The sands of time: TiO2 feedstocks to 2020

By Cameron Perks
Published: Friday, 26 January 2018

The balance in the market for titanium dioxide (TiO2) feedstock has been in constant flux throughout history, and 2017 was no exception. Industrial Minerals Correspondent Cameron Perks takes a look at supply, demand, and prices throughout 2017, as well as what we should look out for as we approach 2020.

In 1967, the world supply of ilmenite was estimated to be a little more than 2.7 million tonnes, while rutile supply was around 300,000 tonnes. Fifty years later, ilmenite supply is estimated to have reached almost 7 million tonnes, with rutile approaching the 1 million tonne mark.

Ilmenite (FeTiO3) ), leucoxene (an alteration product of ilmenite), and rutile (TiO2) are important titanium minerals commonly extracted from heavy mineral sand deposits, but are also derived from hard rock deposits. Titanium dioxide products of ilmenite, rutile, leucoxene, as well as upgraded products of synthetic rutile and titanium slag, are used principally as feedstocks for the production of white pigment, but are also used as a metal, as a welding electrode fluxing agent, and more.

So how has titanium feedstock demand and supply changed in the past 50 years, and how did they change in 2017?

Fifty years ago, ilmenite prices were A$10 per tonne fob Bunbury (Western Australia), or around A$122 ($95) per tonne when adjusted for inflation, while rutile prices were around $96 per tonne fob Australia in 1967, or A$1,173 ($919) per tonne, after adjusting for inflation.

In 2017, 54% TiO2 ilmenite cif China went from $140-160 per tonne to highs of $200-280 per tonne before falling back to current levels of $190-225 per tonne. The price of natural rutile, min. 95% TiO2 bulk cif China, has increased from $650-700 per tonne to its current high of $850-950 per tonne.

In 1967, Australia was by far the world’s largest producer of rutile, with the bulk of material heading for the United States. Australia was also significant in terms of ilmenite, and the combined production with the US accounted for around 70% of global production (excluding Communist countries). Ilmenite concentrates from Australia were destined primarily for the UK, France, Japan and the US, as well as domestic pigment producers.

In 50 years, the production landscape has dramatically changed, with ilmenite being primarily produced in China, Kenya, Mozambique, Vietnam, India, Ukraine, Australia, Senegal, Sierra Leone and South Africa.

Australia still dominates rutile production, and its destinations for export have not changed much - with the exception of China, whose import volumes rose to nearly 75,000 tonnes in 2017. Rutile in China is used for chloride TiO2 pigment and titanium sponge (a raw material for titanium metal) as well as in welding rods and flux cored wires.

The issues and opportunities facing the industry in the 1960s are not so different from those of today. A potential shortage of rutile had become evident by the late 1950s and early 1960s because of a strong upsurge in the demand for titanium dioxide pigments.

Australia was the largest global producer in 1967, exporting
predominantly to the US.  

These pigments were traditionally produced via the sulphate route. However, by 1967, the emphasis on chloride process production was becoming more marked, and pigment producers in both the US and Europe were actively seeking contracts for the long-term supply of increased tonnages of Australian rutile.

The move to the chloride process was driven by waste-disposal issues and anti-pollution legislation in the US.

Today, the demand for rutile is rising on increasing demand from Chinese TiO2 manufacturers, which are already making moves away from sulphate processing toward the chloride process.

Chinese producers Henan Billions, Luohe Xingmao and Yunnan Xinli produce about 100,000 tonnes per year of TiO2 via the chloride route, but have completed chloride TiO2 plants with combined production capacity of 220,000 tpy, meaning that there is potential for more than 110,000 tonnes of added rutile or slag demand in 2018 if that idle capacity were fully used.

Billions announced at the end of 2017 that it also planned to add as much as 500,000 tpy of chloride capacity by 2030, which would bring total Chinese chloride capacity to at least 800,000 tpy by that time.

Just as the US underwent a transformation 50 years ago, China is now undergoing its own commercial revolution. According to documents from Tronox Ltd, the vertically integrated mining and inorganic chemical business, the chloride process generates less waste, uses less energy, is less labor-intensive than the sulphate process, and permits the direct recycling of chlorine back into the production route. 

As a result, the Chinese government is encouraging the expansion of chloride-route plants as a key part of its 12th Five Year Plan.

While this helps to explain the rising demand for rutile, it is not the full picture, because Chinese titanium sponge production and welding activities have increased this year.

Adding support to rutile prices is Iluka’s declining natural rutile production forecast for 2018, as well as the closure of Sibelco’s Stradbroke Island operations by 2020, located 30 kilometres southeast of Brisbane, Queensland, Australia.

