Industry Fundamentals

Industry Fundamentals

The mineral sands industry generally involves two product chains:

  • Supply of Titanium raw materials, largely used to produce Titanium dioxide (TiO2) pigment with small amounts used in the production of Titanium metal sector; and
  • Supply of Zircon sand to a number of industries, dominated by the ceramics sector (50%).

The supply/demand dynamics of the mineral sands feedstocks sector have changed considerably during the last few years, influenced by a number of factors, but in particular:

  • Lack of development of, or investigation into, new projects due to reduced investor interest and mediocre financial returns from feedstock producers;
  • The financial crisis resulted in the curtailment of global production to match the considerable fall in demand.

Forecasts suggest that without considering additional supply from potential new projects that have yet to receive formal approval to proceed, the global supply/demand balance is likely to grow into progressively larger deficits. This is expected to occur throughout the remainder of the decade as underlying demand continues to grow uninterrupted while the supply base declines.

The recent downturn in global commodity cycle in major developing economies has resulted in the curtailment of global production, by major industry producers, to match the considerable fall in demand.

Forecasts suggest that without considering additional supply from potential new projects that have yet to receive formal approval to proceed, the global supply/demand balance is likely to grow into progressively larger deficits,

This is expected to occur throughout the remainder of the decade as underlying demand continues to grow uninterrupted while the supply base declines.

Zircon

Zircon is commonly found in alluvial deposits in conjunction with other heavy minerals, most typically titanium minerals. As such the majority of zircon is produced as a co-product of titanium mining in heavy mineral sands deposits.

The value chain for zircon covers three stages:

  • Mining and processing to produce zircon sand;
  • Further processing to produce milled zircon or simple zirconium chemicals; and
  • Incorporation of milled zircon or zirconium chemicals into complex final products.

Zircon production is dominated by Australia and South Africa, which together account for approximately 70% of world production. There are four main uses for zircon:

  • Ceramics (mainly in tile production) is the main driver for zircon demand;
  • Specialty chemicals and materials where demand is growing, particularly for the zirconium metal and chemical zirconia used in auto catalysts and technology driven applications;
  • Refractories and foundries; and
  • Other minor uses.

Ilmenite, Leucoxene, Rutile and Synthetic Rutile

The titanium dioxide market is a global industry worth £7 billion, representing over 5 million tonnes of TiO2 pigment in more than 170 countries. The market is expected to reach 6.8 million tonnes by 2016, requiring producers to increase capacity to meet growing demand. (Source)

Titanium dioxide is a brilliant white, non-toxic pigment which is  incredibly versatile and an essential ingredient in a variety of high demand products including white paints, sunscreens, and  infrared reflectors.

Photocatalytic TiO2 has been extensively studied and used (in Asia and Europe) for its beneficial effects in medical environments (to create self-sanitizing surfaces), as a valuable new tool in air and water treatment, as the key to producing self-cleaning windows and even in the production of smog-eating cement.

Amongst a myriad of other reasons, in the past twenty years, prices have been held high by an increase in the use of sunscreen. Also having an effect was the increase in demand for solar panels, a trend that is expected to continue. (Source)

Production is primarily through the sulfate process and the chloride process. The sulfate process has been widely used, but chloride technology is protected by a small group of producers.

Demand is driven mainly through the paint/coatings sector, which accounts for around 56% of the global consumption, and the plastics sector, which consumes around 25%.

The mineral sands industry involves mining and processing of titanium dioxide and zircon products such as ilmenite, rutileand upgraded TiO2 products of synthetic rutile and slag. Both titanium dioxide and zircon have different properties and have distinct end-users. Titanium dioxide is used as whitening pigment in paper processing, plastics and paints and coatings. Titanium dioxide is also used in welding flux wire cord and titanium metal. Zircon is used in production of ceramic tiles. Other applications for zircon are foundry and refractory castings, zirconia and zirconium chemicals which are used in nuclear rods and catalytic fuel converters. On the basis of product types, the market for mineral sands is divided as zircon, rutile, synthetic rutile, chloride slag, sulphate slag and ilmenite among others. Rutile, synthetic rutile, chloride slag, sulphate slag and ilmenite are the product types of titanium dioxide. Upgraded ilmenite (chloride slag, sulphate slag and synthetic rutile) make up the largest markets in the mineral sands industry.

The market for mineral sands is driven by substantial demand from the building and construction industry. Paints and coatings, PVC piping and ceramic tiling are the major building and construction applications in which mineral sand is used. Titanium dioxide is one of the key ingredients in paints and coatings, PVC pipes and fittings. Titanium pigment is also used in plastics, paper processing, inks and fibres. In addition, titanium pigment is used in cosmetics, food and pharmaceutical applications. Titanium metal is used in aerospace and military applications. Zircon is used in manufacturing of ceramic tiles, tableware and sanitary ware among others. In addition, zirconia and zirconium based chemicals are used in pigments, catalysts, refractory, fibre optics and electronics among others. Metal and other end-users such as aerospace and automotive are likely to provide major opportunities for the mineral sands market in upcoming years. However, fluctuating raw material prices along with environmental regulations can have a major impact on market conditions and is likely to hinder the growth of the market during the forecast period.

In terms of demand, Asia Pacific was the leading region in the mineral sands market. China had the largest demand for both titanium dioxide as well as zircon owing to huge demand from the building and construction industry coupled with huge demand from the automotive industry. However, other countries such as India, Japan and Korea are likely to exhibit more demand for mineral sand in upcoming years. Demand continues to grow owing to increasing demand from various applications such as ceramic tiles and flooring and sanitary ware among others. Europe had the third largest market share in the mineral sands market. Growing demand from buildings and construction is driving the mineral sands market in Europe. European countries such as Germany and the UK were the major consumers of mineral sands in this region. However, stringent environmental regulations associated with the paints and coatings industry in the European Union can act as a major restraint for the market in upcoming years. Rest of the World market is anticipated to have stable demand for minerals sands in the near future. Latin America is one of the largest markets for mineral sands in the Rest of the World. However, growing construction activities in the Middle East region is anticipated to offer more opportunity for mineral sands in upcoming years.

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