Imerys to acquire World Minerals - News 06-05

NEWS AT THE CORE
Imerys to acquire
World Minerals
Surveying at Celite’s Lompoc,
California diatomite mine
Courtesy World Minerals
AS IM WENT to press, French
industrial minerals giant
Imerys announced a definitive
agreement for the $230m.
acquisition of global perlite
and diatomite leader, World
Minerals Inc., from parent
Alleghany Corp. The buyer is
Imerys USA Inc., a whollyowned subsidiary of Imerys
SA, and the acquisition is
subject to relevant anti-trust
approvals. Closing of the
transaction is expected to
occur within six to eight
weeks.
There have been rumours in
the market for several months
that Imerys was in the process
of finalising a major
6
acquisition, but the scale is
still something of a surprise –
$230m. in cash for a
company with over 20 plants
worldwide (see table). IM
spoke to the Imerys head of
finance and strategy, Jerome
Pecresse, who said that
discussions with World
Minerals had been
continuing, “for some time”.
Headquartered in Santa
Barbara, California, World
Minerals reported 2004 sales
of $286m. and is mainly
involved in the mining,
processing and sales of
diatomite and perlite,
predominantly for beverage
filtration, but also as fillers in
paints and plastics. Perlite has
important additional uses in
construction (insulation) and
horticulture.
Weston Hicks, president
and CEO of Alleghany, said,
“we are pleased that we have
reached an agreement to sell
World Minerals to one of the
world's leading global
minerals companies, which
should ensure that the
company will prosper over
the long term. With the
completion of this
transaction, Alleghany will
have substantial liquidity to
be used opportunistically to
enhance returns to our
shareholders.”
Perlite and
diatomite added
to an increasingly
diverse portfolio
by Paul Moore,
Deputy Editor
Fitting into existing
divisions
The acquisition moves
Imerys into a completely new
minerals area it has had no
substantial experience with
before, and the assets do
not obviously fit into one of
the existing four main
divisions, which include
Pigments for Paper, Specialty
Minerals, Building Materials,
and Refractories/Abrasives.
Pecresse agreed that the
acqusition would represent a
new minerals business area
for Imerys. On where the
business would be
positioned in the current setup, he commented, “it has
not yet been decided where
it would fit. We are keeping
an open mind and are
thinking about it, but we are
concentrating on closing the
acquisition first”.
However, in its official
announcement of the deal,
Imerys stated that it regards
the move as completing “the
broad spectrum of the
Group's offerings to the paints
and plastics markets”, which
would suggest the possibility
of the assets joining the
Performance Minerals sector
of its Specialty Minerals
division. Alternatively, a new
Filtration Minerals sector may
be created within Specialty
Minerals.
An unsettled market
Elsewhere in this market, one
of the major players is going
through a transition of its own.
EaglePicher Inc., the parent
company of EaglePicher
Filtration & Minerals Inc., filed
for Chapter 11 bankruptcy
protection on 11 April 2005
June 2005
NEWS AT THE CORE
(see IM May ’05, p.9). As part
of the restructuring process,
the Filtration & Minerals
company is thought one of the
most likely candidates for an
asset sale. However, Imerys is
unlikely to make an approach
given that the World Minerals
deal is still to be completed
and that a combined World
Minerals/EaglePicher group
would probably not be
permitted given the dominant
market share that would result.
Other majors in filtration
minerals include US-based
Grefco Minerals Inc.
(Dicalite® range), and
Greece’s S&B Industrial
Minerals, which is a
European leader in perlite
supply, as well as exporting
significant volumes to the
eastern US market. In
China, the company has a
25% stake in XinyangAthenian Mining Co. Ltd
(XAMCO) in Henan
province, one of the
country’s leading producers.
There are several other
smaller players in the US
perlite market, including
Basin Perlite and Cornerstone
Industrial Minerals Corp. The
North American market is
also highly competitive, which
has put pressure on pricing in
recent years.
World Minerals assets
World Minerals conducts its
diatomite business through
Celite Corp., the world’s largest
supplier of filter aid diatomite.
Headquartered in Lompoc,
California, Celite owns, either
directly or through wholly
owned subsidiary companies,
diatomite mines and/or
processing plants in the USA,
France, Spain, Chile, Peru and
Mexico. World Minerals also
has controlling interests, via
Celite subsidiaries, in two joint
ventures engaged in the mining
and processing of diatomite in
Jilin province, China.
The company’s perlite
business comes under
Harborlite Corp., also based in
Lompoc, which is the world’s
leading producer of perlite filter
aids. Harborlite is also
June 2005
engaged in the business of
selling perlite ore, and is one of
the world’s largest merchant
producers of perlite ore. Perlite
ore for filter aid and certain
filler applications is mined at
the Superior, Arizona mine and
expanded at Harborlite’s six US
expansion plants. Harborlite
also mines non-filter grade
perlite at No Agua, New
Mexico, as well as having
expansion plants in Italy,
France, Spain, and South
America. The European
expansion plants use ore from
the company’s Dikili, Turkey
mine and other mines in central
Turkey, as well as merchant ore
producers in Europe.
Continuing the
Imerys “growth
strategy”
Pecresse told IM, "World
Minerals is a good
illustration of our growth
strategy in that it is an
established company which
is a leader in its field. It also
has the added benefit of
being a new business for us".
However, this major
acquisition also begs the
question of where else Imerys
can expand in the future to
satisfy its shareholders that it
is continuing to maintain its
oft-stated “growth strategy in
industrial minerals”.
The global silica sand and
remaining calcium carbonate
markets are very much centred
on SCR Sibelco and Omya AG
respectively. Equally, the
world’s lime industry remains
dominated by Belgium’s
Carmeuse and Lhoist.
Approaching “mid-sized” EU
mineral players such as SA
Reverte, Gruppo Minerali, S&B
Industrial Minerals, or France’s
Denain-Anzin Minéraux (DAM)
would likely raise eyebrows
with regard to EC competition
rules. Turkey still offers a
number of ripe minerals
acquisition targets, particularly
in sodium feldspar, though
Imerys, together with the other
large mineral groups, seems
very focused currently on
strengthening its foothold in
Asia, and China in particular.
