Investment needed to avoid ilmenite shortage

Investment needed to avoid ilmenite shortage

Published: Wednesday, 14 September 2016

Shrinking output from China has resulted in higher imports of TiO2 feedstocks while increased activity in pigments could result in higher demand and prices for ilmenite and rutile. Additional supply sources are needed as sulphate ilmenite inventory is being worked off.

Unless new supply sources are created for sulphate ilmenite, the market will face a shortage by 2018, according to the latest global update from independent research firm TZ Minerals International (TZMI).

In its quarterly market update for the titanium and zircon value chain, TZMI said that there are no new significant sulphate ilmenite mines under construction or ready to come on stream.

Based on long lead times for the completion of studies and construction of new supply together with limited funding options available to miners, TZMI predicts that juniors will be unable to fill the necessary supply gap.

“After a number of years of supply surpluses, excess sulphate ilmenite inventory is now being worked off and the market is heading into a period of sustained shortages from as early as 2018 without supply from new mines,” the report outlines.

Leading zircon and rutile producer Iluka Resources also said earlier this year that the capital expenditure required to sustain the industry is “large and imminent” at $1.6bn, with industry profitability insufficient to support required investment.

TiO2 momentum

Increased activity and output ramp up at titanium dioxide (TiO2) pigment plants has resulted in positive sentiment in the feedstock market, both for ilmenite and rutile.

Prices in China for domestic ilmenite have now seen a 50% increase since the lows seen in Q1, while average ilmenite prices from elsewhere have also seen price increases.

However, while year-on-year (y-o-y) demand for pigments grew by around 9% in Q1 and 7% in Q2, it remains to be seen how pigment producers in the Northern Hemisphere will respond to the seasonal downturn during the winter months.

Should producers keep momentum going and maintain higher production levels in Q4 in anticipation of higher demand, feedstock producers could see an uptick in prices and demand.

Shrinking supply

Additionally, TZMI anticipates global demand for chloride titanium feedstocks to increase by 4% between 2015 and 2020 while supply is expected to fall 20% y-o-y in 2016.

For sulphate ilmenite, prices have been stimulated as a result of lower magnetite output in China.

Sulphate ilmenite is produced as a byproduct of magnetite, the mining of which takes place in conjunction with iron ore production. However, the slump in iron ore import prices on the back of higher imports has made magnetite mining uneconomical.

Sources told IM that this has affected the production of the 3m tpa ilmenite byproduct from the industry and created a need for higher ilmenite imports.

One industry participant told IM that while Chinese ilmenite prices are up 50%, they would need to increase by at least another 50% to justify mining activity at current iron ore price levels.

Despite recent prices movement in both ilmenite and rutile feedstocks, one mineral sands producer expressed concern that prices are still not at high enough levels to validate long term investment into new feedstock supply sources.

“Macro drivers for the industry all look positive for supply and demand but more investment is needed to keep production going,” the producer told IM. “This happened before when there was a race to supply which was not positive for the industry and resulted in some substitution.”

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Rutile and ilmenite prices increase

Rutile and ilmenite prices increase

Published: Friday, 16 September 2016

Increased activity in titanium dioxide and tighter supply from China is edging up mineral sands prices.

Prices for titanium dioxide (TiO2) feedstocks seem to have turned a corner, particularly in sulphate ilmenite, which has seen a quick recovery in Q3, market sources told IM this week.

“It’s pleasing to see a recovery – it’s true to say winter had come and it’s nice to see the end of it. We are looking forward to a period of sustained recovery in the mineral sands sector,” one mineral sands supplier said.

Sources noted that prices for ilmenite in China have increased by 50% since the start of the year.

“The sulphate ilmenite market has rebounded fast, we’ve seen an increase from $80 up to $120 to China,” one source said.

Producers attributed the increase in prices to higher activity in TiO2 and rationalisation of the Chinese industry, as well as tighter ilmenite supply owing to lower iron ore prices.

Sulphide ilmenite is produced as a byproduct of magnetite, the mining of which takes place in conjunction with iron ore production. However, the slump in iron ore import prices on the back of higher imports has made magnetite mining uneconomical.

