Year in Review 2018

By IM Staff
Published: Thursday, 20 December 2018

A round-up of all this year's events in the global industrial mineral sector.

Bauxite and alumina

A round-up of the year’s main events in the global bauxite and alumina markets.

The past 12 months were eventful for the global bauxite and alumina industries, characterised by supply shortages and end-market diversification.

Tight supplies of Chinese bauxite and alumina contributed to price volatility in both markets throughout 2018 and availability showed no sign of loosening towards the end of the year. 

The supply squeeze was partly attributed to temporary closures at Chinese mines and processing plants in the main bauxite and alumina production hubs of Shanxi and Henan provinces in April and a further round of closures in August and September. 

Calcined bauxite and fused alumina output were particularly affected by the closures in China, with more restrictions on heavy industrial activity expected through the winter months.

However, demand for bauxite and alumina on the global stage was subdued, with buyers taking a relaxed attitude to supply issues due to already having large inventories.

Speaking at Fastmarkets MB’s Bauxite and Alumina Conference in Jamaica in March, Norwegian miner Norsk Hydro said that Chinese imports of bauxite could double to 130-150 million tonnes per year (tpy) in the next decade.

But at Fastmarkets’ IM24 Congress in Barcelona in June, industry participants highlighted the reliability of Chinese bauxite and alumina supplies as one of the most pressing concerns facing the industry in 2018 – especially if Chinese domestic consumption increases as predicted.

Much of the anticipated increase in Chinese demand will be for metallurgical bauxite and alumina, but market participants believe that growth would also affect global trade flows of non-metallurgical forms of the mineral.

In September, alumina was one of the refractory materials removed from a list of Chinese imports into the United States earmarked for a 10% import tariff after the industry lobbied for supplies of this key raw material to remain unrestricted.

Corporate activity

Norsk Hydro’s Brazilian alumina refinery Alunorte in Pará state was hit by flooding in February, prompting concerns that effluent from the largest alumina refinery outside China could be polluting nearby watercourses and soil. 

Norsk Hydro refuted these claims, however, and has been battling with the Brazilian authorities to allow Alunorte to resume regular operations.

Since March, the authorities have forced Alunorte to operate at 50% of capacity and its solid waste disposal deposit (DRS2) operations were halted after the floods. The company was then forced to suspend all activity in early October, including its Paragominas bauxite mine. 

The reduction in Alunorte’s output further exacerbated wavering exports of Brazilian bauxite and helped contribute to rising prices for alumina during the year.

Also in November, Chinese mining company Bosai Group acquired 51% of Shandong Qixing Group’s alumina refinery for 1.2 billion yuan ($1.73 million*). 

The Qixing refinery has a capacity of 500,000 tpy of alumina but has also been idle for more than a year due to financial issues.

Elsewhere, Canadian company First Bauxite began industrial-scale trial shipments of bauxite-based ceramic proppants to the US in May, where it hopes to become a supplier to the fracking industry.

However, French industrial minerals giant, Imerys, which also produces ceramic proppants, complained of weak demand for this type of product over the last 12 months.

Australian Bauxite, meanwhile, reported its first sales of fertiliser-grade bauxite in May, as a separate product line to its alumina for cement and its planned output of aluminium fluoride for metallurgical and battery markets.

Refractories

Refractories continued to be the major end market for non-metallurgical alumina in 2018, although demand varied as steel production began to ease around the middle of the year.

Official figures from China, released in late November, showed that the country produced 637,400 tonnes of unshaped refractory materials in October 2018, up 0.87% year-on-year, of which 572,200 tonnes were alumina-silicon refractory materials, up by 1.63% compared with October 2017.

China’s total unshaped refractory product output in the first 10 months of 2018 was 5.78 million tonnes, up by 3.35% year-on-year, and alumina-silicon refractory material accounted for 4.88 million tonnes of this, up 9.72% on the same period in 2017.

Elsewhere, demand for refractories remained reasonably firm in Europe and North America in 2018, supporting non-metallurgical alumina consumption.

Strong demand for speciality alumina

In July, Germany-headquartered speciality alumina producer Almatis announced plans to build a new tabular alumina facility at Falta in West Bengal, India, expanding an existing site operated by the company since 1995.

Almatis did not disclose the capacity of the new facility but said it was increasing production to satisfy growing Asian demand for tabular alumina in the refractories sector.

In September, French speciality alumina producer Alteo announced it would raise prices for its entire portfolio of products because of increasing production costs amid unrelenting demand for its material.

In June, Germany’s Nabaltec announced plans to build a new 30,000 tpy refined hydroxide facility in the US state of Tennessee, due to be commissioned by August 2019. The facility will use alumina tri-hydrate (ATH) as its main feedstock. 

The company is also planning to build a second facility in another US location in the near future.

In October, Nabaltec formed a Shanghai-based trading company to service expanding Chinese for boehmite, which is a type of aluminium oxide used in battery separator films.

Outlook

Like other industrial mineral markets, the bauxite and alumina industry has begun diversifying its application profile, with speciality aluminas leading the charge into new high-value markets – a trend that looks likely to continue in 2019.

For ATH in particular, flame retardants, water treatment chemicals and aluminium fluoride are all expected to boost demand in the foreseeable future, keeping prices firm.

Market share growth is being aided by the arrival of new, non-Chinese supply of bauxite and alumina. 

In the meantime, restrictions on Chinese supplies of bauxite and alumina are expected to continue into 2019, with further rounds of closures planned for March.

* Conversion made December 2018

Graphite

A round-up of the year’s main events in the global graphite market.

The graphite industry enjoyed a year of relatively stable high prices in 2018, sustained by strong demand from the refractories and batteries sectors and restricted supplies from China.

By November, however, market participants were reporting that the market was starting to loosen, as new capacity in Africa and Asia began to take pressure off supply at the same time as demand softened.

Supply generally kept pace with demand in 2018, despite the curbs on Chinese output and persistent problems at Syrah Resources’ Balama project in Mozambique, which struggled to meet guidance throughout the year. And even the closure of Imerys’ and Gecko Graphite’s Otjiwarongo mine in Namibia in October failed to raise supply concerns.