North America
Capabilities
USA
No Agua, New Mexico
Mine and mill (P)
Antonito, Colorado
Loading facility (P)
Superior, Arizona
Mine and mill (P)
Utah
Deposit (P)
Escondido, California
Expansion facility (P)
Green River, Wyoming
Expansion facility (P)
LaPorte, Texas
Expansion facility (P)
Youngsville, North Carolina
Expansion facility (P)
Vicksburg, Michigan
Expansion facility (P)
Quincy, Florida
Expansion facility (P)
Lompoc, California
Mine and processing facility (D)
Quincy, Washington
Mine and/or plant (D)
Fernley, Nevada
Mine and plant (D)
Mexico
Central Mexico
Deposit (P)
Tuxpan
Mine and/or plant (D)
Guadalajara
Mine and/or plant (D)
Europe
Wissembourg, France
Expansion facility (P)
Murat, France
Mine and/or plant (D)
Hessel, UK (closed April 2004 – some
production relocated to Barcelona)
Expansion facility (P)
Barcelona, Spain
Expansion facility (P)
Alicante, Spain
Mine and/or plant (D)
Milan, Italy
Expansion facility (P)
Turkey, Dikili
Mine and mill (P)
Central Turkey
Deposit (P)
South America
Santiago, Chile
Expansion facility (P)
Arica, Chile
Mine and/or plant (D)
Arequipa, Peru
Mine and/or plant (D)
Ayacucho, Peru
Mine and/or plant (D)
Paulinia, Brazil
Expansion facility (P)
Note: P/D Perlite/Diatomite
Source: World Minerals Inc., Industrial Minerals
7
The Chinese producers see the
antidumping measures as unfair
given the rapid development of
their industry
China slams
EU MgO brick
antidumping
move
In response to the European
Commission’s (EC) recent
ruling to start provisional
antidumping measures
against Chinese imports of
magnesia refractory bricks,
industry officials in Liaoning
have told IM that they
consider the EU policy to be
unfair (see IM May '05, p.6).
The Liaoning Refractory
Industry Association (LRIA) told
IM: “We think it is an unfair
judgment for the European
Commission to impose a
provisional antidumping duty
on imports of Chinese >80%
MgO bricks. Now, most of the
Chinese magnesia brick
producers are private
companies. They have
developed fast during the last
decade, while China has
continuously perfected a
market economy system. They
now operate separately and
are responsible for their own
profit or loss. Thus it’s unfair
to deny China’s market
economy position without
considering the current
situation of China. Also, it’s
unfair to take a developed
country as a substitute country
to estimate the proper value
of Chinese products
concerned.”
The LRIA was referring to
some of the Chinese brick
producers being denied
“market economy status”,
which could have led to them
having preferential treatment
and a lower antidumping
penalty, eg. 11.2% against
66.1%. Also, in EC
antidumping investigations, it
is normal practice to
“benchmark” such a trade
dispute with the same in
another country. In this
instance, the EU selected the
USA, but only after initially
choosing then rejecting
Turkey. In the view of the
LRIA, this was clearly an
unsatisfactory selection.
The Dae Hung plant shaft kilns
for clinker production
Courtesy Ian Wilson
North Korean
magnesia supply
IM understands that the
monopoly of North Korean
magnesite production, currently
residing under the operations
and control of Korea Magnesia
Clinker Industry Group
(KMCIG) is about to change.
In order to encourage a
certain degree of “competition”
and ensure that the mining
8
companies receive some
revenue, the authorities are to
create another magnesia
supply company, and possibly
more over the next few months.
First hand reports indicate
that currently some of the
mining operations are so
poor that they cannot feed or
pay staff, a situation that has
negatively impacted
consistent supplies of dead
burned magnesia for export.
There are three main
magnesite mines in North
Korea – the Dae Hung open
pit and the Ryong Yang and
Paek Bai (White Rock)
underground operations. The
total capacity from all three is
The LRIA also had strong
words on the role of Viennabased leading refractory
producer RHI AG, one of the
main lobbyists for the EC
ruling. The LRIA went on to
say: “The main plaintiff, RHI
AG, which has invested in
China for many years, has a
better understanding of
China’s market economy and
operation advantage, so
bringing forward this
antidumping investigation
unveiled its operation strategy
of monopolisation. Thus the
provisional antidumping duty
on Chinese bricks is in favour
of a few European refractory
companies, and is unfair not
only for Chinese enterprises
but also for European
refractory consumers. The
Liaoning Refractory Industry
Association is firmly against
the European Commission’s
decision, and Chinese
companies will appeal against
the decision to the end.”
about 2.5m. tpa, but Dae
Hung is the largest at 1.3m.
tpa. There are also three
clinker producing plants at
Dae Hung, Tanchon (supplied
from Ryong Yang and Dae
Hung mines) and Song Jin
(supplied from Paek Bai and
Dae Hung mines). The mines
at Dae Hung also have a
dedicated railway by which
magnesite ore is delivered to
the plants, and rail is also
used to deliver clinker to the
ports.
Hungnam and Kimchaek
are the ports used for the
export of clinker. Kimchaek
is owned 100% by KMClG.
The main export markets for
the Korea Magnesia Clinker
Industry Group are Japan,
Taiwan, Southeast Asian
countries and Europe.
Industry consultant Ian
Wilson is to present a
compre-hensive review of
the world's current and
potential magnesite
resources at MagMin 2005,
12-14 June, in Vienna (see
p.2&3)
June 2005
NEWS AT THE CORE
Motim reports
strong first quarter
Motim's new warehousing facility, Mosonmagyaróvár, Hungary
Courtesy Motim
Motim Electrocorundum Ltd,
the Hungarian fused alumina
producer, has reported a
“very strong” first quarter of
2005. Zoltán Tanyi,
managing director, told IM:
“The upward trend which
started in Q4 2004 has been
driven by the refractory
business, whilst the abrasive
business has shown a
moderate increase”.