Sibelco’s closure will subtract around 35,000 tpy of welding-grade rutile from the market. The titanium feedstocks used in the chloride process include natural rutile, but also slag, synthetic rutile and, in limited cases, high titanium content ilmenite ores.

This fact, combined with increasing rutile prices, may result in greater demand for synthetic rutile and titanium slag.

A factor affecting both ilmenite and rutile on the supply side is declining grades. In a November investor presentation by Iluka Resources, managing director Tom O’Leary repeated the view that the quality of deposits currently being investigated for development "are lower grade and lesser quality than those currently being exploited".

Haul trucks move sand from the Douglas mine in the Murray
Basin in Victoria.

This means that "there’s less zircon, less rutile, less valuable chloride ilmenite".

Another issue affecting all titanium feedstock supply and demand is the environmental concerns sweeping China. The country’s government has introduced strict emissions standards, and has begun strictly to enforce them.

It was reported in December that inspectors had demanded the indefinite suspension of Sichuan mining and processing operations after a drop in air-quality there. But it was also reported that traders could not reach consensus over the proportion of operations that have closed or that remain open in the province.

One market participant confirmed that some plants and mines there have already restarted and that the shutdowns are "part of the continuing environmental monitoring".

One supplier suggested that the effect on ilmenite prices may only be neutral, since the tendency is for mines and processors to be forced to suspend operations simultaneously. Evidence has so far supported this view, but we will need to wait and see how this develops in 2018.

In Vietnam, ilmenite production quotas issued in 2014 put limits on production, but have also sent some exports into the illegal black market and made tracking their volumes extremely difficult.

It was reported late in December that the Vietnamese government had announced quotas are for some 1.422 million tonnes of ilmenite and 159,000 tonnes of concentrate, with a deadline of December 31, 2018.

Concerns that this would inflate supplies have been rebuked by market participants, with one supplier predicting that Vietnam will provide just 400,000 tonnes of ilmenite in 2018, which would be a small increase on the volume in 2017.

In India, around 40,000 tonnes per month was removed from the market when operations in Tamil Nadu were shut down by the local government. This situation is unclear and is likely to continue into 2018.

Goondicum Spiral banks.
Melior Resource 
Resources and reserves

When a major source for any material is shut down, consumers need to find an alternative source. Luckily for Chinese consumers of Indian ilmenite, South Africa and Mozambique were ready to do business in 2017. In fact, Chinese ilmenite imports actually increased last year compared with 2016, helped by small amounts of cheap low-quality material from Australia, as well as a flurry of ilmenite arriving from Sibelco’s Stradbroke operations as it prepared to shut down.

In order to keep up with demand, mineral sand producer Iluka Resources has warned that capex of around $1-1.5 billion, or $500-750 million per year over 2018-19, will be required to sustain current production levels.

O’Leary said in November that "that volume of capital has not been spent. So the consequence of the lack of investment will, over time, increase pressure on limited supply and again drive pricing upward."

He also said that "there have been no discoveries of significant higher-grade deposits in the past decade" and, with very long project lead-times, this could create problems for consumers of the future.

So what does the project pipeline look like for titanium minerals, specifically?

India’s leading producer, V.V. Mineral, is planning to expand
feedstock production in the country as prices continue to rise.
V.V. Minerals 
Goondicum – Melior Resources

In October 2017, Melior secured $5.25 million in funding from Pala Investments for the restart of its Goondicum ilmenite mine. The company requires an additional $5 million to be fully funded.

Located west of Bundaberg, Queensland, Australia, the mine will use dry open-pit methods to produce an average of 181,000 tpy of ilmenite, with peak production of 228,000 tpy expected in 2020.

The mine would also produce an average of 31,000 tpy of apatite - a mineral used in the manufacture of fertiliser as a source of phosphate - over its nine-year mine life. In November 2017, Melior signed an offtake agreement with SOFT Agriculture to supply it with 100% of its apatite production, commenting that the agreement is testament to the quality of its product.

Boonanarring – Image Resources

On November 8, 2017, Image Resources announced that it had received final approval for the development of its Boonanarring Project, located in the North Perth Basin, 80km north of Perth in Western Australia.

The company will make a decision to mine in the first quarter of 2018, with project construction and commissioning to follow. The timeline for first production will be just six months following the decision to mine.

Boonanarring contains 19.9 million tonnes of ore, which contains 7.2% total heavy minerals (THM). 