“Prices need to go up by more in China by at least another 50% before extra production takes place,” a producer said. “Increases are needed to warrant the mining of iron ore to produce just ilmenite.”

Chloride ilmenite prices have also seen an uptick, this week moving up to ranges of $140-160/tonne CIF China (54% TiO2).

This week, independent research firm TZ Minerals International (TZMI) released its quarterly market update for TiO2 feedstocks and zircon, outlining that unless new supply sources are created for sulphate ilmenite, the market will face a shortage by 2018.

The report warned that there are no new significant sulphate ilmenite mines under construction or ready to come on stream, and long lead times for the completion of studies and the construction of new supply, coupled with limited funding options, means that junior minors are ill-placed to fill the necessary supply gap.

While leading zircon and rutile producer Iluka Resources said earlier this year that the capital expenditure required to sustain the industry is “large and imminent” at $1.6bn, not all market participants agree.

“I’m not of the school of thought that more investment needs to be made in sulphate ilmenite to prevent a supply shortage. Let’s see some returns first off the investments that have already been made,” a producer told IM.

Rutile to follow

Increased activity in the TiO2 sector and the ramp-up of production at pigment plants has also resulted in an increase in the high-grade feedstock mix and pricing pressure on product headed for the welding sector, paving the way for price increases in rutile feedstocks for TiO2.

According to market sources, rutile (95% TiO2) prices have seen an uptick to $700-750/tonne FOB Australia, for bulk pigment.

“The increases reflect a recovery in the pigment market and high activity recently in TiO2, so welding customers will also need to pay higher prices,” one industry participant told IM.

Although much rutile material has already been sold under contract, another source said that price increases are being incorporated into future pricing negotiations, adding that “we believe rutile prices have turned a corner”.

Zircon stabilises

Since the $100 drop in prices in zircon in Q2, the mineral saw a slight uptick of around $60/tonne in the third quarter.

“There has been a trickle down of prices since 2012,” one market source told IM. “This has perhaps been arrested now in Q3 but that remains to be seen,” the source added, emphasising that it is unclear whether the price increase will be sustained in the fourth quarter.

“The indications are there that zircon prices have stopped falling.”

The zircon market is still in oversupply despite the idling of production, and demand will need to grow before the market comes into balance.

Previous price declines earlier in the year did not induce additional zircon consumption, but suppliers are hopeful that the growth of new end markets such as 3D printing will stimulate demand.

Further information on IM’s zircon prices and pricing trends can be found on the IM Pricing Database.

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India’s AMCR rules seek clarity over monazite

India’s AMCR rules seek clarity over monazite

Published: Tuesday, 20 September 2016

While the Indian beach sand mineral industry is yet adapting to the newly introduced provisions Under the Atomic Mineral Concession Rules 2016, clarity over monazite remains opaque as the government has sought help from the Department of Atomic Energy (DAE) in demarcating this area.

India’s Atomic Mineral Concession Rules 2016 ( AMCR) aimed at enhancing the country’s presence in the heavy minerals market still remain ambiguous over the potential mining of deposits exceeding minimum monazite threshold limits.

Miners have also expressed fear that the suggested auctioning routes will delay productivity.

While the debate over the minimum threshold of 0.75% of monazite content in the total heavy minerals deposits continues, the government has advised private miners to seek fresh clearances from the Department of Atomic Energy (DAE) in order to continue operations should the monazite content exceed minimum threshold levels.

This remains a matter of concern among several private miners as the current regulatory changes and longer window clearance timeframes are likely to prove detrimental to the government’s ‘Make in India’ initiative.

Speaking to IM, Vaikundarajan Subramanian, vice president of the  Beach Minerals Producers Association (BMPA) and managing director of VV Minerals, said that the government is still working on possible measures with the DAE to enhance regulations and fast-track window clearance processes, otherwise the country is likely to rely upon increased imports.

He further added that the government’s plan of auctioning the mines with high monazite content will prove futile should the clearance windows take 3-4 years of waiting time before the mines actually come into operation.

Despite accounting for 30% of global heavy mineral reserves, India accounts for just 4% of the world’s total production.