Motim reports that it is
currently running close to its
full capacity of 50,000 tpa.
Of this, 30,000-33,000 tpa is
white fused alumina, 6,0007,000 tpa is white fused
mullite, 10,000 tpa consists
of fused spinel grades and
1,000-2,000 tpa is fused
zirconia mullite. About 95% of
Motim’s production is
exported to the European
Huang He Cast
upgrades fused silica plant
Union, North America and
Asia. Tanyi added: “Generally
speaking, the demand is
strong with some signs that in
certain areas the trend has
reached or is close to its
culmination point”.
The recent robust demand
for material has allowed
Motim to raise prices in an
effort to offset high feedstock
and energy costs. Since Q4
2004, prices have increased
by 5-15% depending on the
application. The company’s
annual agreements for
calcined alumina feedstock
include at least three
different sources including
domestic supplier MAL
Magyar Aluminium Rt and
have protected it to some
degree from alumina spot
price spikes.
which amounted to some 300
tpm using three furnaces. Last
year, Huang He installed a
further six furnaces bringing
production capacity to 900
tpm. Moreover, the company
has also installed a “full
range” crushing and milling
system including a hammer
mill, Barmac crusher, granulate
dressers, zircon/alumina-lined
ball mill, and air classifiers.
Huang He is targeting the
refractory, investment casting,
and electronic markets with
products in -325 mesh, -600
mesh, and -1,000 mesh sizes.
The typical specification for the
fused silica is 99.96% SiO2,
115ppm, Al2O3, 32ppm,
Fe2O3, 27ppm, K2O, 26ppm,
Na2O, 31ppm, CaO, 6ppm,
MgO, and 1.6ppm magnetics.
In the wider economy,
Huang He is facing the same
problems as all Chinese
mineral producers and
processors – further electrical
power price increases and tax
rebates wholly cancelled for
nearly all minerals and
mineral products. The
company also produces
brown fused alumina (BFA),
white fused mullite and fused
spinel at its other plant in
Yima City, Henan Province.
EC upholds
Ukraine SiC duties
still a non-market country, and
has ordered that the duties
remain. In its review
investigations last year, the EC
found that although ZAC was
being privatised, “company
decisions of ZAC regarding
labour, output and sales were
not made in response to
market signals reflecting supply
and demand”. Instead,
decisions were taken “with
significant state interference in
this regard”.
Another argument dismissed
was that Brussels should take
into account ZAC’s prices for
silicon carbide sold to the USA,
which the company said
proved it would no longer
dump products in the EU
regardless of the duties.
However, Brussels concluded
that these US sales “were not
representative”, dismissing
claims it was “appropriate to
use the export prices to the
USA” in calculations.
ZAC also challenged the
EC’s use of Brazil as an
analogue ‘market’ country to
value silicon carbide, saying
that Russia should have been
used. The Commission
refused to accept the claim,
noting that Russian producers
had themselves dumped
silicon carbide.
Tianjin-based Huang He Cast
Plant Co. Ltd (HCP) has
increased its fused silica
production capacity to 900 tpm
and has installed a range of
modern processing equipment.
Using high purity natural
quartz, initial production had
commenced in 2000 in
Lianyungang, Jiangsu province,
A Ukrainian silicon carbide
(SiC) producer has failed to
persuade the European
Commission (EC) that existing
24% anti-dumping duties on
its exports to the European
Union (EU) were outdated
and should be abolished.
Although Zaporozhsky
Abrasivny Combinat (ZAC) had
made price undertakings to
avoid paying the duties, it
claimed that the 1996 analysis
June 2005
behind their imposition was
flawed. ZAC argued that this
analysis was based on
assumptions that formercommunist Ukraine was a nonmarket country, whereas today
it is truly capitalist in
orientation.
The Commission, which had
carried out the original
calculations, staged a review,
but has concluded that despite
recent reforms the Ukraine is
9
DSP to concentrate
on speciality MgO
Focus on specialities leads to withdrawal from refractory grades
IN LINE WITH its strategy over
the last few years in focusing
on speciality magnesia
markets, it should come as
little surprise that Dead Sea
Periclase (DSP) of Israel has
decided to implement an
exclusive concentration on the
markets for speciality MgO
and withdraw from the
refractory grade magnesia
market. Following internal
reorganisation at Israel
Chemicals Ltd, DSP became
the Magnesia Products SBU
of ICL – Industrial Products.
Arieh Tabic, Manager for
Marketing and Specialty
Products, explained to IM:
“Refractories has ceased to
be a core business. DSP
operates a highly energy
intensive process which
produces a product of
superior chemical purity.
These product advantages
are exploited in the markets
for speciality MgO, such as
pharmaceuticals and food,
transformer steel, rubber and
plastics, as well as providing
a superior feedstock for
producers of high purity
magnesium compounds.” He
continued: “Formerly our
sintered product could exploit
these purity advantages in
refractory applications as
well. However, the changes
that have occurred in the
refractory market over the last
decade have created a
10
situation [whereby] there are
no longer cost benefit
advantages to be obtained by
using sintered MgO produced
at DSP; whereas in the
speciality areas DSP's purity
continues to play a major
role.”
DSP operates a plant at
Mishor Rotem, Israel to
process magnesia from the
magnesium chloride-rich
brines of the Dead Sea.
Utilising the proprietary
Aman pyrolysis process, DSP
is able to produce very high
purity grades of magnesia.
Up until recently this
included dead burned
magnesia for the refractory
market, typically grading
99.3% MgO, zero B, bulk
density 3.43-3.45 g/cm3,
and a periclase crystal size of
70-90µ.
In 2003, Roland Mureinik,
Manager for Business
Development, told IM: “We
are producing at much
reduced volumes for niche
applications in the
refractories market that
demand high purity sinter
magnesia.” Of the total
production, some 30,000 tpa
was caustic calcined
magnesia (CCM) aimed at
the buoyant speciality
markets.