Of the THM, zircon constitutes 22.7%, rutile 2.4%, leucoxene 1.8% and ilmenite 50.4%. The mine will be dry, open-cut extraction with a production rate of 500 dry tonnes per hour for a total 3.7 million tpy of ore.

Alkane’s plans for its Dubbo project, which is scheduled for production in 2019.
Alkane Resources 
Thunderbird – Sheffield Resources

Located in the north-west corner of Western Australia, Sheffield’s Thunderbird deposit (part of the Dampier Project) is estimated to contain 680.5 million tonnes of ore reserves, of which 76.8 million tonnes is heavy mineral. Of that heavy mineral material, 7.7% is zircon, 2.4% "HiTi Leucoxene", 2.3% leucoxene, and 27.4% ilmenite.

Sheffield intends to commence construction in the second quarter of 2018, with initial earthworks and site access arrangements under way.

Zircon products represent 62% of Sheffield’s revenue stream, so it has focused strongly on securing offtake agreements for this product. Offtake deals with CFM Minerals, Ruby Ceramics, Sukaso Eracolors Ceramics, and Hainan Wensheng High-Tech Materials Co now represent a combined 100% of first-phase production for zircon concentrates and around 75% of premium zircon production.

Fungoni – Strandline Resources

Strandline Resources completed its definitive feasibility study in October last year, with positive results. The company revealed that a low development capital cost of $30 million would be required, a figure that includes mine infrastructure, port facilities, working capital, land access, pre-production mining, owners’ costs and project contingencies of 10%.

Fungoni is located in Tanzania and has a measured-indicated mineral resource estimate of 22 million tonnes of ore at 2.8% total heavy minerals. The mineral assemblage of the deposit is "exceptional", according to Strandline, with heavy minerals constituting 42.3% ilmenite, 18.2% zircon, 4.4% rutile, 1.2% leucoxene and 1.5% monazite.

The mine is expected to be conventional dry mining, has an initial six-year mine life at 2 million tpy, and is expected to begin production early in 2019.

Bluejay Mining demonstrates stockpiling of high-grade ore
at its Finland project.
Bluejay Mining 
Mutamba – Savannah Resources & Rio Tinto

Savannah Resources and Rio Tinto are under agreement to define a potential dry-mine in Mozambique. The project combines Savannah’s Jangamo Project with Rio Tinto’s adjacent Mutamba Project, which includes the Jangamo, Dongane and Ravene and Chilubane Deposits.

The most recent news to come from the Mutamba Consortium is that a pilot plant has been commissioned and officially opened. The 20 tonnes per hour plant would be used to produce concentrates as part of the continuing pre-feasibility study there.

A previously completed scoping study identified the potential for a 30-year mine life on a resource of 451 million tonnes, containing 6% total heavy minerals. According to that study, the Consortium would target first production in 2020 with average production of 456,000 tpy of ilmenite and 118,000 tpy of non-magnetic concentrate.

Dubbo – Alkane Resources

The Dubbo Project is located in central-western New South Wales, Australia, and contains an 18.9 million tonne ore reserve, contained within a 75.18 million tonne resource. The reserve is made up of 1.85% ZrO2, as well as various economic amounts of hafnium, niobium, yttrium and rare earth elements.

The project is in advanced stages of development, having had all state and federal approvals granted; the project is construction-ready subject to financing. During the September 2017 quarter, the company was focused on securing offtake agreements. It said in its March quarterly activities report that the project is scheduled for production in 2019.

Ilmenite and rutile pictured side by side.
Dundas – Bluejay Mining

Formerly known as Pituffik, Dundas is the subject of a feasibility study to be delivered in the March quarter of this year. The heavy mineral sand deposit holds an inferred resource of 23.6 million tonnes at 8.8% sulphatable ilmenite, including a high-grade zone equal to 7.9 million tonnes at 14.2% ilmenite at Moriusaq, which is the focus of the feasibility and production studies that are under way.

In September 2017, the company entered its first agreement "allowing for the company’s bulk sample run of mine (ROM) material to be refined into a high specification ilmenite product" with an "experienced mineral sands processor". This follows an earlier announcement in which it was revealed the company had achieved a production rate of less than 15 tonnes per hour.

The company said that it expects to produce "two high-spec ilmenite products" that are "suitable for sulphate pigment production and for both sulphate slag and chloride slag markets".

Bluejay said in August that it would try to bring Dundas into production in 2018.

