operates three mining sites.
President Trump’s executive order on
December 20, 2017, was administered on the basis of identifying
and securing industrial minerals that are deemed critical to
the United States' economy. Yet production of fluorspar, which
made the list, has been minimal since 1995, when 51,000 tonnes
The US natural fluorspar production market
has been more or less dormant for over two decades despite a
relative abundance of 4 million tonnes of proven reserves.
Historically, mining fluorspar in the US
has been expensive, and was the dominant reason for mines
closing down. But environmental clampdowns on polluting
production in China has increased production costs in the Asian
country and narrowed the cost gap between the US and China.
Hastie Mining, based in Illinois, US,
produces 10,000 tonnes per year of fluorspar, most of which is
metal-grade spar, 90% CaF2 purity or lower and used for
production of metals. Meanwhile, the US imports around 82.5% of
its fluorspar for manufacturing hydrofluoric acid, which
requires 97% CaF2 fluorspar.
Bar Hastie’s production, the
US imports all of its near-400,000 tpy of consumption. This
comes primarily from four markets; Mexico, Vietnam, South
Africa and Spain, although small amounts are sourced from
Mongolia, China, Russia and the United Kingdom, according to
2016 data from the United States Geological Survey (USGS).
Around 320,000 tonnes of the total imports
are acid grade, and almost all of which is accounted for by
end-users Chemours and Honeywell.
Globally, 88% of demand for fluorspar
comes from three sectors; steelmaking, aluminium smelting and
the production of hydrofluoric acid.
Some 40% of fluorspar is required for
manufacturing hydrofluoric acid, of this 60% is required for
The US currently produces around 85
million tonnes of steel and 6 million tonnes of aluminium. The
steel market is growing, and aluminium could soon receive a
boost from incoming protectionist policies on Chinese products,
according to Metal Bulletin Research.
The increasing cost of imported
With strong and growing demand and US
capacity at a minimum, it seems as though making the fluorspar
supply chain secure is mission impossible.
Certainly there is the demand, although
the time taken between commissioning projects, breaking ground,
correcting issues in the production line, assuring quality and
then delivering capacity means the effect of planned additional
supply will not be felt in the short term.
There is also the issue of President
Trump’s stance on Nafta, an agreement he dubbed
"one of the worst in history" due to the trade deficit it
created with the signatories. Ending Nafta is likely to be
adverse for Mexican producers, who exported 267,000 tonnes of
fluorspar to the US in 2016, according to the USGS.
Mexico has a $63 billion annual trade
surplus with the US whereas Canada's trade surplus comes to
$12.5 billion, according to the Office of the United States
Trade Representative, and on that basis it is unclear whether
this would affect Canada Fluorspar’s anticipated
200,000 tpy capacity, which is due to hit the market in the
With the market extremely tight, Canada
Fluorspar's output will provide some reassurance to the two US
majors, who have received some of the first sales from the
Canadian start-up, Industrial Minerals understands.
"If I had an additional 100,000 tonnes, I
would have no problem selling it, judging from the serious
inquiries I have had," one producer outside of the US told
The market tightness is reflected in high
fluorspar prices. Industrial Minerals assessed acidspar 97% CaF2,
wet filtercake prices, fob China at $480-520 per tonne on
February 8, which one India-based consumer described as "the
highest I have ever seen, in my 15-year career."
Industrial Minerals understands that
Chinese consumers have looked to buy material from Mongolia
recently, although with limited success.
The cost of Chinese material
went up on January 18 to $480-520 per tonne from $400-420
previously for acidspar 97% CaF2, wet filtercake, fob China, on
a plethora of issues which can be partially linked to the
rising cost of production due to the environmental controls now
The high prices in China reinforce
arguments in the market that fluorspar supply should be
US consumers still have access to
reasonably-price Mexican fluorspar, which is home to the
world’s largest producer, Mexichem. The price for
acidspar, 97% CaF2, dry filtercake, <5ppm,fob, Tampico,
Mexico has been flat at $280-310 per tonne for several
months, but if the market trend of China exporting very little
continues or it becomes a net importer, that could place a
higher demand on Mexican material and push the price up.
Minerals' operation in Nevada.
Should the cost of imported fluorspar
continue to rise, the price differential between imported and
domestic fluorspar could narrow further and make US production
an attractive prospect once again.
Domestically, the scope to expand
fluorspar production and secure the supply chain is small. The
Hastie Mining operation is primarily a limestone quarry with
some deposits of fluorspar which run like veins through the
The company imports around 100,000 tpy of
fluorspar, while locally-produced material costs around 20%
higher than imports, according to Don Hastie, partner at Hastie
But Hastie Mining has been developing a
deposit in Kentucky for the past three years. It will have
capacity to produce 20,000 tpy of fluorspar when it comes
online in the second half of 2018. The Illinois quarry
operation will then cease production because of the lower head
grade quality - 40% as opposed to 55%.
The Kentucky mine is financially more
viable as it is solely a fluorspar operation, meaning the costs
are dramatically reduced to process fluorspar for sale and
there is a "different thickness of ore material," according to
There were no difficulties in processing
the fluorspar from the limestone quarry though, Hastie
Nevada and California in the US also have
fluorspar deposits, although no operations exist in California
while UK-based Tertiary Mining is developing a mine in Nevada
where the company has 2,500 acres under license.
There is 86 million tonnes of ore in this
deposit, at 10% head grade, although it is believed that there
are higher grades further down.
The company expects it will be able to
produce in excess of 100,000 tpy of fluorspar when operational
within the next five years, although this is subject to
production costs, market status and offtake agreements.
This equates to around 25% of current US
demand, and a few percentage points lower than that once the
supply reaches the market accounting for growth in demand. That
said, the company plans to export its material, it said, and
has evaluated the potential for exporting to Asia from San
Tertiary has signed an offtake agreement
with Germany-based mineral trader Possehl Erzkontor. Under
this, Possehl will take a minimum of 70% of acidspar production
from Tertiary’s three sites which also include
Sweden and Norway. Possehl also provided pre-financing to
In a recent statement made to the London
Stock Exchange, the company said it is progressing the scoping
study, having completed flotation test work. Still outstanding
is project feasibility, de-risking and development phases, and
assessments of costs, further offtake agreements, market
situation for when the project goes live and economies of
scale, Industrial Minerals understands.
Yet with domestic production coming at a
premium, and the world’s biggest fluorspar
producer just across the southern border in Mexico having
escaped the price spikes seen in China and South Africa, some
market participants question whether the US needs domestic
And it begs the question why fluorspar has
been placed in the critical minerals category by the Trump
administration when its security seems unobtainable. It could
be related to President Trump’s promise to secure
US jobs and US business, with Chemours and Honeywell both
sitting within 2017’s Fortune 500 list.
Additional supply will go some way to
soften the reliance on foreign imports, but until any
significant amount of acid grade production hits the US market,
importers will endure a large exposure to global market
conditions, and prices.