Further, the country’s ilmenite exports decreased by 36% year-over-year on a national level in 2015, according to a report by the Beach Minerals Association of India.

India holds a significant share of global beach sand mineral supply, including 35% of the world’s ilmenite, 40% garnet, 71% monazite, 14% zircon and 10% of worldwide rutile.

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Raring for a rare-earths revolution: How the next Tesla could originate from India

Raring for a rare-earths revolution: How the next Tesla could originate from India

India is at the cusp of a mini-revolution, and government needs to help Make it in India

Jaideep Prabhu| Saturday, September 17, 2016 – 18:14

Since the birth of the nuclear age, the beach sands of peninsular India have attracted much attention. Every day, the sea washes up on the beaches of Kerala, Tamil Nadu, Andhra Pradesh, and Orissa, valuable deposits of beach sand minerals that had been carried to the sea from the Ghats by natural erosion through sun, wind, and rain.

Beach sand minerals comprise a group of minerals such as garnet, ilmenite, zircon, rutile, sillimanite, leucoxene and monazite.  Out of these, all minerals except monazite are non-radioactive and have common industrial applications.  Monazite, which contains Uranium and Thorium (roughly 10% max) apart from rare earths, is a highly valuable resource today and is the only radioactive mineral.  India has been producing and exporting monazite as early as 1910 for use in thorium-based gas mantles. Soon after Independence, the government brought all the mineral sands except garnet and sillimanite in the beach sands under national control though only monazite has any nuclear significance.

In 1998, private companies were invited to enter the beach sand mining sector covering six of the seven minerals – garnet, ilmenite, leucoxene, rutile, sillimanite, and zircon. Only monazite remained under the purview of the Department of Atomic Energy due to its uranium and thorium content.

This move was purely because India despite having 35 per cent of global beach sand deposits and the sector being restricted to public sector, was only contributing 0.2 per cent of the world’s production.  However, since the entry of private companies in 1998, India’s contribution to the world’s production increased to 6 per cent and export value skyrocketed from Rs. 35 crores in 1998 to Rs. 4,500 crores in 2015. It is significant to note that private companies contributed more than 90 per cent to this sector and also spearheaded value addition ahead of public sector enterprises.

Unlocking India’s monazite potential

The potential for capacity expansion and value addition in the six minerals notwithstanding, the miracle story lies in the seventh and as yet controlled atomic mineral, monazite.

Although Monazite contains 8 per cent Thorium and 0.3 per cent Uranium which are of strategic value, the real potential and economic value lies in 65 per cent rare earth elements it contains. India is home to 71 per cent of the world’s monazite reserve which lies totally unutilized and the world is solely depending on China’s monopoly in rare earth supply. There are 17 rare earth elements and as their collective name suggests, found only in very small quantities in the earth’s crust. These elements are used in almost all day-to-day gadgets and technology used by the common man, like smartphones, TVs, cars, audio systems, batteries, LEDs, speakers, cosmetics, computers and textiles.

Beach sand minerals with rare-earths in south India

For example, smartphones have proliferated like wildfire in the last few years and demand is only expected to increase in the coming years; these ubiquitous gadgets, however, rely on neodymium, europium, and cerium for their speakers and screens.

These elements also have magnetic, thermal, and electrical properties that find useful applications in several vital industries such as communications, electronics, transportation, energy, aerospace, and armaments. Some of the applications represent cutting-edge technologies that could determine the material evolution of society.

It is paradoxical that despite having huge reserves of rare earths (in the form of Monazite) in India, which lies unutilized due to Government regulations, we are unable to develop futuristic energy efficient technologies: for example, more efficient LEDs that have already been designed are yet to leave research laboratories for want of europium and terbium in commercial quantities. Similarly, the non-availability of neodymium and dysprosium have delayed the replacement of gearbox-driven wind turbines by more efficient direct-drive units. The widespread embrace of these technologies would go a long way in meeting not just India’s stated climate change goals but also its infrastructural development including clean and energy efficient technologies.

Make in India, another Tesla?