Chinese production remains curtailed

After an eventful 2017, when all significant Chinese graphite-producing regions were affected by government inspections and shutdowns, 2018 witnessed further curbs on China’s output.

Shandong province, China’s largest graphite-producing region, saw a round of temporary factory closures in May – the first since 2017 – ahead of the Shanghai Cooperation Organisation (SCO) Summit held in Qingdao in June.

At Fastmarkets IM24 Congress in Barcelona, Spain, in June, the notion that China’s dominance over global graphite supply is waning was widely dismissed, however.

The country continues to account for between 60% and 70% of global graphite supplies – a share that has barely shifted despite the opening of new non-Chinese mines in 2018 – and has the flexibility to ramp up production and exports at short notice.

New supply stutters

Having become the first new non-Chinese graphite mine to open in a number of years in December 2017, Syrah Resources’ 350,000-tonnes per year (tpy) Balama mine has been plagued with problems during 2018.

Issues with ramping up the mine and processing facility kept production behind forecasts, yet the company stuck to its bullish business plan, announcing in May that it would acquire a site in Louisiana, US, for $1.23 million to build a spherical graphite plant. 

However, in October, a fire at the Balama plant forced the company to halt production for a number of weeks, leaving it unable to meet orders.

The problems did not prevent the company from lining up more offtakers to add to its list of Asian customers and, in November, Syrah signed a binding offtake agreement for 20,000 tpy of graphite with China’s Qingdao Taida-Huarun, effective immediately. 

In Canada, Nouveau Monde Graphite successfully commissioned the wet circuit of its 3.5 tons (3.2 tonnes) per hour demonstration plant in Saint-Michel-des-Saints, Quebec, for upgrading material from its Matawinie project.

Although the plant had been due to come online in July, Matawinie remains one of the most developed new graphite projects in North America. Nouveau Monde hopes to produce 1,000 tpy of flake graphite, 100 tpy of expandable graphite and 250 tpy of uncoated spherical graphite over the next two years.

Back in Africa, Bass Metals announced in October that it had achieved the nameplate 500 tonnes per month production at its Graphmada mine and processing plant in eastern Madagascar, having commenced production in June. The company sold 274 tonnes flake graphite concentrate in the first three months of productive operations.

In its third quarter results, released in early November, France’s Imerys said it had closed its Namibian Otjiwarongo graphite mine because of low prices and problems with ramping up production.

The $50 million mine and plant – which is a joint venture with local company Gecko Graphite and had been forecast to produce 20,000 tpy of flake graphite – was put on care and maintenance for the foreseeable future. The facility started production in May 2017.

Batteries

Demand for flake graphite for use as anode material in batteries continued to be hailed as the main growth market for natural graphite in 2018.

Industry estimates suggest that around 90% of the raw material used to make battery anodes is graphite – either natural or synthetic – with anode makers mixing natural material into synthetic bases to reduce costs.

Natural graphite continues to compete with synthetic for battery market share as well as use in other applications such as flame retardants.

Estimates put forward at Fastmarkets IM7 Graphite & Graphene Conference in London, UK, in September, suggested that the current market split of natural to synthetic graphite is 50:50, although demand for synthetic graphite is reported to be growing more quickly than demand for natural material. 

Elsewhere in the world

While investor interest has rebounded in other battery minerals, such as lithium and cobalt, graphite companies have found it harder to regain momentum.

Permit bottlenecks in highly promising regions such as Madagascar have held back new projects by Tirupati Carbons and NextSource Materials, while a lack of funding has delayed progress at a number of North American and European mines.

Consumption of graphite in refractory materials remained robust in 2018, thanks mainly to strong global steelmaking activity. 
In October, graphite, along with other refractory minerals, was removed from a list of Chinese products due to face an immediate 10% import tariff, potentially rising to 25% in 2019. 

Outlook

Although major Western consumers of graphite have expressed an interest in establishing 100% non-Chinese supply chains, they have made it clear they will only shift purchasing patterns when non-Chinese graphite can be supplied at or near Chinese price levels. 

This is despite risks associated with an over-reliance on Chinese supplies, plus the widely held view that China may become a net importer of graphite to support its domestic battery-making industry within the next 10 years.

Predictions from Chinese graphite companies suggest that a number of the 147 or so active Chinese graphite mines will disappear over the coming years, either through consolidation or closure. 

And Chinese processing capacity is also likely to shrink, as acid-treatment plants are being phased out in favour of less-aggressive chemical- and water-based processing under the government’s environmental legislation.

These factors, coupled with growing demand from battery anode, graphite foils and flame retardant producers, could create opportunities for non-Chinese graphite miners if they can control costs and successfully produce the high-quality materials required for these applications.


Fluorspar

A round-up of the year’s main events in the global fluorspar market.

The world fluorspar market remained tight in 2018, after more than 500,000 tpy of fluorspar supply was removed in China a year earlier as a result of government-ordered shutdowns of polluting production plants. 

More than a million tonnes of fluorspar production has come offline globally since 2011, while just 280,000 tonnes of new supply has entered the market over the same period.

Towards the end of the year, stocks of Chinese fluorspar for export were running seasonally low, exacerbated by ongoing environmental inspections and factory closures in Northern China and Inner Mongolia.

There were also unconfirmed reports that producers and traders were holding back material to further push up prices.

Meanwhile, in Europe, low water levels in the Rhine meant that inventories began to build up at the river’s ports towards the end of the year, as suppliers were unable to ship material to customers.

In North America, new supplies from Canada came too late in the year to ease pressure on the market. In September, fluorspar was left off a list of Chinese raw materials earmarked for import tariffs by the US government.

Dwindling availability of fluorspar was reducing spot buying towards the end of 2018, with more buyers moving towards contracts to lock in supplies. Contracts for 2019 deliveries of South African fluorspar were settled in October this year, several weeks earlier than usual.

Prices for both acidspar and metspar began to increase in September and have continued to rise ever since, with acidspar price growth outstripping metspar.

Strong fluorspar pricing helped contribute to strong financials at the world’s largest fluorspar producer, Mexichem, which reported a 35.6% rise in third-quarter profits in October to $82.4 million.