The trend continued in
2004, when DSP revealed
that it had significantly cut
back its DBM production as
a result of market change,
and was focusing on tailormade grades of high purity
CCM for the
pharmaceuticals,
nutraceuticals and flame
retardant markets. Last year
Mureinik told IM: “The
refractory market has
changed. If you are a top
end [DBM] supplier, there is
now no real demand in light
of Chinese dead burned and
fused magnesia grades.”
The trend of magnesia
companies diversifying into
speciality markets is one that
has gathered strength in
recent years – prompted
mainly by Chinese
competition and also growth
markets in the CCM sector.
However, there are upper
and lower tiers of the
speciality market,
characterised by demands on
CCM/Mg(OH)2 purity and
performance. DSP is firmly
focused on the high grade
upper tier of the market. DSP
has made significant efforts
and investment in recent
years in order to increase
production capacity of its
tailor-made speciality grades,
as well as to improve product
quality and production
efficiency.
Roland Mureinik will be
outlining DSP’s activities and
views on this market at
MagMin 2005, 12-14 June,
in Vienna, which has already
attracted over 150
international attendees active
in the supply, trading, and
consumption of magnesia
products (see p.2&3).
Causmag ramps
up after kiln
shutdown
May 2005 saw Causmag
International, of Young, New
South Wales, start the rampup phase of its rotary and
shaft kilns following a six
week shutdown earlier this
year.
Causmag, which produces
magnesium carbonate and
caustic calcined magnesia,
needed to reline both its
rotary and shaft kilns with
bricks imported from Vesuvius
in South Africa, which had
been delayed in shipping.
The animal feed season is
just getting underway in
Australia and so Causmag is
keen to get its caustic
calcined grades on line as
soon as possible. Full
production was expected to
resume in two to three
months.
Richard Quadros of
Causmag is giving a
presentation at the
forthcoming MagMin
conference in Vienna (12-14
June) entitled “High purity
natural caustic magnesia offering solutions”. See p.48,
49 for full programme
details.
June 2005
NEWS AT THE CORE
Revenue increase for AMR
On 16 May 2005, rare
earths and zirconium products
company, AMR Technologies
Inc., announced its Q1 2005
results for the period ending
31 March. AMR reported
record revenues of $16.2m.
compared to $11.8m. for the
same period in 2004. Rare
earths recorded a 43% sales
increase to $12.9m., while
sales in the zirconium
business almost doubled to
$2.7m. The Magnetics
business, however, had a
disappointing quarter with
sales at half of last year’s
level.
Profits for the quarter stood
at $47,000 compared to a
loss of $143,000 in the
corresponding period of
2004. Broken down by
division, operating income for
the quarter in rare earths
increased from $768,000 in
Q1 2004 to $1.24m., while
the zirconium business
contributed $411,000
compared to $123,000 in the
previous year. Shipments of
rare earths for the quarter
exceeded 1,130 tonnes with
a total sales value of
$12.9m.
Operating margins in the
quarter were adversely
affected, however, by
increases in raw material
prices – namely rare earth
carbonates, rare earth clays,
zircon, zirconium oxychloride,
hydrochloric acid, nitric acid
and oxalic acid.
Transportation and electricity
costs in China have also
increased sharply. Peter
Gundy, chairman and CEO
commented, “we believe these
higher input costs will
continue and have raised
prices for some of our
products to offset the cost
increases”. He also referred to
the cancellation of Chinese
VAT rebates (see p.10), which
includes rare earth exports. “It
was recently announced that
the 5% VAT credit on all rare
earth exports from China will
be revoked with effect from 1
May 2005. We have informed
our international customers of
this change and are currently
negotiating with them on price
increases” said Gundy.
During the quarter the
company also commenced
legal action in the Ontario
Superior Court of Justice
against Lynas Corp. in
connection with the acquisition
of AMR shares (see p.19) by
another shareholder which
AMR believed may have been
acting jointly or in concert with
Lynas in compiling “a
significant block of AMR
shares”.
Rare earth
“processing trade”
banned
Compounding the removal of
the VAT rebate on rare earth
exports is a ban on
“processing trade” of rare
earths, which became
effective on 19 May. This is
not, as it sounds, a ban on
exporting rare earths, rather it
is a ban on importing raw
rare earth ores to make
processed rare earth
products. Similar measures
are being taken with iron ore,
pig iron, waste steel, steel
ingot, and phosphorite ore.
The cost of rare earth
mineral ores is also
increasing in China. Jeff
Hogan, VP and general
manager of AMR’s rare earths
and zirconium divisions told
IM that effective 6 May, the
major rare earth mining
companies in Baotou and
Suzhou raised prices by 10%.
The government is hoping
that the processing trade
move will help to consolidate
the Chinese rare earths
industry, leaving only the
larger players with better
environmental and safety
records. Margins will of
course fall, but it is hoped
that by tightening supply,
prices of finished products will
rise to counter this.
Metso awarded
major Chinese
lime contract
Finnish minerals processing
group, Metso Minerals, is to
supply three lime calcining
plants to Tai Yuan Iron & Steel
(Group) Co. Ltd (TISCO) in
China. The plants are to be
delivered to TISCO’s
Dongshan quarry, Tai Yuan
City, Shanxi Province, with
production scheduled to
begin in March 2006. The
value of the order was not
disclosed.
The turnkey deliveries will
include all key equipment,
process and equipment
design, control system,
12
inspection services, as well as
installation and start-up
assistance. Each lime plant
has been designed to
produce 1,000 tpd of lime.
With a total production
capacity of 3,000 tpd, the
Dongshan quarry will become
the largest single lime
production facility in China.
The lime will be used by
TISCO as a flux in
steelmaking and in their
sintering plant. The
investment is part of the
company’s expansion project
to increase its production of
One of Metso’s global preheater lime calcining plants. The new lime
production facility at Dongshan will be the largest in China,
producing 3,000 tpd
Courtesy Metso Minerals
stainless steel by 1.5m. tpa.
