The year 2017 was a good year for the mineral sands industry, with global average prices for all TiO2 feedstocks at higher levels than for the previous year for the first time since 2012. The healthier tone of TiO2 feedstock prices during 2017 resulted from a second consecutive year of strong demand. This enabled producers of high-grade feedstocks to reduce their accumulated inventories to more normal levels. Leading up to the 19th Mineral Sands Conference on 21-22 March 2018, we reached out to Reg Adams, Managing Director, ARTIKOL (UK) to discuss some of the key developments and challenges in today’s TiO2 industry.
We’ve recently seen some positive developments in the TiO2 industry. Can you briefly explain some of the key opportunities and risks the industry is likely to face in 2018?
Looking ahead to 2018, the general consensus among economists is for continued synchronised macroeconomic growth, despite a myriad of political uncertainties in the US, Europe, the Middle East, Latin America and East Asia. The IMF is forecasting an acceleration of world GDP growth – to 3.7% in 2018 – followed by a gentle deceleration over the following three years. Artikol is forecasting a 5.0% increase in global TiO2 pigment demand. This should presage a similar increase in global TiO2 feedstock demand, offering opportunities for sales growth for a wide variety of suppliers. The perennial question in 2018, as in past years, is: “What proportion of the feedstock demand increment will be assigned to chlorinatable feedstocks and what proportion will be assigned to sulfatable feedstocks?”
Certainly, the situation in China, accounting for more than 40% of world pigment output, will be a key consideration. Meanwhile, in order to meet demand from domestic and export customers, the country’s 35 sulfate-route pigment plants, with a combined capacity of around 2.5 million t.p.a., will require more ilmenite, possibly topped-up by more sulfatable slag. So, there should be opportunities for increased sales of ilmenite from African and Australian suppliers. On the other hand, they face the risk of intensified competition from Vietnamese and Chinese indigenous suppliers.
In the rest of the world beyond China, there are no new pigment plants scheduled to come on-stream during 2018 or 2019. Some existing plants will raise capacity by debottlenecking measures and output at the recently expanded Chemours pigment plant in Mexico is expected to increase, resulting in increased demand for chlorinatable ilmenite.
According to ARTIKOL, world TiO2 pigment demand increased by 4.4% in 2016 and 5.3% in 2017. From all-time historical lows in Q1 2016, pigment suppliers steadily raised their prices quarter-by-quarter in all regions of the world. By the end of 2017, the average pigment price in Europe had been raised by nearly 50% from € 1.96 per kilo to € 2.90 per kilo.
A significant new outlet for sand ilmenite might appear in the shape of the long-awaited ilmenite smelter at Jazan in southern Saudi Arabia, co-owned by Cristal and Tasnee. This facility is now supposed to come on-stream during the second half of 2018, about four years later than originally planned. While some of the ilmenite input will come from Cristal’s mines in Australia, there will also be a need for ilmenite purchased from outside suppliers. The risk here is that start-up of the Jazan smelter may be delayed yet again.
In mid-December 2017, Iluka confirmed that it will be going ahead with a AUD 250-270 million project to produce 375,000 t.p.a. of chlorinatable ilmenite from a new mine at Cataby (150 km north of Perth). All of this material will be used for the captive production of synrutile at Iluka’s 200,000 t.p.a. SR-2 unit at Capel (200 km south of Perth), essentially replacing input from the company’s Tutunup South mine, which is nearing exhaustion. The Cataby mine should begin production in mid-2019.
What will be the key takeaways of your presentation at the upcoming Mineral Sands Conference?
I will be presenting an overview of the current status of the TiO2 value-chain, with numerical forecasts on supply, demand and prices over the next 10 years. The future for TiO2 pigment consumption is essentially bright, because there are no technical substitutes and the raw materials for making TiO2 are relatively abundant, especially in politically stable countries, such as Australia and Canada. However, it is also clear to me that major TiO2 pigment consumers are fed up with the oscillations of the TiO2 price cycle, oscillations that have increased in amplitude and frequency over the past 10 years. The message from the downstream end of the value-chain is for more long-term price stability, which in turn depends on better forecasting and planning. At the upstream end of the value-chain, there is always a requirement for good, properly costed projects with a substantial resource base in locations with good infrastructure. These are the projects that deserve to attract long-term investors and mineral sands customers.
Another takeaway from my presentation could be mention of the impact of wide-ranging concepts, such as carbon footprint, life-cycle analysis, conservation of resources, consumer health and environmental pollution. There is clearly a need to encourage the development of new technologies for making TiO2 pigment that chime with these concepts.
Why do you think it’s important to stay on top of the latest developments in the TiO2 industry and attend the Informa Mineral Sands Conference this March?
As Editor & Publisher of ‘TiO2 Worldwide Update’ it’s my mission to stay on top of all developments that affect the TiO2 value-chain. For me, the annual Informa Mineral Sands Conference is one of the highlights of the year. This year’s event, as with past conferences in the series, features: an excellent blend of TiO2 and zircon market overviews; presentations on technical developments in materials handling, processing and applications; and news from established producers and aspiring industry entrants with projects designed to replenish global supplies.
The conference is a great forum for anyone to learn from discussions with old friends and experts, as well as meeting newcomers to this fascinating and complex industry.
As part of the Minerals & Investment Week, the 19th annual Mineral Sands Conference is Australia’s key meeting place for mineral sands leaders. Find out more here.