Chinese squeeze continues

The Chinese government has continued its crackdown on fluorspar mines and processing facilities that fail to meet its tough new environmental and safety standards.

In September, the country’s government announced a fresh round of environmental inspections on fluorspar mines, in addition to an earlier round of inspections on heavy industries launched in May.

In October, three fluorspar mines in Qingliu county, Fujian province – Fujian Yongfu Chemical, Qingliu County Mingsheng Fluorite Mine and Qiukoutong Fluorite Mine – were placed under inspection as part of the local government’s new safety inspection project.

The squeeze on domestic supplies has fuelled suggestions that China is now a net importer of fluorspar. According to data compiled by Roskill Information Services, Chinese metspar imports are expected to reach 233,000 tonnes for the whole of 2018, outstripping projected exports of 204,000 tonnes.

Operating rates at Chinese fluorspar companies were estimated to be as low as 45-50% of capacity during the middle part of the year.

Downstream developments

In April, France’s Arkema completed a 20% expansion of its fluoropolymer plant in Calvert City, Kentucky, US. The company said it had increased its capacity to serve the growing US fluoropolymer market, but did not disclose the overall capacity of the facility, which makes Kynar-branded polyvinylidene fluoride (PVDF) products.

According to speakers at Fastmarkets IM’s Fluorspar 2018 conference in Johannesburg in June, Chinese domestic consumption of locally-produced fluorspar has increased by more than 10% in the last decade to 90%.

The growth of fluorspar-based products, such as fluorine polymers, has helped diversify end markets for fluorspar. In recent years, demand for acidspar has suffered from restrictions on the use of certain fluorochemicals in refrigerants, while metspar has benefited from a resurgence in global steel production since 2016.

A rebound in the hydrofluoric acid (HF) market, which consumes about 40% of all fluorspar supply, also supported both demand and prices in 2018. The Chinese HF market, in particular, saw strong price appreciation in the first half of the year.

Some European HF capacity changed hands during the year and more production has been shifted to Asia.

In June, Alkeemia, a subsidiary of Italian fluorochemicals company Fluorsid, completed its purchase of Belgian chemicals producer Solvay’s Porto Marghera-Venice HF production plant in Italy.

In the US, controversy over the use of hydrofluorocarbons (HFCs) heated up in 2018. In July, US-based chemicals producers Chemours and Honeywell International stepped up their appeal against the removal of a ban on HFCs by petitioning the US Supreme Court for a review.

Around the same time, the Attorneys General of 10 US states and of the District of Columbia, also launched a challenge to the decision by the US Environmental Protection Agency to cancel regulations that ban the use of HFCs.

New supply

Early-stage miner Canada Fluorspar shipped its first delivery of around 4,700 tonnes of fluorspar from its St Lawrence project eastern Canada in August. The company, which suffered numerous delays to its project over the last two years, is ramping up to a nameplate capacity of around 200,000 tpy.

In South Africa, Sepfluor made good progress at its Nokeng project during the year and is confident it will make first deliveries from the 200,000-tpy capacity mine in early 2019.

Elsewhere, SC Mining in Thailand added 12,000 tpy of new capacity in 2018, while in Mongolia, local producer Mongoljuyuanli reportedly commenced production at a 10,000-tpy operation in June and Mongolia International Minerals reportedly brought an idled 12,000-tpy mine back online in the same month.

In Kenya, the country’s Mining Ministry announced in August that it was seeking investors to restart Kenya Fluorspar’s 120,000-tpy mining operations in the country’s Keiro Valley, which has been shut for two years. In September, however, local media reported that the plans had stalled due to a row about compensation for landowners.

Outlook

Average demand growth for fluorspar is expected to continue at a steady 3% per year, driven mostly by refrigeration gases, aluminium fluoride and fluoropolymers.

Market participants warned that there could be supply shortages in the near future, however, if new fluorspar sources fail to ramp up in time and China continues to shut down production.

Downstream, end-market diversification and strong demand for high-performance chemicals are expected to underpin robust manufacturing activity and could see further capacity expansions in the fluorspar market.


Lithium

A round-up of the year’s main events in the global lithium market.

The global lithium sector remained extremely active in 2018, with established producers and junior companies investing in additional capacity amid high prices and strong demand driven by the electric vehicle (EV) battery sector.

Yet despite remaining at historically high levels – more than $16 per kg compared with $5-6 per kg in 2015 – lithium prices showed some signs of softening towards the end of the year. 

Contract prices fell month-on-month between June and December, due to lower spot prices in China – mainly as a consequence of the increased availability of lithium compounds, and coinciding with the arrival of significant new Australian spodumene supplies in the second half of the year.

EVs and batteries continue to drive market

The faster than expected adoption of EVs caught the lithium market off-guard two years ago and EV output continued to be strong in 2018, particularly in China, although lithium supplies had started to catch up with demand by the end of the year.

Chinese new energy vehicle output almost doubled in the first half of 2018, to 413,000 units, government figures showed. 

In the meantime, EV and other kinds of battery makers made more moves to lock in lithium supply over the last 12 months.

In October, China’s Ganfeng Lithium extended its offtake deal with Korea’s LG Chem for a further three years, providing battery maker LG with an extra 45,000 tonnes of battery-grade lithium carbonate and hydroxide from Ganfeng, to give it a total of 92,600 tonnes between 2019 and 2025.

In the same month, Tesla agreed an offtake deal with Ganfeng, which will see the producer deliver 20% of its lithium hydroxide production capacity to Tesla between 2018 and the end of 2020.

Tesla also signed a three-year offtake deal in May with Australian spodumene junior Kidman Resources. The agreement, for an undisclosed volume, is expected to commence in 2019.

In October, German car manufacturer BMW signed a three-year offtake deal with Gangfeng Lithium at market prices, also for an undisclosed volume.

LG, meanwhile, has a five-year offtake agreement with Canadian junior Nemaska Lithium for 7,000 tonnes per year (tpy) of lithium hydroxide, starting in 2020. Nemaska also secured offtakes with US-based FMC Corp, Japan’s Hanwa Corp and Swedish battery maker Northvolt.