Metso said that the market for
stainless steels continues to
increase in China as more
diversified consumer and high
technology products are
made in the country.
TISCO is China’s largest
stainless steel manufacturer
and is among the world's
largest producers of stainless
steel. In 2004, its turnover
stood at $3,500m.
Metso is the global leader
for the supply of preheater
lime calcining plants. The
company stated that the value
of one lime calcining solution
of this volume is generally
over €10m.
June 2005
NEWS AT THE CORE
Omai Bauxite
production
above target
Kiln number 13 at Omai Bauxite’s operation in Guyana.
Courtesy Cambior.
BAUXITE PRODUCTION at
the Linden joint venture in
Guyana is 20% above
target, Cambior president
and CEO Louis Gignac said
June 2005
during a conference call.
Canadian firm Cambior
owns 70% of project
operator Omai Bauxite
Mining (OBMI) in a
partnership with the
government, which has a
30% stake.
Production of high alumina
calcined bauxite (RASC) – a
refractory grade – reached
44,000 tonnes from the
Linden mine during the first
quarter of 2005. Chemical
and cement grades were also
produced. Sales for the first
quarter totaled $7.3m., and
the company implemented a
price increase in January that
was supported by very strong
demand for its products.
Cambior relocated a 14
megawatt power plant to the
operation from its Omai gold
mine, which is being wound
down, to ensure reliable
power supply at the site. The
rehabilitation of a second kiln
at Linden could boost
production during the second
semester of the year. The
company will also spend up
to $20m. to refurbish the
processing plant, improve
infrastructure and obtain
more mining equipment. The
power plant will also supply
the Government of Guyana
for the Linden community.
Power purchase agreements
are in place to reimburse all
operating costs and pay back
capital with a competitive
financial return.
Cambior anticipates
revenues of $42m. in 2005
from bauxite, including
$39m. (approx. 90%) from
the sale of RASC production.
During the 1970s Guyana
supplied 800,000 tpa of
RASC to the refractory
market, over 80% of
worldwide supply before
being edged out of the
business by Chinese
producers.
Contributor: Paul Harris,
independent business
journalist, Santiago, Chile.
13
NEWS AT THE CORE
Mineral sands
projects progress
Higher ilmenite output estimated from Moma, while Canadian oil sand
recovery project extended
THE FINAL flow sheet
development of Kenmare
Resources plc’s Moma
minsands processing facility
has indicated that the mine
will have a 701,000 tpa
ilmenite capacity. This raises
the ilmenite production
volume for the Moma
Titanium Minerals project in
Mozambique by 86,000 tpa,
from earlier estimates of
615,000 tpa. Meanwhile,
Dublin-based Kenmare has
indicated that production
volumes for zircon and rutile
are substantially unchanged.
Construction at the Moma
mine site is proceeding to
schedule and production is
expect to begin in the second
half of 2006. The project site
work is currently in the hands
of the building contractor and
Kenmare hopes to take the
reins in mid-2006.
In a recent statement,
Kenmare Chairman Charles
Carvill said that most of the
design work and procurement
for the project had been
completed, while work on
several major parts of the
construction project was well
underway. These include: the
hard standing for the dry plant,
The dry plant for Kenmare’s
Moma minerals sands project,
Mozambique.
Courtesy Kenmare Resources plc.
June 2005
a construction pond, a power
line, a 20 km access road, an
airstrip, and a road for the
conveyor. In addition, plant
components bought from BHP
in Australia are expected to
arrive at Moma in late May,
and a new exploration drill has
been purchased to carry out
detailed infill drilling and full
investigation of the resource
potential beyond the
immediate mining area.
Carvill said that project
product marketing was
progressing well, with
agreements being established
with major consumers to
supply sulphate grade ilmenite.
These agreements are in the
process of being converted into
full legal contracts. The
company expects the current
level of production capacity to
be sold out by the time the
operation commences output.
become concentrated during
the bitumen extraction
process, and are stored at
Syncrude’s Fort McMurray,
Alberta facility.
Titanium Corp. is now
proceeding with the design,
engineering, and installation
of a bulk sampling facility at
Fort McMurray. The sampling
plant will be a small-scale wet
mill operation, which will
separate the oil and water
from the mineral-bearing
sand. This solid material will
then be transported by truck
to Titanium Corp.’s Regina
unit for further processing.
The new plant, which will
be built in Australia, is
expected to come on-stream
by late summer 2005 and will
operate for several months.
The company estimates a
total capital and operating
expense of Can$625,000
(approx. $495,750). Titanium
Corp. is planning a full-scale
production facility for 2007.
Syncrude mines Alberta’s
Athabasca oil sands deposit,
Canada.
Courtesy Syncrude Canada Ltd.
New sampling unit
in Alberta
Titanium Corp. Inc. of
Toronto, Canada has
announced a 12-month
extension to the exclusivity
agreement between itself,
Syncrude Canada Ltd and a
major titanium dioxide
producer.
The agreement will see the
continuation of the oil sands
mineral recovery project, in
which Titanium Corp.
processes oil sand tailings,
supplied by crude oil producer
Syncrude, in order to recover
titanium and zircon at its pilot
plant in Regina, Saskatchewan.
The plant, the first of its kind,
was opened in May 2004.
The tailings are rich in
heavy minerals, which
The wet plant gravity circuit at Titanium Corp.’s Regina,
Saskatchewan oil sands mineral recovery pilot plant.
Courtesy Titanium Corp. Inc.
15
NEWS AT THE CORE
China drops export rebates again
THE CHINESE authorities are
yet again placing pressure on
prices of exported minerals.
On 29 April 2005, the
Ministry of Finance
announced that the export
rebate of 5% for exporters on
a range of minerals including
magnesite, talc, silicon
carbide and fluorspar was to
be scrapped completely
effective 1 May.