Rare earth elements also find use in some of the technologies that can truly be said to be of the future.  Rare earth elements like samarium, dysprosium, neodymium are playing a vital role in producing magnets, which in turn play a huge role in producing energy efficient motors.

Leading automobile companies like Toyota, Honda, Tesla are facing challenges in sourcing these critical minerals for their hybrid and electric cars, which are the future. These minerals are also part of magnets used in speakers /microphones found in almost all our smartphones, laptops, Ipads and AV systems.

Rare earth elements like Lanthanum and Cerium are the key raw materials for rechargeable batteries which are used in automobile and day-to-day electronics.

For example, Tesla has been experimenting with practical energy storage not only for its cars but also for renewable energy sources and electricity grids. Rare earths are key to some of the concepts and designs the company has developed. Easy access to rare earths may well entice the likes of Teslas to start manufacturing in India, bringing with them not just the technology and capital but also a demand for quality labour that dovetails well with the Make-in-India and Skill Development schemes that the Modi government has been trumpeting over the past couple of years.

Image By cytech via Wikimedia Commons

Indeed, the ambitious may well look beyond the arrival of hi-tech multinationals like Apple and Tesla to Indian shores to the time when India will be able to produce its own Apples and Teslas for the global market.

With the world’s attention turning to the environmental costs of 21st century growth, demand for commodities like rechargeable batteries, catalytic converters, fluid-cracking catalysts, hybrid vehicles, and stronger magnets is only expected to grow in the coming years. India can well emerge as a vital hub in the network of futuristic industries and technologies.

The China Angle

There is another reason for optimism in the development of India’s rare earths industry: the world market is dominated by China, with almost 95 per cent share of this market.

Beijing’s restrictive policies have raised concern in Tokyo, Washington, and the capitals of other major industrial powers. With everyone looking for other sources of these strategic elements, an Indian foray into the market would not just be welcomed but possibly nurtured by other industrial countries. Given the importance of the elements, India may even be able to import the latest technology for the safe and efficient extraction of rare earths to develop its own industry.

The technological manna, the economic bonanza, and the contribution to labour markets and skill development that would result from private sector participation in monazite processing is undeniable.

Yet with uranium and thorium as by-products, there is, however, an unfounded fear of private players handling nuclear materials.

Should we fear private handling of nuclear material?

First, private firms play an important role globally in the mining and processing of nuclear materials; corporations are even allowed to own and operate nuclear power plants and their record has so far been exemplary.

Second, it would be easy for the Department of Atomic Energy & Atomic Energy Regulatory Board to regularly audit or supervise the processing of monazite until the uranium and thorium are separated, which usually comes off in the first stage of monazite processing. The uranium and thorium values can be given to the Government by the private sector to fuel its nuclear reactors. With plans to boost nuclear energy to 63 GW by 2030, this would supplement the requirement of Uranium in the country.

India stands on the cusp of another mini-revolution – what information technology was to the 1990s, rare earths promise to be for the 2020s. Development of this sector can drastically alter the global market as well as domestic conditions in strategic, economic, as well as social terms. As a major exporter of such an important resource, India stands to gain some political leverage – as China does today – in its dealings with other powers.

Monazite on display. Image: By Ra’ike via Wikimedia Commons

Proper leveraging of this industry could also shift the balance of India’s economy from deficit (import driven) economy to surplus economy (export driven). Some of these elements even cost as high as Rs. 10 lakhs per kg. Not just that, because of the strategic applications of minerals in the defence sector, developed nations would rely on us, which could lead to a favoured strategic partnership.

For over a century, the occurrence of these minerals and India’s dominant resources are well known but nothing has been done so far. If we wait longer, the relevance and strategic advantages of these minerals may be lost with the entry of alternate and substitute materials.

All that remains is for Delhi to get over its irrational fear – protectionism? – of the private sector in handling radioactive materials.

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Unlocking India’s monazite: Modi govt’s beach minerals policy resembles Nehruvian socialism

Unlocking India’s monazite: Modi govt’s beach minerals policy resembles Nehruvian socialism

Why is Modi government restricting beach sand minerals and at the cost the country’s future?