Producer challenges

While a handful of established lithium producers continue to dominate the market, the arrival of new supply ate further into their market share in 2018, while the big companies had to deal with numerous obstacles to their operations.

The world’s largest lithium producer, Chile’s Sociedad Quimica y Minera de Chile (SQM), increased its revenues from lithium and derivatives by 7.7% to $500.9 million in the nine months to the end of September.

Also in September, SQM objected to moves by China’s Tianqi Lithium to acquire a 24% stake in the Chilean miner, citing competition concerns. 

SQM’s US-based rival Albemarle Corp meanwhile had an eventful 2018, meanwhile Albemarle was forced to close its US and Chinese plants for a few weeks in the third quarter, due to a hurricane and environmental inspections.

In October, Chilean national economic development agency, Corfo, opened a dispute with Albemarle at the International Chamber of Commerce over a sales contract.

And in November, Albemarle signed a deal with Australian miner Mineral Resources (MRL) to develop a 50,000-tpy battery-grade lithium hydroxide plant, based at the Wodinga hard rock lithium mine in Western Australia’s Pilbara region.

Towards the end of 2018, Albemarle was still negotiating with Chilean authorities over plans to build a 42,500-tpy lithium carbonate plant in Chile, which the government claims is lacking environmental information.

In Argentina, Australian miner Orocobre reported production and sales were down by more than a third in Q3, due to a maintenance shutdown of its lithium carbonate production plant in September and seasonally lower evaporation rates at its brine ponds.

Elsewhere, Livent Lithium, which was spun out of US chemicals company FMC Corp, listed on the New York Stock Exchange in October, hoping to cash in on investor enthusiasm for battery metals and electric vehicles. The company produces lithium in Argentina and has processing facilities in the US and China.

Australian spodumene producers spurred on

Boosted by relatively enthusiastic investor sentiment towards lithium, several Australian companies accelerated spodumene production in 2018.

Altura Mining commenced spodumene production at its 220,000 tpy Altura mine in Western Australia in July. In November, it secured an offtake agreement with Ganfeng Lithium to supply 70,000 tpy of spodumene.

Fellow Australian spodumene miner Tawana Resources also reported successive increases in spodumene output, although mining delays towards the end of the year caused the company to rein back its production target for July-December to 55,000-60,000 tonnes from 60,000-75,000 tonnes.

Meanwhile, Neometals maintained strong spodumene production levels into the third quarter of the year but reported falling exports. Neometals’ Kalgoorlie refinery to process its own spodumene into 10,000 tpy lithium hydroxide in Australia was on track at the end of the year, for commissioning in 2021.

In October, Pilbara Minerals shipped its first 8,800 tonnes of spodumene from its Pilgangoora mine in Western Australia to customers in North Asia.

Outside Australia, small maiden spodumene shipments came from AMG Mineração’s Mibra mine in Brazil in September, while Namibian lithium producer Desert Lion Energy began shipping lepidolite concentrate in July. Both companies exported their material to China.

Outlook

Falling lithium prices towards the end of 2018 indicate that supply is starting to close the gap on demand, driven partly by additional Australian spodumene capacity being shipped to China.

New brine, clay and hard rock projects in South America, North America, Africa and Europe progressed during 2018 but are unlikely to add significantly to supplies in 2019.

Battery production looks set to remain the main driver of lithium demand in 2019. 

The establishment of new non-Chinese processing plants could start to reshape trading patterns for lithium within the next 12 months.

And, with a range of supply options and the slightly softer market conditions anticipated over the next year, it is possible that buyers will be less concerned about locking in supplies and will start to negotiate tougher deals with producers.

Rare earths

A round-up of the year’s main events in the global rare earths market.

After a number of rough years characterised by severe oversupply and low prices, the global rare earths industry had a relatively steady 2018.

A steep increase in the production of electric vehicles helped support demand and prices for neodymium, in particular, which offers significant benefits in electric vehicle motors, while dysprosium-based magnets used in electronic devices were also in high demand.

Speculation about China’s rare earths policy continued amid rising trade tensions between China and the US, while the few non-Chinese rare earths projects that have survived the past six years took some notable steps forward.

Chinese dominance continues

China was responsible for more than 80% of global rare earths output in 2017 and nothing that happened in 2018 has done anything much to shift this dominance.

However, in June, the Chinese government issued an update to a previously announced policy to widen access to China’s raw materials industry, including rare earths.

While still prohibiting foreign investment in rare earths exploration and mining, the government removed restrictions on the smelting and separation of rare earths, which were previously limited to joint ventures and co-operations with Chinese companies.

Yet these overtures to international companies have done little to ease political trade relations, particularly with the US.

In September, the US government said it had excluded rare earths compounds and magnets from its final list of tariffs against $200 billion-worth of Chinese imports – due to face an immediate 10% duty, potentially rising to 25% in 2019.

Industry observers noted at the time that finding alternative sources of these minerals, which are considered essential to the US defence industry, would be difficult given the lack of active mines outside China.

China retaliated to the US protectionist measures by increasing tariffs on many imported US-origin products – worth about $16 billion – but refrained from restricting the supply of rare earths products to the US.

Meanwhile, consolidation of China’s rare earths industry into state-run conglomerates continued in 2018, although the expanding government-run businesses have not been free from problems.

In late June, Chinese state-owned metal company Chinalco ordered its rare earth unit in Guangxi to suspend operations after government inspectors found contaminated water sources near the company’s mines. 

Chinalco said it was investigating the issue and would discipline those responsible. The government’s rare earths production quota for Guangxi in the first half of 2018 was 1,750 tonnes of heavy rare earth oxides, 14% of China’s total heavy rare earth quota for the period.

In late October, Chinese state media refuted claims by international research groups that China planned to slash its rare earths output. State media quoted the country’s Ministry of Industry and Information Technology as saying that China would in fact raise rare earth mining quotas for 2018 from 105,000 tonnes to 120,000 tonnes and increase the smelting quota from 100,000 tonnes to 115,000 tonnes.

Non-Chinese producers

Rare earths production outside China continues to be minimal and difficult, but some companies did successfully contribute to global supply.