Tax rebate cancelled from 1 May 2005
(previous rebate)
Dead burned magnesite
(5%)
Calcined caustic magmesite
(5%)
Silicon carbide
(5%)
Fluorspar
(5%)
Talc
(5%)
Rare earths related
(5%)
Rare earth metals and related
(13%)
Molybdenum ore, refined
(13%)
Tax rebate reduced from 11% to 8% from
1 May 2005
Coal
Tungsten metal and related
Zinc metal and related
Antimony metal and related
Tin metal and related
Increasing customs tax from 1 June 2005
Yellow phosphors
10% to 20%
Ferrosilicon
0% to 5% (temporary)
The policy was announced just
prior to China’s early May
public holiday and so caused
some degree of confusion
amongst traders and exporters.
The move follows the January
2004 move by the authorities,
which initially reduced the
amount of export rebate on
selected minerals from their then
levels of 12-15% depending on
the mineral, down to 5% (see
IM November ’03, p.12)
With the 5% export rebates
cancelled, the export prices
of minerals are expected to
rise, and traders also fear
that the government may
“adjust” the VAT rules which
might further increase the
VAT burden on exporters.
With minerals and metals
that have already had their
export rebate abolished,
there is concern that the
government may wish to
collect more tax in the
region of 5-25%.
The policy is seen as yet
another move by the
government to control, and
perhaps reduce, the amount of
raw materials exported overseas
from China, and use the
resources to manufacture more
value added end products (see
IM October ’04, p.23).
However, for many of the
mineral products, the alternative
worldwide sources are limited in
terms of satisfying overall
demand, so further price
increases are likely to result.
Fuel increases
announced
Compounding the raw
material prices situation,
China has also raised its
diesel retail prices by 4% to
RMB4,509/tonne
($545/tonne) on 10 May
2005. The fuel increase will
immediately impact the truck
freight market in China,
which is already under
pressure from stringent
government controls on
overloading (see IM June
’04. p.15). The authorities
stated that the price hike
was owing to the high cost
of crude oil on the
international market.
Effect of a RMB
revaluation
A Chinese currency
revaluation would also have a
major effect on exporters, by
Australian sand mining
application blocked
ROCLA Pty Ltd, a major
Australian producer of
construction sands, has failed
in its bid to open a 4.5m. tpa
sand mine on the Kurnell
peninsula on the outskirts of
Sydney, New South Wales, only
2km north of where Captain
Cook landed in 1770.
Rocla is one of the
businesses of the Amatek
Group, an Australian-based
international building
products company. Other
divisions in Amatek include
Stramit and Insulation
Solutions. Rocla Quarry
June 2005
Products is currently involved
with the extraction, processing
and distribution of sand,
aggregates and fly ash from
19 sites throughout Australia.
The company has extracted
and sold fine sand from the
Kurnell peninsula since 1985
and is the sole washed sand
producer in the area, where it
currently extracts fine sand
from two adjoining properties
owned by Besmaw Pty Ltd and
Consolidated Development Pty
Ltd. The existing Kurnell
operations are all major
suppliers of fine washed sand,
specifically graded for blending
in premixed concrete. Also
produced are fill and speciality
sands such as bricklaying and
plaster sand.
The new mine would
replace one of the two existing
sources (Consolidated
Development) which is
planned to cease production
by late 2005, and supplement
production from the remaining
source. It is proposed to
remove some of the existing
dune sand by dry extraction
methods. However, the bulk of
the dune sand would be
eroding much of their
competitiveness. China's GDP
increased 9.5% in the first
quarter of 2005, which led to
widespread speculation that
the renminbi (RMB) will soon
be revalued under pressure
from the USA, which has
racked up a massive trade
deficit as the dollar has
weakened in recent years.
During that time the renminbi
has remained pegged at
about 8.28 to the dollar,
unchanged since 1995.
China now represents by far
the largest country share of
the US deficit.
However, the Chinese
government shows no signs
of acting in response to
pressure. At a meeting with
US Chamber of Commerce
representatives on 16 May,
premier Wen Jiabao said,
“the reform of the RMB
exchange rate system is a
matter of China's
sovereignty and any
pressure and speculative
exploitation of the issue or
any attempt to turn the
economic issue into a
political one will not be
conducive to resolving it”.
allowed to slide into the
dredge pond and be mixed
with the underlying deeper
sand to produce a high
quality construction sand.
The New South Wales
minister for infrastructure and
planning, Craig Knowles,
refused the development
application citing, “concerns
over the environment and
public interest”. He described
the area as a unique area
with wetlands of international
importance and national
heritage significance stating
that the proposed mine would
destroy a groundwater
aquifer, remove one of the
last remaining sand dunes on
the peninsula and pose an
unacceptable risk to the
ecosystems of the nearby
Towra Point Nature Reserve.
17
NEWS AT THE CORE
Atacama Minerals to double
Aguas Blancas production
CANADIAN company
Atacama Minerals Corp. is to
double iodine production
from the Aguas Blancas
mining operation in northern
Chile having completed the
purchase of Atacama
Minerals Chile (AAM Chile)
from ACF Minera.
Atacama Minerals paid
$11.2m. for the 50% stake in
AAM Chile, whose main asset
is the Aguas Blancas mining
operation. A payment of
$4.5m. will be made within
12 months following the close
of the transaction.
Operations at Aguas
Blancas will be
debottlenecked and
optimised throughout 2005
to increase production by
20% from its current 720 tpa
of iodine. A demonstrationscale agitated leach plant will
be installed with a view to
ramping up to commercial
scale and switching
production to this process.
This will double production
capacity to 1,400-1,500 tpa,
Paul Conibear, Atacama
Minerals’ Director told IM.
“We will spend $10m. on
this; it will take 16-18
months to complete and so
by the end of 2006 it will be
in production,” he said.
Aguas Blancas produced 720
tonnes of iodine in 2004.
Atacama Minerals bought
out its partner in the Aguas
Blancas mine to pursue a
growth strategy that ultimately
includes producing 300,000
tpa of sodium sulphate and
up to 75,000 tpa of nitrates.