Holocene heavy mineral sand (seen in dark areas)
concentrated by wave action.
Niafarang & Donald – Astron Corp

Astron received a mining license for its Senegalese Niafarang heavy mineral sands project in June 2017, saying at the time it intended to start production in the first quarter of 2018. But Reuters reported in September that a "dormant Senegalese rebel movement has called for the abandonment of a planned mineral sands project operated by Australia-listed Astron, saying it amounts to "a declaration of war."

On October 31, Astron announced that all aspects of the project are now being progressed to target commencement of activities in first quarter of 2018. It is expected that the mine will be a surface mine with little or no overburden, meaning the mining method will be relatively straightforward, with spiral separation.

Astron updated the market on its Donald project on the same date, saying that "an updated feasibility study is expected to be completed shortly" and that "work continues on the capital aspects of the optimisation".

Scrapers in a test pit in one of Iluka’s projects.
Iluka Resources 

Glenaladale – Kalbar Resources

Acquired in 2013 from Rio Tinto, the main deposit part of the company’s Fingerboards Project is self-styled as one of the biggest mineral sands deposits in the world. The mineral resource of 2.7 billion tonnes of heavy mineral is located 250km east of Melbourne in south-east Australia.

From that massive number, the company hopes to extract 200 million tonnes of ore to produce around 5 million tonnes of heavy mineral concentrate over a period of 20 years. The company has highlighted in its most recent newsletter its potential to produce 136,000 tpy of zircon. Kalbar has proposed to start construction in 2019, with mining commencing 2020.

At the end of 2016, the local government authorities requested that Kalbar submit an Environmental Effects Statement (EES) under the Environment Effects Act 1978 to assess the potential environmental effects of the project. The EES is due for completion around mid-2018.

Hydraulic mining operations at Base Resources’ Kwale Project. 
Mount Peake – TNG Ltd

Located in Northern Territory, Australia, Mount Peake is a vanadium-titanium iron project containing 41.1 million tonnes of ore reserves, of which V2O5 makes up 0.42%, TiO2 7.99% and Fe 28%.

The company recently announced that it had lodged its Environmental Impact Statement (EIS). Once all environmental approvals are received, the company will be in a position to apply for a mining lease, subject to a mining agreement with the traditional owners.

In its December 18 announcement, managing director Paul Burton said that a decision on construction and mine development will take place in 2018 subject to financing and other approvals.

TNG has secured a Memorandum of Understanding offtake agreement with Wogen Pacific for the sale and marketing of its titanium dioxide products, a binding offtake agreement for a minimum of 60% of its vanadium output with Korean company Woojin, and a binding offtake agreement for its iron products with Singaporean trader Gunvor.

A feasibility study update late in 2017 outlined the need for pre-production capex of A$853 million ($668 million).

Base Resources wholly-owned subsidiary, Base Titanium
Limited, operates the 100% owned Kwale Mineral Sands
Operations in Kenya, which commenced production in
late 2013. 
Orokolo Bay – Mayur Resources

Mayur is exploring for mineral sands in southern Papua-New Guinea, along the coast of Orokolo Bay.

The company recently signed a Memorandum of Understanding with the Gulf Provincial Government for an exclusive development license, and an outline on cooperation in the development of natural resources.

The project contains 86 million tonnes of industrial construction sand, 173 million tonnes of magnetite at 9.2% Fe (upgrades to 6.6 million tonnes of magnetite at 57% Fe) and 107,000 tonnes of zircon.

An internal PFS has estimated that the project could be in production by 2019, producing 500,000 tpy of titanomagnetite and 5,000 tpy of zircon concentrate over a mine life of 12 years.

Engebo – Nordic Mining

Nordic Mining’s Engebo Rutile and Garnet Project contains an inferred 138.4 million tonnes of ore, comprising 3.86% TiO2 and 43.5% garnet. The dominant garnet fraction has meant that the deposit has already signed a North America distribution deal with Barton for its garnet production.

According to Nordic’s second-quarter interim report, the company is targeting 1.5 million tpy of run-of-mine production and sees an opportunity to target garnet sales of 300,000 tpy "within 10 years from commencing production."

The company expects rutile sales on the order of 30,525 tpy once the project is commissioned in 2021.

Barge loads cargo at Kenmare’s Moma jetty
Kenmare Resources 
Selected producers

Base Resources

As a key company for ilmenite exports to China, Base Resources provides insight into the health of that most important market throughout the year.

Base Resources said in its 2017 annual report that "pigment demand continues to strengthen through the year under review", and that the "ilmenite feedstock market tightened as demand from the Chinese pigment industry increased rapidly". Base added that ilmenite production from China was suppressed thanks to low iron ore prices.