Rainbow Rare Earths, which operates the Gakara project in Burundi, said it had sold 475 tonnes or rare earths concentrate in the year to 30 June 2018 and a further 350 tonnes in the three months to the end of September.

After riding out a torrid few years, Australian rare earths miner Lynas Corp revealed in July that it was, for the first time, stockpiling neodymium and praseodymium (NdPr), in response to price fluctuations – a move that helped it increase profits during the year.

In September, the Malaysian government launched an investigation into Lynas’ Advanced Materials Plant (LAMP) in Kuantan regarding the facility’s management of radioactive waste.

The following month, Lynas alleged that the government’s investigation was neither fair, nor independent as it was 

being led by a politician hostile to Lynas’ operations – Malaysian deputy minister, Fuziah Salleh.

In late October, the company said it had been granted an extension of its temporary permission to store waste materials from its processing operations at the LAMP, while it awaited a decision on a longer-term application. 

Meanwhile, in India, varying volumes of monazite-based rare earths material continue to be produced, but erratic government policies and intermittent bans on mining in regions such as Tamil Nadu have been partly to blame for India not ramping up its contribution to rare earths output.

Elsewhere in the world

The number of companies exploring for rare earths outside China has dwindled considerably in the past six years, although a handful are still progressing projects.

Australian junior Arafura Resources received a recommendation for approval from the environmental protection agency of Australia’s Northern Territory for its Nolan rare earths project in January. 

And in November, Arafura said it planned to build a separation plant at Nolan to produce up to 3,600 tpy NdPr oxide from material extracted from its 14,000-tpy operation.

Meanwhile, fellow Australian junior miner, Northern Minerals, produced its first batch of mixed rare-earth carbonate in October, from a pilot plant at its Browns Range facility in Western Australia – the first heavy rare-earth carbonate to be produced from xenotime ore outside China.

In New South Wales, Australia, Alkane Resources said it is still committed to using the profits from its Tomingley gold mine to finance the development of its Dubbo rare earths project.

In the US, Medallion Resources is building a plant to process monazite by-product from mineral sands mining at a facility in Nebraska, and Texas Mineral Resources is developing a rare earths deposit in Texas.

Outlook

While the rare earths market continues to be tough and price volatility still undermines the economics of many early stage projects, there is significant political will behind getting more non-Chinese rare earths supply into the market.

Overcapacity is still a problem for many companies who are relying on price increases for NdPr in particular to offset likely losses from low-value light rare earths.

But with defence industries, electric vehicles, consumer electronics and renewable energy generation continuing to grow, the future for rare earths looks like it will be brighter in 2019 than it has been for a number of years.


Mineral sands

A round-up of the year’s main events in the global TiO2 feedstocks and zircon markets.

Prices for titanium dioxide (TiO2) declined gradually during 2018, particularly in China, where large-capacity investments over the past few years have added weight to supply against flat demand.

Some companies, including US-based Venator, attempted to introduce price increases in the second half of the year, in an effort to counter lower prices coming from China.

Meanwhile, zircon prices performed strongly, due to tight supplies and robust demand from ceramics and other end markets.

In November, leading Australian mineral sands miner Iluka Resources forecast the zircon market would remain in structural deficit over the next few years, due to a shortage of new projects scheduled to come online.

At TZMI’s 2018 congress in Singapore in mid-November, market participants said that a reliable and consistent supply of zirconium and titanium minerals remains a primary concern for pigment, welding and ceramic end users.

Companies face disruption worldwide

In July, global mining firm Rio Tinto declared force majeure at its Fer et Titane titanium slag business in Quebec, Canada, due to a problem with one of its furnaces. 

Rio Tinto said it would take several months to repair the furnace and did not expect its slag plant to return to full operation before the end of the year.

Rio Tinto’s Richards Bay mineral sands mine in South Africa was also forced to halt production during the year, with stoppages in April and July.

Irish miner Kenmare Resources reported unplanned outages during 2018, contributing to production shortfalls.

In September, the 80,000-tpy Armyansk sulfate-route titanium TiO2 plant in Crimea, in Russia-annexed Ukraine, was forced to close for two weeks after a large release of sulfur dioxide gas.

In late November, Iluka announced that it had resolved a labour dispute at its operations in Sierra Leone and would restart mining imminently. The company has faced industrial action at its rutile mines in the country since October, causing intermittent stoppages.

Saudi Arabia’s Cristal, meanwhile, reported production problems at its operations in Saudi Arabia and Australia during the year. Technical problems at its 260,000-tpy Saudi ilmenite slag smelter means the facility will not come online until the second half of 2019.

Australia’s Base Resources had a relatively problem-free 2018, reporting rising prices for its material and achieving record-high mineral sands output of 25,125 tonnes from its Kwale operation in Kenya in the third quarter, although sales of rutile and zircon both declined.

Australia’s Mineral Commodities also had a steady year, reporting steady production from its Tormin mine in South Africa.

Tough conditions for US TiO2 

In November, US TiO2 producer Kronos reported prolonged third-quarter destocking by pigment buyers, pulling down sales volumes for the three-month period by 19% year on year.

Rival North American producers Chemours, Tronox, and Venator all reported similar trends in their third-quarter earnings. 

Towards the end of the year, Tronox reported good progress towards completing its merger with Saudi Arabian TiO2 producer, Cristal. 

The deal is subject to a number of conditions set by the US Federal Trade Commission on antitrust grounds, including the sale of Ashtabula plant in Ohio – for which the companies said they had found a buyer in November after an earlier deal with Venator fell through.

Chinese TiO2 capacity still growing

In March, world leading TiO2 producer, China’s Lomon Billions announced plans to further enhance integration by purchasing Chinese ilmenite producer, Sichuan Anning. The deal was scrapped in May, however.

In late November, Lomon Billions signed a multi-year offtake deal with paint company PPG that included a portion of its planned 200,000 tonne chloride-route TiO2 pigment expansion in 2019. 

China’s TiO2 industry rode out 2018 relatively unscathed by environmental inspections that have slashed capacity in many of the country’s other industrial minerals sectors.

