ZIRCON will stand out as a gun performer for the WA mineral sands industry as demand dominated by the ceramics industry continues to expand.
However, the rest of the sector faces uncertainty.
In its annual global review of the industry, Perth consulting group TZ Minerals International Pty Ltd says the titanium feedstock market will continue to be oversupplied over the next two years, placing downward pressure on titanium pigment prices.
However, the zircon sector will continue to perform strongly with suppliers operating at full capacity with no new suppliers coming on line.
“This is important to producers, such as Iluka, Ticor, RBM and Namakwa Sands who gain a significant portion of their revenue from zircon,” the review says.
Iluka Resources produces 259,000 tonnes of zircon in WA for the world market, while the Tiwest JV adds a further 78,000 tonnes per annum and Cable Sands (WA) Pty Ltd another 17,000 tonnes.
Iluka Resources managing director Mike Folwell’s quarterly report released last month concurred with the TZMI review.
“Demand for premium grade zircon remains strong and supply tight with new projects not expected to contribute to an oversupply situation in the foreseeable future,” the March quarterly report says.
“Iluka fully expects all 2003 zircon production to be sold and at prices which are higher than those achieved in 2002.”
TZMI director Philip Murphy said he forecast demand to continue to grow by around 3.2 per cent per annum to 2005 after consumption increased by 5.4 per cent in 2002. Production was only 3.8 per cent above the previous year’s levels, resulting in tight market conditions.
“The small supply deficit in
2002 looks likely to increase in
the period to 2005,” he said.
“This will clearly have an upwards effect on pricing, although price increases are being restrained by the reluctance of consumers to pay about $US400 per tonne, (free-on-board) for bulk premium grade material.
“The zirconia, zirconium, chemical and metal markets, which have grown strongly over recent years, faltered in 2002, but the demand for zircon in CRT glass increased by 9 per cent from 2001 to 2002.”
TZMI said the mineral sands industry was in an unusual phase of development. The titanium feedstock industry entered a period of transition in 2002 that is likely to last for several years.
Increased production from new producers such as Ticor South Africa, Doral Mineral Sands, VV mineral and Beach Minerals, is replacing the gradually declining output from many established companies.
WA producers are among the largest in the world.
Iluka has around 15 per cent of global mineral sands production. The Tiwest JV has around 6 per cent of the world market with Cable Sands (WA) not much further behind.
Besides dealing with new players, the established industry is also facing a threat of a different kind.
The $10 billion Oklahoma City-based energy and chemical company Kerr-McGee, which also owns 50 per cent of the Tiwest JV, has announced that it intends to close its synthetic rutile plant in Mobile at the end of 2003.
Mr Murphy said he believed this would have a dramatic effect on feedstock supply by reducing the synthetic rutile available and increasing the surplus situation for ilmenite.
Titanium dioxide can be produced by one of two processes: chloride and sulfate. Chloride grade feed-stocks are preferred by paint, coatings and plastics manufactures while the sulfate process is used to make grades preferred for paper, ink or rubber manufacturers.
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