Indian mineral sand exporters will incur a higher cost of
production beginning from this week, as part of a broader
"canalization" scheme, which many participants say is, in
practice, the partial nationalization of the industry.
The new standard operating procedures, which were
distributed to Indian mineral sand exporters on Thursday
September 6, explain that producers are now required to submit
details such as the mineral being sold, a foreign
buyer’s name, the selling price, quantities and a
profile of the selling company to government-owned corporation
IREL when exporting mineral sands.
Additionally, samples are required to be submitted,
alongside reports of petrological and chemical analysis of the
mineral "or any other analysis as deemed fit" to IREL. A
"service charge" to IREL is then incurred, calculated as 3% of
the fob invoice value for bulk and containerized shipments.
The service fee, the cost of additional sampling and
analysis, as well as the effort now required to submit extra
paperwork will all contribute to increasing costs for mineral
sand producers in India, which may in turn result in higher
prices for ilmenite produced in India.
Unless costs are absorbed by the producer, higher prices
from India may be supporting prices in China, which have been
depressed in recent weeks due to a number of factors.
Fastmarkets IM assessed the price for ilmenite concentrate,
47-49% TiO2, cif China at $160-180 per tonne on September 27,
down from $185-195 per tonne on August 16.
The new standard operating procedures were released to
clarify the confusion caused by the Indian Department of
Commerce’s unexpected announcement on August 21
that it had amended its export policy for heavy mineral sands,
which stated that all material is to be moved or "canalized"
These two announcements have led some industry participants
to believe that this is, in practice, the partial
nationalization of the industry.
"For the Indian mining industry and its customers, it raises
the larger spectre of dramatically increased sovereign risk,"
Grant Smith at Australasian Minerals and Trading Pty Ltd told
Smith notes that this change in regulation, "overthrows the
Beach Sands Policy announced in October 1998, which has
governed the industry for the past 20 years. Under this policy,
which freed the industry from government control, mineral sands
exports quadrupled and the Indian ceramic and welding electrode
industries expanded rapidly with easy access to domestic
sources of zircon and leucoxene/rutile. When these benefits are
combined with the foreign exchange earnings and import
substitution by domestic product, it proves the worth of
private participation in the industry."
Prior to the standard operating procedure announcement,
industry participants sought clarification on issues such as
warehousing logistics, transport to port, loading and transfer
of ownership, fob versus cfr shipping, quality standards and
While not all of these issues are addressed in the newly
announced standard operating procedures, it does show that the
Indian government is serious about implementing this new
Export policy changes
India’s Department of Commerce announced on
August 21 that it had amended its export policy for heavy
mineral sands, stating that all material is to be "canalized"
or moved through the government-owned corporation Indian Rare
Earths Ltd (IREL).
The announcement named ilmenite, rutile, leucoxene, zircon,
garnet, sillimanite and monazite as the minerals affected and
has classified these as "rare earth compounds", despite only
monazite having the ability to contain rare-earth elements.
Market participants directly involved in the local industry
have told Fastmarkets IM at the time that exports will continue
to be disrupted, "until clarification is obtained on the new
method of exports."
While overall export volumes from India are unlikely to
change significantly, it is unclear if the announcement means
mining will resume in the south Indian state of Tamil Nadu,
where mineral sand production is currently shutdown.
In 2017, around 40,000 tonnes per month of high quality,
highly reactive ilmenite was removed from the market when all
mineral sand mining operations in Tamil Nadu were shutdown by
the local government in response to allegations of illegal
The timing of the policy change had some market participants
speculating that it has come as a direct result of the shutdown
and its subsequent legal dispute.
The announcement also came only two months after VV Mineral
(VVM) began exporting ilmenite via its Transworld Garnet
subsidiary in the Indian state of Andhra Pradesh.
If the announcement results in the return of mining in Tamil
Nadu, global ilmenite production could surge by up to half a
million tonnes per year, placing downward pressure on already
weak ilmenite prices.
Chinese ilmenite prices have fallen on seasonally lower
pigment demand in China, disruptions in pigment plant
operating rates in some provinces, an uptick in local
ilmenite supply, trade war fears as well as a weakening
yuan against the dollar.