New supplies

In India, Transworld Garnet International, a subsidiary of VV Mineral (VVM), began exporting ilmenite from Andhra Pradesh in June.

Transworld did not disclose the volume of the shipment, other than to say it was a bulk cargo. The company expects to eventually produce around 100,000 tpy of ilmenite. 

This year, India has witnessed lengthy disputes about the safety and environmental impact of domestic mineral sands mining, while floods in Kerala in August disrupted production.

Iluka expects to start production at its Cataby ilmenite mine in Western Australia in the first half of 2019, with output expected to be approximately 100,000 tonnes of combined synthetic rutile, rutile and zircon.

Also in Australia, MZI increased mineral sands output at its Keysbrook mine in Western Australia during the year, although the company admitted that it had problems achieving target rutile recovery rates.

Melior Resources began wet commissioning at its Goondicum deposit in Queensland in the third quarter of 2018, while Sheffield Resources said its Thunderbird project in Western Australia would be construction ready by the end of the year.

In Africa, Australia’s Strandline Resources secured a binding offtake agreement in October with trader IMMCO for 100% of future rutile production from its 15,600-tpy Fungoni project in Tanzania. First production from Fungoni is expected in the first half of 2019.

Outlook

Despite the declines in TiO2 prices in 2018, expectations for mineral sands prices remain relatively bullish overall.

Premium zircon sand prices are expected to remain firm in Europe and China in the first half of 2019, due to a combination of supply tightness and strong end-market demand.

Plentiful supplies of standard-grade zircon sand in China is likely to put pressure on prices in this market, however.

Strained rutile supplies are expected to keep prices up into 2019, although some pigment producers are looking at replacing natural rutile with synthetic feedstock and welding end users have begun to blend rutile with ilmenite to reduce costs.

Concerns about high inventories of TiO2 pigment are unlikely to dampen the market for sulfate-route ilmenite significantly in the early part of 2019. Sulfate-route TiO2 pigment producers are facing more competition for ilmenite feedstock from chloride slag producers. 

A number of TiO2 companies admitted towards the end of the year that they were not hopeful of pushing through price increases in 2019, barring any major unforeseen capacity closures.


Antimony trioxide

A round-up of the year’s main events in the global antimony trioxide market.

One of the more volatile industrial minerals in terms of its price trends, antimony trioxide (Sb2O3) had a bumpy year in 2018 as values for antimony metal fluctuated regularly.

Unforeseen incidents, including the seizure in August of a large shipment of smuggled antimony metal in China, created sudden gaps in the market and threatened to affect supplies of antimony feedstock to trioxide producers, thereby leading to higher prices.

According to reports, more than 3,000 tonnes of antimony metal were seized by the Chinese authorities in a crackdown on smuggling, although it is not clear what subsequently became of the impounded metal.

Hiatuses in Chinese supply during the country’s Lunar New Year celebrations in February and its Golden Week holiday at the beginning of October failed to move prices, however, as buyers had secured material in advance of these regular and well-advertised breaks in trading.

Towards the end of 2018, spot prices for antimony trioxide slid on weak demand and a lack of inquiries from buyers amid seasonal end of year destocking.

As well as purchasers sitting on their hands while sellers and traders rushed to sell old stock before Christmas, low demand has been attributed to high inventories among producers of antimony trioxide-based flame retardants.

Global output of antimony trioxide was expected to remain fairly stable through 2018 at around 110,000 tonnes, with China remaining the leading producer.

In September, antimony was removed from a list of China-origin imports due to face 10% import tariffs in the US, allaying concerns about market disruption for Chinese producers.

Concerns over US-Chinese trade tensions remain prevalent among metals and minerals traders, however, and have made buyers more sensitive to potential changes in their supply chains and to the need for contingency plans.

In September, the Minor Metals Trade Association (MMTA) said that China’s dominance of the antimony industry could be waning, thanks partly to declining reserves and environmental shutdowns (as well as falling demand), which have caused output to drop in China.  

Chinese mine production declined by 7% per year over between 2010 and 2017, the MMTA said.

End market risk

Calls from chemical safety watchdogs to phase out antimony trioxide from household flame retardants, due to its intrinsic toxicity, have increased over the year.

Concerns about the effect of the chemical on human health, which were first seriously raised in the US by the National Toxicology Program (NTP) in 2016, centre mainly on its potential carcinogenicity. 

In October, the NTP concluded that antimony trioxide could reasonably be anticipated to be a human carcinogen, and in November, it said it would add the chemical to its list of carcinogenic materials.

In the same month, attendees at the International Antimony Association Day in Brussels said that despite the minimal scientific evidence – based only on studies on animals using powdered forms of the chemical – pressure to replace antimony trioxide in flame retardants could induce policy makers to bow to activist demands. 

So far, there have been no official calls in Europe for the substitution of antimony trioxide and demand growth for the chemical is anticipated to remain steady for the next few years, due to increasing consumer demand for fire-safe products. 

However, the MMTA said in September that regulatory evaluations in Europe under the EU’s REACH chemical safety regulations might drive manufacturers to consider substitutions.

Supply diversification

As with other industrial minerals, there have been moves to open up new antimony mines outside China to reduce supply concentration, and 2018 saw progress at a number of major projects.

In July, the Chinese government confirmed that plans to open up its mineral industry to foreign investors would not extend to antimony, which the government wants to protect as a strategic national resource.

Earlier in the year, in March, Russian miner Polyus said it had started selling antimony produced from its Olimpiada gold deposit in Russia. 

The company, which is listed in the UK, said that it could potentially supply up to 15% of global demand for antimony, with output estimated at 15,000-20,000 tpy.

Polyus also said it had signed sales contracts for all of its 2018 antimony concentrate production and had plans to ship material to China.

In the second half of the year, Oman-based Strategic and Precious Metal Processing (SPMP) said it was nearing first production at its 20,000-tpy Oman Antimony Roaster (OAR). 

SPMP signed a supply agreement with Luxembourg-based trader, Traxys, in June, to supply an undisclosed volume of antimony metal.