Jaideep Prabhu | Saturday, September 17, 2016 – 18:19

The greatest obstacle to India’s development is India itself. In a recent article, I had written about the tremendous opportunities extant in the private development of the rare earths industry, specifically the processing of monazite. Unfortunately, that seems to be a stillborn dream, for the government has recently moved to restrict the beach sand minerals industry.

The historical record of the industry is pretty clear that government control over beach sand minerals will stifle growth, curtail exports, and effectively terminate any prospects of industrial, economic, or social development.

The Mines and Minerals (Development and Regulation) Act of 1957 had categorised all beach sand minerals (other than garnet and sillimanite) which were classified as Prescribed substances under Atomic energy act as atomic minerals. Realising the gross under-utilization of these resources by the public sector, in 1998, the government invited the private sector to participate in beach sand mining in an effort to give a fillip to the industry and the industry grew over a hundred-fold in 15 years; in 2007, except monazite and zircon all other beach sand minerals were removed from the list of prescribed substances in the Atomic Energy Act, along with the request to the Ministry of Mines to remove them from the list of Atomic minerals. Sadly, this never happened for the last 10 years, instead the present government seeks to put all minerals including Garnet and Sillimanite (which were never atomic minerals) as atomic minerals, which virtually closes the door for this industry.

Disastrous policy of Modi government

The AMCR (Atomic Minerals Concession Rules 2016) proposes to reserve all beach sand mineral deposits containing over 0.75 percent monazite in Total Heavy minerals for public sector companies; any already operating private mine that is found to contain above this concentration of monazite will again need to seek fresh clearances from AMD. Needless to say, these retrograde and draconian measures will severely damage the private sector role in beach sand mining.

If, on the other hand, the government were to allow the private sector to mine and process all minerals including monazite, and implement policies that would encourage the production, the industry estimates forecast almost a million jobs in direct and indirect employment, capital investments of over Rs 100,000 crores, and Rs 30,000 crores as revenue to the government.  It is pertinent to note that these revenue estimates are only from chemical processing of these minerals.  Actual revenue potential remains unimaginable and several times more for further downstream industries involved in producing magnets, speakers, motors, hybrid vehicles, electronics, defense and aviation systems.

Against an annual global demand of 125,000 tonnes, India produced just 300 tonnes of rare earth elements between 2009 and 2014 (6 years). A recent study done by the Council on Energy, Environment, and Water in conjunction with the Department of Science and Technology has also stated that the production of rare earth elements would significantly contribute to the growth of the manufacturing sector. In fact, the rationale for privatisation in 1998 as expressed in a Department of Atomic Energy report was the under-utilization of the beach sand mineral resources.

“However,” the report stated, “this is highly capital intensive and it may not be possible for only the PSUs (both Central and State-owned) operating in this field to set up the new plants on their own. It is therefore necessary to allow the private sector to set up such plants within the framework of some broad guidelines.”

Time is running out

The recently notified AMCR jeopardises the private sector participation in beach sand mineral industry and therefore puts the entire business at risk.  It is pertinent to note that, only after private participation in this industry post 1998, India became a prominent player in minerals such as ilmenite and garnet, competing against Australia and South Africa.

Given the geopolitical turmoil caused by Chinese assertion of hard power in recent years, major consumers of rare earth elements such as the United States and Japan are eagerly looking for other alternatives, which gives India a mega opportunity to produce these minerals.  If India misses this opportunity, the demand for Indian rare earths would diminish and economic and strategic advantage would be lost forever.

The present Government is welcoming FDI by opening up all sectors including defense, telecom, aviation, etc.  But contrary to this “Make in India” initiative, the Government’s recent actions (such as this AMCR) seek to restrict and destroy the beach sand minerals business opportunity. This mindset needs to be corrected immediately.

Private handling of atomic resources is not a risk

The oft-heard argument that atomic resources are a security risk in private hands needs to be once and for all debunked: plenty of private firms are engaged world-wide in nuclear activities from mining and processing to operating reactors.

Furthermore, security has been a convenient excuse for the government under which to hide incompetence – a look at the defence sector or the nuclear energy industry should be enough.

