FLUORSPAR 2018: Trend continues toward permanent cuts in supply

By Michael Greenfield, Michael Greenfield
Published: Monday, 01 October 2018

For the fourth year since 2011, there was a permanent reduction in the global supply of fluorspar in 2017, resulting in shortness of material and price increases, factors which were among the main topics at conversation at Industrial Minerals’ annual fluorspar event.

Global supplies of fluorspar showed their largest single-year decline in 2017 since they began to diminish in 2011, a development that was largely a result of industrial inspections in China intended to reduce environmental pollution.

Prices have risen over the course of the 2018 calendar year so far, because of this tight supply. This meant that the global supply-demand balance was widely discussed at Fastmarkets’ annual fluorspar conference, hosted by Industrial Minerals in Johannesburg, South Africa, last week.

The price for acidspar, 97% CaF2, wet filtercake, fob China, was unchanged for the seventh week at $410-500 per tonne when assessed on September 27.

This was up from $400-420 per tonne at the end of 2017, which itself was up by by $150 per tonne from $250-270 per tonne in January of the same year.

The price rise has corresponded with the effects of environmental inspections on supplies coming out of China. More than half-a-million tonnes per year of fluorspar production was withdrawn from global output year-on-year in 2017 compared with 2016, Kerry Satterthwaite of Roskill Information Services told conference delegates on September 27.

Satterthwaite, who is division manager for carbon and chemicals at the consultancy, has produced a report based on on-the-ground research.

This research indicates that 600,000 tonnes per year came out of the global supply in 2017, reducing the total output by 10% from the 6.3 million tonnes produced in 2016.

This was broken down into a cut in acidspar output of 8% year on year to 3.7 million tonnes, and a fall in metspar production of 12% year on year to 2 million tonnes.

"World production of fluorspar has fallen steadily since its peak in 2011, due to a period of oversupply caused largely by Asian producers flooding the market with cheap exports," Satterthwaite said.

"Several acidspar producers ceased production between 2014 and 2017, when acidspar prices dipped below production costs for many miners," she added.

Since 2012, several projects outside of China have ceased production. Solvay took two projects offline, one in Bulgaria and the other in Namibia, while Kenya Fluorspar and South Africa’s Buffalo and Witkop projects also came offline.

Fastmarkets has reported on these developments as they emerged:

  • The Buffalo and Witkop projects came out of production in 2012; the total fall in output was estimated to be at least 140,000 tpy.
  • Solvay took its 80,000-tpy Namibian project, Okorusu, offline in 2014.
  • Solvay followed that with the closure of its 30,000-tpy Bulgarian operation in Chiprovtsi.
  • Kenya Fluorspar ceased production in 2016, taking 120,000 tpy out of the market due to the unfavorable pricing environment.
  • British Fluorspar suffered from the effects of a fire that stopped production, taking its 30,000 tpy mine offline for six months.
  • The Samine mine in northern Morocco reduced its production to 40,000 tpy of acid-grade fluorspar, from the previous 120,000 tpy, over the course of two years ending in 2017. Fastmarkets understands that this was because the ore body had become thinner and headstone grades reduced. The company is now focused on cement grades, for which Fastmarkets does not do price assessments, and produces 30,000-40,000 tpy.
  • Mongolrostvestment reduced its output of fluorspar by 10,000 tpy from its mines in Mongolia.
  • A total of 600,000 tpy was taken offline in China in 2017.
  • TOTAL: 1.04 million  tpy of fluorspar output permanently offline.

On the supply side, Masan Resources’ Nui Phao mine in Vietnam has come online, while there was a small production expansion in Thailand. Looking ahead, Canada Fluorspar has shipped 22,000 tonnes so far this year while it goes through its ramp-up, and Sepfluor hopes to begin production early in 2019.

The planned additions to the fluorspar market on the production side are as follows:

Without taking account of growth in demand, which is widely perceived by the market to be around 3% per year, this revised output total would leave the fluorspar market undersupplied.

In trying to assess how the situation may develop in 2019, and how the supply-demand balance may continue to influence pricing, Guillermo Gallegos, upstream business director for Mexichem, believes that the trend toward reduced production will continue.

"We expect demand to maintain its rate of growth, driven mostly by [needs for] refrigeration gases, aluminum fluoride and fluoropolymers," Gallegos told conference delegates in Johannesburg.

"Despite the fact that new producers are entering the market," he added, "we believe that overall demand, including China, will absorb any incremental supply, and as a result the balance in the market will continue to be short, resulting in price increases."

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