According to SPMP, once at full capacity, its Omani plant will supply up to 12% of the world’s current antimony demand, reducing Chinese dominance in this market. However, since the OAR relies on third party supplies of antimony ore (stibnite), its main function will be to diversify processing capacity, rather than overall net supply of antimony metal and trioxide.

One of the company’s main investors is UK-listed Tri-Star Resources, which owns 40% of the project, with the rest being held by Dubai-based Dutco Group (20%) and the Oman Investment Fund (OIF), a sovereign wealth fund of the Sultanate of Oman (40%). 

In July, Tri-Star said it was anticipating first antimony production by the end of October, although it is unclear whether the company adhered to this schedule.

Outlook

Following the NTP’s registration of antimony trioxide as a known carcinogen, the impact on demand for the chemical remains to be seen. In the near term at least, rising consumption of flame retardants is expected to support the market.

In September, the MMTA said that, as well as projects in Russia and Oman that have or were expected to come online in 2018, new developments in China, Russia and Tajikistan are fundamental to the outlook for antimony supply and demand.


Iodine

A round-up of the year’s main events in the global iodine market.

Iodine prices continued to edge up during 2018, having risen steadily since August 2017.

Global sales were believed to be exceeding production levels at the end of 2018, indicating tight market conditions and more promising fundamentals for iodine producers.

Although iodine’s price appreciation began to slow in the second half of 2018, there was a 28% increase in both the spot and contract prices in the period between August 2017, when prices were around $21 per kg, and the end of November 2018 when values were pushing $28 per kg.

Towards the end of 2018, quarterly contract prices for iodine exceeded spot market prices for the first time in almost two years, reaching $27.50 per kg for the first quarter of 2019. 

In September, currency weakness in China and India led to sell-offs of iodine in these Asian markets, but this failed to send prices for raw iodine into retreat.

Prices for iodine derivatives have not kept pace with increases in prices for crude iodine, however.

At the CPhI Worldwide pharmaceutical industry exhibition in Madrid in October, Fastmarkets IM learned that fierce competition between iodine chemicals manufacturers had led to a glut of cheap derivatives in the global market, keeping prices down.

Corporate activity

In January, the long-running dispute between Chilean Economic Development Agency, Corfo, and the world’s biggest iodine producer, Sociedad de Quimica y Minera de Chile (SQM), came to an end, after both sides settled their differences over lease arrangements for the Atacama Desert salt flats, Salar de Atacama.

Salar de Atacama is SQM’s main source of mineral products and its agreement with Corfo dates back to 1993 and is due to run until 2030. In 2015, Corfo accused SQM of not paying royalties and taxes due under the terms of the contract and of abusing its water rights. 

SQM denied the allegations but the dispute affected its expansion plans.

A new agreement, reached through an arbitration process, means that SQM will pay more for its lease but will also be allowed to expand its mineral extraction operations on the salt flats.

Elsewhere, US iodine producer Iofina had a relatively strong year in 2018, thanks to improved iodine prices and fewer technical issues at its iodine extraction facilities in Texas, Montana, Oklahoma and Kentucky. The company recorded first-half 2018 earnings of $725,000 from revenues of $20 million.

In October, Iofina announced it would focus its efforts on selling raw iodine, after the iodine derivative hydriodic acid (an aqueous solution of hydrogen iodide (HI)) imported from the US to China was hit with a 118.8% anti-dumping tax, making sales to the country unviable for Iofina – thereby ending a 15-year trading relationship.

HI imports from Japan, meanwhile, faced a 41.1% tariff.

The tariffs were a consequence of a Chinese company claiming that there had been sales of HI at prices below market value from US and Japanese companies. 

Iofina, which rejected China’s dumping accusations, said it was on course to produce around 600 tonnes of iodine in 2018, although it is not clear how much of this is derivatives. The loss of its Chinese customers would dock around $100,000 per year from its profits, Iofina said.

The status of fellow US iodine producers IOCHEM and Woodward Iodine, which produce lithium from brines in Oklahoma, is unclear. Both companies are privately owned and therefore do not publicly report their production rates. 

Ramping up

To retain its market-leading position, SQM is expanding capacity at its Nueva Victoria plant in Iquique, Chile, to 14,000 tpy, up from 11,000 tpy. 

The company expects to reach nameplate capacity in the first half of 2019. 

SQM was said to be using aggressive sales tactics, extending sales volumes above its capacity to secure customers towards the end of 2018. 

There are significant doubts about whether SQM can secure the water it will need to produce enough iodine to meet demand, however, market sources told Fastmarkets IM.

Third-quarter earnings from SQM published in November revealed that the company was on course to sell around 13,500 tonnes of iodine in 2018. But Fastmarkets IM estimates that the company’s actual iodine output will total just 11,000-12,000 tonnes for the year, implying that the company is selling from stockpiles. The company sold 12,700 tonnes of iodine in the whole of 2017.

The status of other Chilean iodine producers, including ACF Minera, Cosayach and Algorta Norte remains uncertain. 

Cosayach is believed to produce around 4,000 tpy of iodine and has the flexibility to expand, but the company’s bitter rivalry with SQM has made Cosayach hesitant about increasing capacity and other companies are believed to feel the same way about SQM’s dominance in the iodine market.

Both Cosayach and ACF Minera closed down some production facilities in 2017 due to low iodine prices, but it has been suggested that the recent price recovery in iodine could encourage them to reopen the plants.

Outlook

After a tough few years in the iodine market, stronger pricing in 2018 put many iodine companies back in the black.

The rise in contract prices for the first quarter of 2019 indicated that tighter supply conditions are expected to continue into 2019, further supporting prices.

Both sellers and buyers said they expect spot prices to move to $30 per kg levels by early 2019.

Rising prices for iodine have raised the prospect of stalled Chilean developments and idled capacity returning to production, which could ease tightness in the market next year.

During 2018, Fastmarkets IM learned that Eloisa Corp’s 2,000-tpy iodine project in Chile, which failed to secure funding to complete construction in January, could be revived in 2019. And a 1,200-1,500-tpy plant owned by Cosayach, which was idled in 2017, may reopen in the near future.

In April 2018, Chile’s environmental authorities gave the go-ahead for construction to begin at the new Arbiodo iodine and nitrate project in Taltal.

