‘Two lions’: The modern borate duopoly

By Myles McCormick
Published: Thursday, 17 May 2018

Two behemoths supply the bulk of the world borates market, making for a highly concentrated industry. Myles McCormick, IM correspondent, reports on the tussle between the major players, the current dearth of exploration and innovative efforts to increase demand.

A visitor to California’s Mojave Desert in the late 19th century might have been impressed by the spectacle of 20-strong teams of mules hauling wagonloads of borax ore hundreds of kilometers out of the sweltering heat of Death Valley. 

On the other side of the world, that same observer might have witnessed trains of camels with loads of the same material strapped to their backs, trudging slowly across the deserts of the western Anatolian peninsula. 

Almost a century and a half later, with over three-quarters of the global market between them, the descendants of these two operations together dominate the global market for borates – an umbrella term of boron-based minerals used in everything from glass to fertilizers to nuclear reactors. 

US Borax, now part of the mineral division of Anglo-American miner Rio Tinto, operates out of Boron, California, while Eti Maden (trading globally as Eti Mine) controls all borate deposits across Turkey. 

These two companies – chiefly through two particular mines, Boron and Kirka, respectively – tower over the modern borates industry. 

Many of the boron-based day-to-day items people make use of across the world - Pyrex glass used in cooking, detergents used in washing and even some cancer treatments - are likely to owe their existence to material mined by one of these companies. 

"They’re the two biggest in the world. Nothing can compete. The two lions," says Jerry Aiken, a geologist and veteran of the industry who spent three decades at US Borax.

The dominance of these two giants has kept the market, and its prices, relatively stable through the years, though some worry that the industry’s over-reliance on these two sources leaves it open to potential shocks. 

And, with so much of the market captured by these players, newcomers are reticent to enter, leaving exploration at a minimal level. 

Figure 1: Global borates reserves ('000 tonnes) 
Borate1  
Source: USGS 

A tale of two miners

The two companies are very different. 

US Borax dates its existence back to various operations that started in 1872, extracting borates from California’s Death Valley. It came into being in its modern guise in 1956, when the Pacific Coast Borax Co merged with the US Potash Corp. It was subsequently acquired by Rio Tinto in 1967. It has conducted operations at Boron since 1925. 

Eti Maden was established as Etibank in 1935 on the orders of Kemal Ataturk, Turkey’s first president, to finance the young country’s mining industry, unifying much of Turkey’s natural resources. It shed its banking element in 1998, becoming Eti Holding, before adopting its current moniker in 2004. It distributes globally as Eti Mine. 

For much of latter part of the 20th century, US Borax had a firm grip on the borates market, taking full advantage of Rio’s global network. 

"When I started, Borax had 70% of the total market because they had access to the international market through Rio. Especially the fledgling Asian market," says Aiken.

"As time went on, Eti and the Turks realized they didn’t have the greatest marketing infrastructure in the world. But they had the largest deposit in the world," he adds.

Eti gradually upped its distribution game and slowly wrestled the mantle of world’s largest producer from Rio. In 2005, it officially became the biggest player in the game, with a 36% market share of borates. Today it holds over 50%.

How did it achieve this ascent? "By consistent quality and reliability," notes an Eti Maden spokesperson. 

Whereas Rio emphasized its refined products such as boric acid and 5-mol, Eti’s focus tended to be on shipping lower quality ores such as colmanite (which makes up around 70% of Turkish deposits), which it could process and ship cheaply, allowing it to ramp up its market share.

Borate2  
A Death Valley borax wagon that would have been hauled
by a 20-mule team
iStock 

"It costs as much to transport from the West Coast to the East Coast [of the US] as it does for the Turks to ship to the East Coast where all the glass manufacturers are," notes Stephen Carpenter, another veteran of US Borax, with over three decades of experience in industrial minerals exploration.

"It has just been a continuous eroding of Rio Tinto-Borax’s market share. The Turks have got better at marketing and distributing to Europe and Asia. They’ve just gotten more sophisticated," he says.

Today, Eti has ramped up its focus on refined products as well.

For its part, Rio has reduced its emphasis on its borates business. While it still holds a large share of the refined borates market – in 2016 it boasted 38% of global sales of 5-mol and 26% of boric acid sales – borates today are a small part of its overall business.

In 2017, borate revenues of $630 million made up just 1.5% of Rio’s overall take. In contrast, iron ore brought in almost 30 times this, with gross revenues of $18 billion.

The company has moved its focus away from industrial minerals generally. In 2008, the company shut its California-based exploration office. 

Rio sought to sell off its borate business between 2007 and 2009, but its divestment efforts ultimately floundered in 2009, when the company canceled the sale, rejecting bids for Boron as being too low.

Contract disputes with miners in 2010 led to a worker lockout. Budgets were cut in 2010 and again 2011.

Rio declined to answer questions for this piece, including in relation to their future commitment to the borate industry. An Eti spokesperson, commenting on Rio’s pivot away from industrial minerals, said the move "doesn’t mean anything to us."