Finally, private companies would most likely be willing to bear the paranoia of the bureaucrats and agree to supervision of their monazite processing facilities by the Department of Atomic Energy. There is no reason to curtail private sector involvement in this lucrative field of the future.

The Modi government has been hailed for bringing in economic reforms, though admittedly in a trickle rather than a flood. Its beach sand mining policy, however, stands in stark contrast to the laurels it has won from economic commentators and harks back to the days of Jawaharlal Nehru – big, bureaucratic, and opaque public sector units, and a socialistic frame of mind.

If this government is serious about its “Make-in-India” program, its Skill Development scheme, and its overall development agenda, it cannot afford to throttle an up-and-coming industry that will be the lifeblood for dozens of global technological advancements in the coming decades.

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அகில இந்திய அளவில் இல்மனைட் ஏற்றுமதி 36 சதவீதத்திற்கும் அதிகமாக குறைந்துள்ளது.

இந்திய அரசு வணிகத்துறையின் சார்பில் ஏற்றுமதியை ஊக்குவிக்க CAPEXIL என்ற அமைப்பு உள்ளது. அதில் கனிம பிரிவிற்கு தலைவராக இந்திய அரசு இந்தியன் ரேர் எர்த் நிறுவன நிர்வாக இயக்குனர் உள்ளார். கடந்த ஆண்டு கனிம ஏற்றுமதி வெகுவாக குறைந்துள்ளதால் இது பற்றி விளக்கம் கேட்டு இந்திய அரசு CAPEXIL –க்கு கடிதம் எழுதியது. எனவே இது பற்றி ஒரு கூட்டம் டெல்லியில் கடந்த 10.08.2016 தேதியில் நடந்தது. அந்த கூட்டத்தின் Minutes வெளியிடப்பட்டுள்ளது.

அதில் இல்மனைட் ஏற்றுமதி 36%  குறைந்துள்ளதும் வழக்கமாக 20% வளர்ச்சி காணும் கார்னட் ஏற்றுமதி வெறும் 4% மட்டுமே வளர்ச்சி கண்டதும் தெரிய வருகிறது.

இந்த ஏற்றுமதி குறைவு இந்திய அரசுக்கு மட்டும் இழப்பு அல்ல. தொழிலாளர்களுக்கும், மாநில அரசுக்கும் கூட ஒரு பெரிய இழப்பாகவே அமையும்.

World’s second largest ilmenite operation to start Sri Lanka


World’s largest Zircon producer Iluka Resources Limited revealed on Tuesday in Colombo that it was planning to commence one of the largest mineral extraction operations in Sri Lanka from 2019.

“Once we clear the Environment Impact Assessment (EIA) we would like to start immediately since we want the proposed operation fast-tracked” said an upbeat Head of Resource Development of Australia based Iluka Resources Limited Simon Hay.

Iluka’s Hay expressed these views during his meeting with Minister of Industry and Commerce Rishad Bathiudeen joined by Iluka’s Sri Lanka Country Manager Robert M Tyler and General Manager Major Projects and Engineering at Iluka Resources Mr Gavin Swart.

Iluka Resources is based in Perth, Australia and is the largest zircon producer, supplying around one-third of world’s zircon volumes.

“We would like to accelerate our proposed project in Puttalam. We will invest a very significant amount in this project. Our initial investment alone is more than $540 million. The project will give direct employment to 500, and another 2500 indirect jobs. This large scale project in Puttalam can enhance Sri Lanka’s overall mineral industry profile.”

“After we commence production, we expect to supply no less than 700,000 tonnes ilmenite per year to the world’s four million tonne strong total supply-around 17% of total supply. This means Iluka’s Puttalam ilmenite operation will be only second to world’s largest ilmenite operation by Kenmare Resources in Mozambique.”

“In short, Iluka is ready to commence world’s second largest ilmenite operation in Puttalam by 2019. The proposed Puttalam operation is not really a short term project but a long term project-with a time span of 40 years.”

Minister Bathiudeen welcomed Iluka’s initiatives in Sri Lanka and said, “Iluka’s entry will no doubt enhance our mineral industry profile and boost it while supporting the industry reforms and FDI calls of our Unity government.”

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