Conibear continued: “We
want to make incremental
increases to iodine
production to get cash flows
up, then put in the
demonstration plant to
improve recoveries of iodine.
In parallel, we will develop a
small-scale sodium sulphate
plant uses the very high
grade brines produced by the
agitated leach process and
head towards a 100,000 tpa
plant and up to 300,000 tpa
within three years.”
Iodine prices have risen due
to strong demand from Japan
and China for LCD screens
and other evolving
Vietnamese TiO2 plant j-v
AVIRECO USA LLC has
established a joint venture to
build a 10,000 tpa titanium
dioxide facility in Binh Thuan
province, Vietnam.
Avireco owns a 50% stake
in the j-v, while its partners
Viet-My and Mineral
Development Co. No. 6
(Lidisaco) own 40% and
10% respectively. Lidisaco is
a subsidiary of the Vietnam
Mineral Resource
Department.
In February 2004, the
Vietnamese government
approved plans for the
$25m. operation with
Lidisaco responsible for
development of the project.
The aim for Lidisaco was to
find additional investment
via a j-v with an
international partner. At this
time, Avireco formed an
agreement with Altair
Nanotechnologies Inc. to
test the suitability of its TiO2
feedstock using Altair’s
hydrochloride pigment
process (AHPP).
According to local press
reports, construction of the
new TiO2 plant is expected
to begin in the third quarter
of 2005, with production
Blow out towers and brine pond at
Aguas Blancas
Courtesy Atacama Minerals
technologies. “There is a
good future for iodine,” he
said.
Sodium sulphate will be
sold in South America with
Brazil as the main target
market.
Contributor: Paul Harris,
independent business
journalist, Santiago, Chile.
start-up expected in Q3 next
year. The j-v is in the process
of applying for exploration
and mining licences for the
Son My and Tan Thang
mineral sands deposits, also
located in Binh Thuan
province.
Ilmenite embargo
Meanwhile also in Vietnam,
the government intends to
place an embargo on exports
of ilmenite (53-57% TiO2)
from 2008, according to a
report by TZMI.
AMR-Lynas legal action goes to trial
THE ONTARIO Superior
Court of Justice has ruled
that the legal application
brought by Toronto-based
rare earth materials producer
AMR Technologies Inc.
against Australia’s Lynas
Corp. Ltd should go to trial.
AMR is seeking to prevent
June 2005
Lynas exercising the voting
rights attached to a
significant number of its
shares that it claims were
bought by a shareholder
“acting jointly or in concert
with Lynas in a manner that
does not comply with the
takeover bid provisions of
Ontario’s Securities Act”.
Lynas is AMR’s largest
shareholder with a 19.92%
stake.
AMR hopes that the matter
will be resolved before its
annual general meeting of
shareholders on 22 June.
However, a spokesperson for
Lynas pointed out that the
ruling was procedural and
did not offer any court
opinion on the disputes.
Lynas vigorously denies the
claim, stating that “AMR is
proceeding is without merit”
and that it intends to defend
itself against the allegations.
19
NEWS AT THE CORE
NEWS IN BRIEF
Bemax to extend
Snapper minsands
Brisbane, Australia-based
Bemax Resources NL has
purchased a minsands
exploration area in the New
South Wales (NSW) sector
of the Murray Basin from
Iluka Resources Ltd. The
area comprises the northern
section of Exploration
Licence EL 6024 and
contains an extension of
Bemax’s Snapper deposit.
Under the terms of the
agreement, Bemax will
make a net deferred
payment of A$3.9m. to
Iluka, and is currently
awaiting approval of the
deal from the NSW
government.
The Snapper deposit has a
measured resource of 5.4m.
tonnes of contained heavy
minerals, and is located 15
km from Bemax’s Ginkgo
mine. The Gingko mine is
expected to be
commissioned in late 2005.
A mineral separation plant
is also under construction
at Broken Hill; designed to
process material from the
Gingko mine and the
Snapper deposit when it
comes on-stream in 2008.
DKK zirconia
expansion
Daiichi Kigenso Kagaku
Kogyo Co. (DKK), Japan's
largest zirconia producer,
is to boost its zirconia
production to meet
increasing demand for
solid oxide fuel cells
(SOFC) through a total
invesment of Y4,000m. for
the next three years.
The company plans to
build a new plant on a
16,500m3 site of the
Fukui Technoexport in
Fukui Prefecture to
produce yttria and scandia
stabilised zirconias for
SOFCs, with a final
annual manufacturing
capacity of 2,500 tonnes.
20
Saint-Gobain buys
Danfeng silicon carbide
FRANCE’S Saint-Gobain has
officially sealed its acquisition
of Chinese silicon carbide
(SiC) manufacturer Danfeng.
The deal was signed during a
visit to Paris by China’s Trade
Minister Bo Xilai.
Based in Heilongjiang
province, Danfeng is China’s
largest fine SiC powder
producer. The company has
an output of 15,000 tonnes
and has achieved sales of
about $20m.
The purchase reinforces
Saint-Gobain’s position as the
world’s leading SiC producer
(global capacity approx.
170,000 tpa) and makes its
High Performance Materials
division the market leader in
SiC technical powders in Asia.
These high performance
ceramic products are used in
grit or grain form in such
applications as semiconductor
parts, refractory products and
abrasives.
Saint-Gobain has been
pursuing a vigorous
acquisition strategy in recent
years. The company already
has a strong presence in
China with several joint
ventures and partnership
agreements with Chinese
companies. Some 40 SaintGobain subsidiary
companies operate in the
country and total Chinese
sales in 2004 reached
€273m. These subsidiaries
include SiC production at
Qinghai and brown fused
alumina production at
Zhengzhou.
Danfeng has a silicon carbide
powder output of 15,000 tpa.
Courtesy Saint-Gobain
O-N sells Velarde mica mine
OGLEBAY NORTON Specialty
Minerals Inc. (O-N) has sold
the remaining part of its mica
business – the Velarde, New
Mexico facility – to the Picuris
Pueblo.