While Boron has a few decades left in it yet, it is approaching its twilight years. But investing in the site could lengthen its lifespan.

Vast stockpiles of colmanite and ulexite at the site, for example, could be processed into saleable product. But this would require a new plant and Rio’s focus is elsewhere.

"It just doesn’t fit Rio’s strategy anymore," says Carpenter. "At Boron, they are happy to hold on, but not to invest in the future."

Borate3
Borates are loaded for shipment out of Bandirma
Eti Maden 

Market concentration

While it is now Eti in the driving seat, rather than Rio, the market remains a duopoly, with the two companies still holding over 75% of the market share between them. 

This level of market concentration carries a degree of risk. 

"If something major happens in Turkey, affecting shipping out of Bandirma, it would throw the borate market into a tether," says Aiken.

"If you were to close either of those two mines [Boron or Kirka] – by hook or by crook, you’re looking at an issue," he adds. "That’s why I say this is a unique industry. If you only had two copper mines left people would panic."

The past year has seen heated confrontations between the Turkish authorities and the European Union, prompting worries that the market could be affected. But this remains unlikely, with borate supply hugely important to economies on both sides. 

Eti Maden remains unfazed: "We know that this is between the [European authorities] and the industry and we are happy to see that it is well recognized by the [authorities] that borates are important for the European economy."

That said, the industry is unlikely to diversify any time soon. Control by these two giants, coupled with the difficulty of finding quality new resources means exploration is minimal.

This is no cause for alarm. At current consumption levels, world resources are adequate for the foreseeable future, according to the United States Geological Survey (USGS).

What little exploration is currently happening in the market is focused on Serbia.

Despite its decreased focus on Boron, Rio has invested quite heavily in a lithium-borates project in northwest Serbia called Jadar. The mine is based on a newly discovered mineral called jadarite (which coincidentally holds a very similar chemical composition to the mythical kryptonite of Superman fame). 

Figure 2: Borate production by region 
Borate4  
Source: Eti Maden 

Figure 3: Global borates market -
vital statistics 
Borate5  
Source: Eti Maden, 2016

Figure 4: Borates consumption by industry 
Borate6  
Source: Eti Maden, 2016 

Figure 5: Borates consumption by region 
Borate7  
Source: Eti Maden, 2016 

Driven by the Serbian government’s use-it-or-lose it diktat, Rio has invested heavily in Jadar in recent years, with $90 million spent as of July 2017. While interest in the site is focused more on its lithium carbonate production potential, should the project be brought to fruition, it could contribute substantial boric acid to the market as a by-product.

A Canadian junior firm, Erin Ventures, is also conducting borates exploration work in Serbia, at its Piskanja project, near the Kosovo border. The company forecasts (perhaps optimistically) around 5% market penetration upon completion, but it remains at the early stages. 

Meanwhile, British AIM-listed Bacanora Minerals, which had been exploring at its Magdalena borates project in Mexico’s Sonora province, has ceased borates-related investment to focus on lithium exploration in the region. 

"Ensuring there is a level of diversity in the market in terms of sources of supply is certainly important," says David Hall, business development manager at Orocobre, which owns Borax Argentina.

He adds: "The number of quality boron resources globally is relatively small; however, the operations in production typically have large high-quality resources, long mine life and expansion potential."

Borax Argentina – which operates out of northwest Argentina and supplies much of the South American borates market – is itself currently in the final stages of a feasibility study for an expansion project "in order to grow in line with expected market growth and provide more scale to the business."

Lacking the scale of the big two, the company says it must focus its efforts on quality products, unique product offerings and service.

For its part, Eti has no exploration plans for now. "Having three-fourths of the overall world reserves, Eti Maden does not involve [itself] with any exploration work for borates currently," says its spokesperson. 

"As we are working very closely with the majority of the key downstream users, we are able to monitor the pulse of the sector very well and organize our production levels," he adds. 

Global borate reserves – and production – are concentrated across four regions globally: Turkey, the US, South America and East Asia (See Figures 1 and 2).

In South America, other than Orocobre, Chile’s Quiborax and Peru’s Inkabor also produce material. Lithium major Sociedad Quimica y Minera (SQM) pulled out of the borates game some time ago.

In the US, outside of Rio’s operations, Indian-owned Searles Valley Minerals also produces borates.

Various salt lakes in China also contribute varying low-quality tonnages, most of which is consumed domestically, with small quantities sent north to Russia. The Chinese have traditionally been quite protective of their borate production. Borates extraction is protected due to its military uses – super hard borohydrides can be used in hardening in missiles and satellites. 

The Russians used to mine borates south of Vladivlastock, but this was never a particularly economic operation.  

However, all of these regions pale in comparison to Turkey, which holds by far the greatest share of global reserves. 2018 USGS figures indicate the country holds 86% of global reserves, though Eti Maden – which controls all of the country’s reserves – puts this figure slightly lower at around 75%.

