Mineral sands prices are on the rise, with suppliers
struggling to keep up with demand from the titanium dioxide
sector. And although some short-term supply concerns have
eased, the market will still need new sources of supply if it
is to avoid slipping into a long-term structural deficit.
Heavy mineral sands are seams of mineral-rich sands, often
found on beaches or riverbeds where they are sorted by
hydrological action. These deposits can contain a wide mix of
materials, but they are particularly important as sources of
ilmenite and rutile, the key commercial feedstocks for the
white pigment titanium dioxide.
Demand for these feedstocks is rising due to booming demand
from the titanium dioxide industry. And demand for titanium
dioxide is very closely linked to global gross domestic product
(GDP) growth, with the key drivers being manufacturing,
particularly consumer goods and automobiles, construction and
renovation. For this reason, demand has been rising with the
global economic recovery through 2021, with global economic
activity bouncing back from the effects of the Covid-19
The pace of this global recovery, particularly in China,
which is both the world’s largest producer and
consumer of titanium dioxide pigment, has helped prices achieve
upward momentum for the first time in years. Fastmarkets
assessed the price of titanium
dioxide pigment, sulfite grade, fob China at
$3,000-3,200 per tonne on Thursday September 30 compared with
$2,200-2,400 per tonne a year earlier.
In half-year results released on August 18, mineral sands miner
Kenmare reported strong demand for ilmenite. "Accommodating
monetary and fiscal policy globally has boosted demand for TiO2
pigment, which has led pigment producers throughout the globe
to run their plants at high operating rates and has resulted in
a firm demand environment for ilmenite," it said.
The company noted an increase in ilmenite supply from a
number of areas, including China and Vietnam. "Despite this
greater supply, we believe the market remains undersupplied and
this is being exacerbated by global supply constraints,"
Kenmare said. "We have a strong order book for the remainder of
the year and the market is absorbing increased production."
Base Resources, another major miner, said in its
second-quarter results, released on July 29, that Western
pigment producers continued to ramp up production rates toward
full capacity through the quarter. "Chinese pigment producers
maintained high output rates as their domestic market improves
and high volumes of pigment exports are sustained," it
This increase in Chinese production is supporting demand for
ilmenite, in particular. "Demand for ilmenite as a feedstock
for Chinese pigment producers again exceeded supply, resulting
in further solid price gains for ilmenite in the quarter," Base
Resources said, forecasting that "ongoing strong demand will
maintain a tight ilmenite market through the June quarter."
Rutile prices are also expected to benefit. "The ramp-up of
western pigment production through the past two quarters has
absorbed the slight surplus in high-grade feedstock inventory
that was created in the second half of 2020 and has resulted in
an increasingly tight market for rutile," Base Resources
Short-term concerns ease
There is long-term uncertainty about the availability of
titanium dioxide feedstock as the market enters a structural
deficit, which will need new mines to meet demand.
Mineral sands miners’ output tends to decline
over the life of the mine. This is because of grade depletion.
Early in the life of the mine the highest-grade parts of the
deposits are targeted, which means a higher output of valuable
minerals per tonne of ore mined. As the mine grows older, the
quality of the ore falls, slowing the production of
In the absence of new mines opening, the only way to keep up
with demand is for miners to expand the size of their
operations, to mine and process more ore, across a larger
Short-term concerns about feedstock supply have eased
somewhat after recent news about future output at two important
Rio Tinto announced on August 24 that it had begun the
process of restarting operations at Richards Bay Minerals (RBM)
in South Africa, which had been halted due to an ongoing
security issue at the site. Rio Tinto on June 30
declared force majeure on customer contracts
for titanium slag production from RBM, having halted mineral
sands mining earlier this year due to an outbreak of violence
that threatened the safety of workers.
On July 21, Rio Tinto announced that the RBM operations will
shut one of its four titanium slag furnaces, slowing the
depletion of stockpiled feedstock after mining operations at
the site were halted. With mineral sands mining stopped, the
furnaces at RBM had been relying on stockpiled ilmenite.
This was the latest in a series of disruptions at the site,
with operations stopped before in recent years due to a
long-term dispute within the local community, concerning the
succession to a chieftainship. A planned $463-million upgrade
to RBM has been on hold since 2019.
RBM is a major seller of rutile and zircon, and one of the
largest producers of titanium slag, which is upgraded from
ilmenite produced at the mine. Rio Tinto, which also produces
titanium slag at a facility in the Canadian province of Quebec,
is a significant titanium slag producer supplying titanium
dioxide pigment producers.
Titanium slag is used as a high-grade titanium dioxide
feedstock, with similar properties to rutile.
Rio Tinto's titanium dioxide slag production was down by 7%
to 1.12 million tonnes in 2020. The producer attributed the
decline to lower market demand and operational problems at its
The restart of operations was due to "a stabilization of the
security situation around the mine, supported by the national
and provincial government, as well as substantive engagement
with host communities and their traditional authorities," RBM
"The overall impact of the suspension of operations,
including the shutdown of furnace No4 as announced on [July 21,
2021], is still to be assessed. At this time,
the force majeure declared on customer
contracts remains in place," RBM said on August 24.
Further good news for feedstock buyers came from reports
that Iluka’s Sierra Rutile subsidiary will delay a
planned shutdown. Iluka’s Sierra Rutile mine in
Sierra Leone was previously slated to be mothballed in the
fourth quarter of 2021 because of business and financial
challenges, but this shutdown has now been delayed until at
least January 2022.
With long-term supply tightness increasing, particularly in
ilmenite, the question now is where the market will source new
One of the most advanced projects at this point is Sheffield
Resources’ Thunderbird project in Western
Australia. The resource contains an estimated 748 million
tonnes of ore, of which 11.2% is saleable heavy mineral
content, including particularly ilmenite and zircon.
Sheffield Resources is planning a final investment decision
by the end of 2021 before beginning construction on the project
in the first half of 2022. The company has already signed an
offtake agreement for all its planned ilmenite production, with
titanium dioxide producer Yansteel.
This tie-up with Yansteel, which was formalized into a joint
venture in the first half of 2021, marked a significant step
forward for the project.
Strandline Resources is also potentially bringing more
supply to the table as it ramps up construction at its Coburn
mineral sands project in Australia.
The company is targeting a start to its ore processing plant
in late 2022, and the project has a planned final capacity of
110,000 tonnes of ilmenite, 24,000 tonnes of rutile and 88,000
tonnes of zircon per year.
Strandline has already signed its final offtake contract for
the project, with binding contracts estimated to average around
$140 million per year. "Our forecast revenue is
fully-underwritten by binding sales contracts, and we are
perfectly placed to capitalize on increasing demand and falling
supply of zircon and titanium minerals following years of
under-investment in the sector," Strandline Resources managing
director Luke Graham said.
The long-term nature of mining projects, and the time needed
for their construction and production ramp-up, means that no
immediate easing of supply constraints is likely to come from
projects in the pipeline. Markets are instead likely to remain
dependent on supplies from China and Vietnam for now, both of
which are vulnerable to short-term disruptions due to shifts in
government policy. The result is that a sector that has seen
low prices and underinvestment for years is suddenly attracting
a great deal of interest.