Arbiodo expects the extraction facility, which will include a 60km pipeline and pumping station to supply the plant with seawater, will cost around $400 million to build and will have the capacity to produce 3,000 tpy of iodine. It is not clear when Arbiodo aims to start production.

Pharmaceuticals and X-ray contrast media continue to be the main growth markets for iodine, with other applications in dyes, chemicals, food and agriculture. In the supplements market, industrial iodine is beginning to be challenged by seaweed-derived iodine.

Frac sand

A round-up of the year’s main events in the global frac sand market.

North America remained the focus of the global fracking industry in 2018, as relatively robust oil and gas prices spurred on shale projects and drove demand for frac sand.

The market started to tip down in the second half of the year, however, with fracking activity and the number of well completions beginning to slow down – a trend that had a knock on effect on frac sand consumption.

Logistics, a perennial bottleneck in the North American frac sand supply chain, continued to be a problem through 2018, with a lack of rail cars and trucks exacerbated by shortages of labor and oil and gas pipeline capacity in the West Texan Permian Basin.

Corporate activity remained strong during the year, with several asset-level M&A deals and some corporate transactions. 

In June, Unimin’s parent company Sibelco has boosted its stake in the growing US frac sand market through a merger with US-based Fairmount Santrol to create sand and mineral producer, Covia.

The deal means that Sibelco now controls around 8 million short tons per year of frac sand capacity in the Permian Basin.

Outside North America, fracking activity remained fairly muted, although there was some progress at UK projects, after years of battling against objections to fracking in the country. 

Other projects in Europe, Africa and Asia also edged forward, but have so far not begun contributing significantly to global proppant demand.

Market dips in second half

Speaking at the sixth Fastmarkets IM Frac Sand Conference in Denver, US, in September 2018, Joel Schneyer, managing director at Capstone Headwater, suggested that sand intensity has peaked due to the increase in the number of "child wells", which are new wells drilled close to existing ones.

Schneyer said that proppant use per well in the US had risen to more than 14 million lb of sand per well in the Permian Basin in 2018, compared to around 4 million lbs in 2011. However, he said the rate of increase had eased over the year and that in the Eagle Ford basin, where most wells are child wells, it actually fell in 2018.

France’s Imerys announced in October that it would wind up its ceramic proppants business, in the face of sluggish demand for non-sand proppants.

In September, newly formed miner Covia announced plans to reduce frac sand capacity in Texas due to falling demand in an oversupplied US market.

The company announced it would take 4.9 million short tons of capacity out of the frac sand market by the end of January 2019.

The decline in proppant demand coincided with a slew of new frac sand mines coming online, which applied downward pressure on prices. 

The new capacity included a 4 million short ton per year projects by Atlas Sand in Texas.

Projects due to come online or be expanded within the next few months include frac sand mines from Black Mountain, Emerge Energy, Preferred Sands and Alpine Silica in Oklahoma; Vista Proppants in Oklahoma and Texas; and Shale Support in Louisiana.

US Silica Holdings’ chief executive Bryan Shinn said in September that new frac-sand mine developments would probably be mainly limited to the Permian Basin, due to the low quality and disparate nature of reserves elsewhere in North America. 

Also in September, US fracking company Liberty Oilfield Services pulled out of a major offtake agreement for around 1 million short tons per year of fine-mesh frac sand from Canadian supplier Select Sands.

No reason was given for the termination of the contract, which had been in place since 2017, although indications were that weaker market conditions were responsible.

In November, fellow US frac-sand miner Hi-Crush signed an offtake deal to provide an undisclosed volume of Northern White frac sand to Chesapeake Energy over an unspecified period, for use in the Marcellus and Powder River basins.

The announcement came after Hi-Crush was forced to temporarily idle some frac-sand capacity in Wisconsin, due to competition from in-basin sand supplies in Texas and neighboring Oklahoma.

Away from the US, Cuadrilla Resources began fracking at its two UK sites in Lancashire, in north-west England in October, after several years of gaining various approvals from the authorities. The company said it would frack for a three-month period before analysing production results.

Logistics and infrastructure developments

Despite commitments from US president Donald Trump to support the US domestic oil and gas industry, the shale sector remains hamstrung by a lack of rail capacity and infrastructure to support its expansion.

To date, only a handful of private developers have stepped up to invest in these areas.

In June, Canadian mid-stream oil company Kinder Morgan announced it was bringing a major new gas pipeline to West Texas.

Along with EagleClaw Midstream Ventures and Apache Corp, Kinder Morgen signed a letter of intent to develop a $2 billion pipeline to carry up to 2 billion cubic feet per day of gas to the US East Coast. The pipeline is expected to be in service in late 2020.

In October, US short-line railroad operator OmniTrax said it would upgrade its frac sand handling capacity in a joint venture (JV) with road-haulage company, 1845 Oil Field Services. 

The new JV, called ShaleTECH, will integrate short-line rail freight and trucking and will heave between 12 and 14 crews operating across various shale basins over the next year, with each crew handling around 25,000 short tons per month, or 4.2 million short tons per year, of sand and proppant.

Estimates indicate that around 100 million short tons of sand are shipped in North America every year.

Outlook

Despite observing a marked reduction in frac sand consumption in the second half of 2018, coupled with increased competition among suppliers, North American frac-sand producers remain optimistic that demand for the oilfield mineral will recover in 2019. This assumption is based on plans by several oil and gas companies to expand fracking activity next year.

Sharp falls in oil prices in November 2018 could jeopardise these plans, however, especially if prices fail to recover to levels economical for fracking operations.

The problem of a lack of pipelines to handle fracked oil and gas in the Permian Basin is also expected to persist in the first half of next year, although it is hoped the completion of new hydrocarbons infrastructure projects will begin to ease pressure in this area in the second half of 2019.

An oversupply of frac sand could continue to depress prices over the coming months, although it is likely that price weakness will result in further capacity being taken out of the market.

In the ceramic proppants market, this kind of product continues to be eclipsed by cheaper sand products, especially at onshore fracking sites, although there is still some demand for ceramic proppants for offshore operations.