Most Turkish borate mines are colemanite operations (See Box), though Kirka is the largest tincal mine in the world.

Borate8  
An Eti Maden borate pentahydrate production facility at Kirka.
Eti Maden
 

Old reliables

While supply sources may be limited in number, on the demand side end markets for borates number in the hundreds. And they are increasing.

Of the more than 300 applications in which borates are currently used, the vast majority of consumption occurs in glass, fertilizers, ceramics and detergents (See Figure 4).

Glass remains the primary destination for borates produced today, accounting for some 51% of global consumption. Fiberglass makes up the majority of this – the most common variant being e-glass, used in electronics. 

Borosilicate glass makes up the other significant chunk of glass-based demand, where borates strengthen the glass and ensure its resistance to thermal shock. Corning’s Pyrex product is a well-known example. 

In agriculture, which accounts for 15% of the market, borates are used in fertilizers to prevent boron-deficiencies in crops. As this is something all major crops are susceptible to, borates form a key part of all fertilization programs. There is no substitute, according to analysis done by Canadian research group Stormcrow Capital Ltd, with the only alternative to boron usage for farmers being to allow yield per hectare to fall as a result of boron deficiency. 

The third major market, ceramics, which represents 12% of global demand, makes heavy use of borates through boron nitride and boron carbide. In its hexagonal form, boron nitride is used as a graphite-replacement in lubricants and in cosmetics. In its cubic form, it can be used as an insoluble alternative to diamond in grinding steels and other ferrous metals. 

Boron carbide, which is softer, but simpler and less expensive to create, is used in applications including abrasives and ballistic armor. 

Detergents and bleaches have historically also been a key end-market, currently accounting for around 3% of demand. But the abundance of alternative chemicals make it highly substitutable in this market. 

Other important uses include nuclear reactors, where boron’s ability to absorb thermal neutrons, allows it to be used both as a structural material within a reactor and as a "neutron poison" for speedy reactor shutdowns. 

Borate9  
Borax Argentina’s pit at Tincalayu, Salta.
Orocobre 

Market Growth

This composition of end-markets means growth in borates demand tends to be tied to growth of the global economy – increasing at levels roughly equal to or just above GDP. 

Growth over the past half-decade has been around 5%, according to Orocobre, driven primarily by agriculture in the Americas and Asia and borosilicate glass in China. 

In the coming years it will range 2-5% globally. 

The current upturn in the global economy is expected to speed demand growth, with the recovery of the North American housing market in particular spurring a need for insulation fiberglass. Orocobre and Borax Argentina will be carefully watching the expansion of the Brazilian economy.

Demand should also be fueled by more stringent building standards in Europe and the developing world in terms of heat conservation, notes the USGS. This is likely to push up consumption of fiberglass insulation. 

Rio has traditionally pointed to three key pillars driving demand in the borates market: urbanization, energy and food supply.

Urbanization causes the middle class to swell, driving up demand for boron-based goods such as the glazed ceramics used in buildings or liquid crystal display (LCD) televisions and electronics which contain borosilicate glass and textile fiberglass. 

In energy, growing demand for insulation drives fiberglass – and thus borate –demand. And as populations swell, the requirement for ever-greater crop yields pushes up demand for borates used in fertilizers. 

Africa is fast becoming a target for producers – driven especially by the first and third of these categories. Growing economies are pushing demand in glass and, especially, fertilizer markets. 

"Nowadays, the rising star is Africa," says Eti Maden’s spokesperson, noting that East Asia also has been a particularly attractive target consumer for the past decade.

A booming economy has seen Asia become the largest consumer of borates globally (See Figure 5), and its economy continues to grow. 

Innovation

But as well as pushing ever-greater tonnages into the current staple markets, producers are consistently looking to ways to create further markets.

Eti Maden is specifically focusing its efforts on thin film transistor (TFT) technology, used in LCD technology.

A spokesperson for the company also flags work to create new products and markets in areas including chemical synthesis, agriculture, light-weight materials, flame-retardant formulations, metallurgy, construction materials, windmills, aerospace, and automotive industries.

Rio too has long been working with downstream customers to develop new uses for its products. In areas such as paper and pulp treatment, they have been looking at ways to use borates to replace more corrosive chemical treatments. 

Wood treatment, where borates can be used to counter termites and pests, is a growing market. 

Boron neutron capture therapy (BNCT) is a novel targeted radiotherapy, where boron – which is a neutron absorber – can be used as a "capture agent" in cancer treatment.

Orocobre, too, is investigating new applications, though the company declined to expand on these given their early stages of development. 

The twenty-mule teams at Boron have long been retired (trains took over at the beginning of the twentieth century). But, as new markets continue to open up, innovation by producers of borates continues apace.  

Borates types

While there are 250 known borate minerals, just 11 of these can be economically mined.

Of these, four calcium and sodium borates make up 90% of the global market.

They are:
  • Kernite
  • Borax / Tincal
  • Ulexite
  • Colemanite
Source: mininggeologyhq.com