The Pueblo filed an
aboriginal title claim in the
New Mexico state court in
early 2004, and sued O-N, in
addition to all other
companies that have owned
or mined mica at the site
since mining commenced in
the 1960s.
Tribal potters had used clay
pits in the area to obtain
micaceous clay for their
pottery. Pueblo representatives
had argued that once mining
began, they had lost access to
these traditional sites and that
the land should be returned to
them. The mine is located less
than four miles from the tribal
village.
According to an Associated
Press report, the Pueblo has
agreed to drop the legal
claim as part of the
acquisition deal, and the New
Mexican reported that O-N’s
state mining and reclamation
permit has now been
transferred to the Pueblo,
which intends to restore the
site to its natural state and reestablish access to the clay
pits.
O-N has made no secret of
its intention to withdraw from
the mica business and sold its
Kings Mountain, North
Carolina mica facility to
Zemex Corp. earlier this year.
Operations at Velarde were
suspended in September
2004.
EC launches undersea mining study
THE ECOLOGICAL impact of
undersea mineral extraction
at the fringes of Europe’s
continental shelf will be
assessed by a €15m.
international study. The
European Commission is
funding the HERMES project,
which involves 36 research
institutes and nine small
companies from 15 countries,
led by the UK’s Southampton
Oceanography Centre.
Mineral resources could be
rich where the shelf, which
surrounds the continent, and
extends into the
Mediterranean and Black
seas, plunges from around
200 metres to the abyssal
plain at some 4,000 metres.
Silica sand, aragonite,
phosphates, and sulphur are
among the minerals found on
continental shelves
worldwide.
Unfortunately, said the HERMES
leaders, there is little detailed
knowledge of this outer region,
especially its ecology, raising
concerns that exploitation could
potentially damage barelyunderstood ecosystems. As a
result, HERMES will use high
technology communications
and transport allowing experts
in geology, biodiversity,
sedimentology, physical
oceanography, microbiology,
biogeochemistry, and socioeconomics to explore these
zones.
June 2005
NEWS AT THE CORE
IMA-NA 2005
meeting
highlights
US Silica’s Pacific mining operation, Missouri.
Courtesy US Silica Co.
THE INDUSTRIAL Minerals
Association - North America
(IMA-NA) gathered for its
annual meeting in Bonita
Springs, Florida, in April
2005. Now in its third year,
the association represents
90 members, including an
even split of mineral
producers and service
providers. Over 150
delegates attended the
meeting to network, listen to
presentations on topical
issues affecting the industry,
and simply enjoy the Florida
sunshine.
Mine safety awards
Top of the agenda was
recognising member safety
achievements. The IMA-NA
Safety Achievement Award
was presented to individual
IMA-NA member companies
with the best reportable
injury rates by size category
for the preceding calendar
year. For 2004, the winners
were: US Borax Inc. for the
large category (700,000 or
more employee hours); H.C.
Spinks Clay Co. Inc. for the
medium category (fewer than
700,000 but more than
100,000 employee hours);
and IMI Fabi LLC for the
small category (Fewer than
100,000 employee hours
IMA-NA and the Mine
Safety and Health
Administration (MSHA) also
jointly recognised five
individual IMA-NA member
US mining operations for
working 200,000 employee
hours without a single
reportable employee injury.
This year’s honorees
included: Nugent Sand Co.
Inc. for its sand plant in
Muskegon County,
Michigan; Unimin Corp. for
its Red Hill Plant, Mitchell
County, North Carolina;
Kentucky-Tennessee Clay Co.
for its Langley, South
Carolina operation; Badger
Mining Corp. for its
Fairwater plant in Wisconsin;
and the US Silica Co. for its
Kosse Plant in Texas.
Presenting the awards,
John Correll, MSHA deputy
Longwall mining in Solvay’s Green River soda ash operation,
Wyoming.
Courtesy Solvay Minerals
June 2005
assistant secretary, said:
“Mining companies that
achieve excellence in the
control of miner injuries
deserve recognition for their
outstanding safety effort.
This achievement recognition
programme seeks to provide
that recognition and
motivate others to enhance
their own safety
performance.”
The National Industrial
Sand Association (NISA)
Recognition of Excellence
Award was presented to Tom
Stark, CEO of Badger Mining
Corp., for his long-time
contributions to NISA and the
industrial sand industry.
Climate Vision
programme
The meeting offered an
ideal opportunity to
announce IMA-NA’s
participation in the US
Department of Energy’s
(DOE) Climate Vision
programme, a presidential
initiative launched in
February 2002 to reduce US
greenhouse gas (GHG)
emissions by 18% between
2002 and 2012.
Speaking at the meeting,
US DOE representative,
Larisa Dobriansky, outlined
several ways companies can
implement cost effective
technologies and ‘best
practices’ to reduce energy
usage and GHG emissions.
These included: using
biofuels to help reduce
vulnerability to supply
disruptions; using alternative
fuel such as renewable
energy to blunt energy spikes;
upgrading grid bottlenecks
and adding distributed
generation such as fuel cells;
using clean coal from low
cost domestic sources;
improving energy efficiency in
buildings; and upgrading
delivery systems to improve
resilience of the energy
system to disruptions.
So far, soda ash, borates
and sodium silicate
companies have committed to
reducing GHG emissions
from fuel combustion per
short ton of product by 4.2%
between 2000 and 2012.
IMA-NA member participants
include FMC Corp., General
Chemical Industrial Products
Inc., PQ Corp., Searles Valley
Minerals, Solvay Chemicals,
and US Borax.
Dobriansky told delegates
that the focus is now on
exploring “risk-targeted
incentives to tip private
investment decisions and
accelerate commercial use of
advanced technologies to
address the energy investment
challenge”.
US Borax, with borate operation at Boron in California, was presented
with a safety achievement award at IMA-NA’s annual meeting in
Florida.
Courtesy US Borax Inc.
21