The report on markets concluded that "in the absence of substantial new feedstock supply coming online, the titanium dioxide feedstock market is expected to remain in a structural supply deficit, providing an opportunity for continued price strength in both ilmenite and rutile over the coming years."

Base operates its 100%-owned Kwale operation in Kenya, which commenced production in 2013. The operation’s wet concentrator plant processed more than 11 million tonnes of ore in 2017, to produce 708,404 tonnes of heavy mineral concentrate. Mineral separation resulted in a final 467,359 tonnes of ilmenite and 90,625 tonnes of rutile being produced in 2017.

Expansion plans

Base Resources acquired the advanced mineral sands exploration project 'Toliara Sands’ from World Titane Holdings on December 19th 2017. The deposit, which contains 857 million tonnes of ore at 6.2% heavy minerals, is expected to be in production by 2021.

In 2016, the then-owner Word Titanium Resources (World Titane Holdings subsidiary) reported a scoping study production target of 12 million tonnes per annum of ore, which would include a mixed rutile/zircon concentrate averaging 66,000 tpa, whilst stockpiling around 670,000 tpa ilmenite.

Kenmare Resources

As another key company for ilmenite exports to China, Kenmare Resources provides further insight into the health of the market throughout the year.

Kenmare Resources is an Irish incorporated mining company with operations based in Mozambique. The company’s Moma Titanium Minerals Mine produced more than 1 million tonnes in the 12 months to August 2017. In the third quarter of 2017, Kenmare produced 277,800 tonnes of finished products, with 257,500 tonnes of this being ilmenite.

The third-quarter production report, issued in October last year, said that these results are "keeping the company on track for [its] highest ever annual production".

Iluka Resources

Iluka’s third-quarter 2017 rutile production increased from the second quarter for both its Australian and Sierra Leone operations in what the company says were favorable market conditions.

Third-quarter production of rutile at Australia’s Iluka, a global supplier of titanium mineral sands, rose to 96,000 tonnes from 82,000 tonnes in the previous quarter. Sierra Rutile, acquired by Iluka in December 2016, contributed more than 50% of this total.

In addition, synthetic rutile production in Western Australia rose to 58,100 tonnes in the third quarter from 46,100 tonnes in the second quarter.

In Iluka’s November 2017 investor day presentation, the company gave its view that "this market is broadly in balance." The company also noted that "in respect to very high grade chloride feedstocks" such as rutile, synthetic rutile and upgraded chloride slag, "conditions are considerably tighter," adding that "new ilmenite mines will ultimately be required to feed upgrading capacity."

Expansion plans

Iluka announced in December of 2017 that its board had approved the development of its Western Australian Cataby deposit after signing offtake agreements for a minimum of 175,000 tpy of synthetic rutile.

The agreements, signed with various "established western pigment producers," stipulate that customers have the flexibility to take as much as 190,000 tpy, accounting for around 95% of Iluka’s Synthetic Rutile kiln 2 (SR2).

Cataby is expected to produce an average of 370,000 tonnes of chloride ilmenite, which will underpin SR2’s production. In addition, the deposit is to produce around 50,000 tpy of premium-grade zircon and around 30,000 tpy of rutile.

The mine plan for development of the Cataby project has estimated that construction costs will be A$250-275 million ($196-215 million).

While Iluka’s ilmenite production is primarily used internally, it is nevertheless useful to consider it in context of rising demand on TiO2.

In addition to Cataby, Iluka is also looking to complete a DFS into the expansion of upgrade of Jacinth Ambrosia facilities, which would result in a ~30% increase in ore throughput to offset declining ore grades. The project is expected to be completed in Q2 2019.

Additionally, Iluka is looking to improve its Sierra Rutile operations. Firstly, a DFS is under way assessing a doubling of ore-capacity at Lanti Dry. The project would entail the construction of a second in-pit mining unit and additional concentrator capacity, bringing ore throughput up from 500-600 tonnes per hour up to 1000-1200 tph. Iluka is also looking to expand its Gangama mine from 500-600 tph ore to 1000-1200 tph ore, with an expected commissioning date of 2019.

With a PFS anticipated for completion early this year, the company is looking to develop the Sembehun Mine by H2 2020. This would add an initial 1000-1200 tph ore to Iluka’s operations.

Finally, Iluka has planned the expansion of its Sierra Rutile mineral separation plant, from 175ktpa to up to 300ktpa rutile by mid-2019.

So while Iluka is currently forecasting a decline in natural rutile production in 2018, by 2020 Iluka may be producing over 250,000 tpy of rutile.

*The author has specified metric as opposed to long tons, which were being used at the time, and from which conversions have been made.