What we learned at the Zircon Industry Association Conference

By William Clarke
Published: Thursday, 19 September 2019

Controversy over supply and demand prospects and future applications for zirconia dominated discussions at the Zircon Industry Association conference in Dubai earlier in September. Here are some of the major takeaway points.

Zircon supply will only get tighter...

Gavin Diener of consultancy TZMI warned that zircon production was falling due to depletion of ore at existing projects, and forecast an increasing shortfall despite stable demand.

Miners tend to focus their efforts on the highest-grade part of the deposit, meaning that the rate of mineral sand production peaks early in the life of a mine. As time goes on, the rate of production falls.

Diener said that because most operational mineral sand facilities were advanced in their lifespans, the overall rate of production was falling.

TZMI estimated that there was a total of 1 million tonnes of new zircon supply in the planned mineral sand projects currently at project stage. But only "a small subset" of these mines will reach production in the next five years, due to technical, political and environmental factors.

"History shows that new supply arrives later than expected by project developers," Diener said.

As a result, total zircon production was expected to fall to below 1 million tonnes per year by 2024. In comparison, TZMI foresees demand at more than 1.2 million tonnes in 2020, although Diener admitted that the short-term demand outlook was "very uncertain."

And Beth Xiang from mineral consultancy Ruidow reported that local Chinese zircon production plummeted in 2019, after mining almost halted in Hainan province, which previously was responsible for about 90% of China’s zircon production.

Total Chinese zircon production in 2018 was estimated at 150,000 tonnes by the US Geological Survey.

Hainan has been designated a future free-trade zone, to focus on trade, financial services, and service industries, and this will lead to mine closures.

Xiang said that 2019 zircon production in Hainan was estimated to be less than 10,000 tonnes, and said that "Chinese domestic zircon sand will basically disappear in the future."

...But demand is sluggish or falling

Lincoln Ying, chief executive officer at Matrix, one of China’s largest producers of zircon opacifiers, painted a gloomy picture for demand.

He forecast that demand would fall to 1 million tonnes in 2019 and to 850,000-900,000 tpy for the "next couple of years." That compared with peak demand of 1.6 million tonnes in 2011, he told conference attendees.

"We do not expect an increase in demand over the next few years," Ying said, pinning the decline in demand on substitution of the material in the tile industry in China and elsewhere since 2011.

The outlook from other speakers was slightly more sanguine, with Beth Xiang suggesting that demand from the housing sector meant that Chinese zircon demand would hit 640,000 tonnes in 2021.

And Gavin Diener expected demand to move only slightly lower in 2019, to a little less than 1.2 million tonnes, but recovering to more than 1.2 million tonnes in 2020, the highest demand volume since at least 2016.

"[This year] has been a very different year [compared with] 2018," Diener said, citing global uncertainty and lower demand for zircon since the third quarter of last year.

Water shortages could threaten zirconium supply

Alister MacDonald, general manager of marketing at miner and explorer Alkane Resources, warned of the danger to the zirconium industry posed by water shortages.

China produces 200,000 tonnes of zirconium oxychloride per year, MacDonald said. This industry consumes 130,000 tonnes of zircon. But production results in waste outputs of uranium and thorium, and involves high consumption of water.

And around two-thirds of Chinese production is concentrated in so called "dry provinces" which are particularly dependent on water from underground reserves, rather than surface water. These include Shandong, which alone produces 52% of the zirconium oxychloride.

MacDonald noted that around one-third of the Chinese zirconium oxychloride industry was shut down by environmental controls in April 2017, when the government cracked down on pollution.

MacDonald warned of a "high risk" of further plant closures, due to water shortages and pollution constraints. He believed that this pressure will drive further consolidation in the industry.

Producers hope new applications will drive fresh demand

Matrix’s Ying said that the development of new applications for zircon could be crucial to sustained demand in the years to come.

Prospects for new applications are seen as centered on zirconia, the pure form of zirconium dioxide, and zirconium metal.

TZMI’s Diener saw the zirconia and chemical sector as the fastest growing end-user of zircon between 2016 and 2020.

Roberto Dante, CEO of the scientific consultancy 2D to 3D, saw potential markets for high-value zirconia chemicals being driven by the developing new-energy and carbon reduction sections.

These markets included the use of zircon as a breeder for tritium in reactors, in the sequestration of carbon from the atmosphere, and in solid state lithium-ion batteries.

But Dante noted that the scale of demand could be limited by the potential for recycling.

And he added that some of these end-uses could be "antagonistic" - for example, the widespread adoption of nuclear power could limit demand for carbon capture.

Simon Marshall, managing director of Independent Nuclear Expertise, said that zirconium demand from the nuclear industry was likely to remain steady over a long period of time.

This demand was driven by the need for reliable non-fossil-fuel power, and the fact that existing nuclear infrastructure is ageing.

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