

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 effect as end-users search for lower prices and manufacturers search for ways to provide this.