Current and Future Mineral Sands Industry Perspectives from TiPMC Consulting · 2019-03-08 ·...
Transcript of Current and Future Mineral Sands Industry Perspectives from TiPMC Consulting · 2019-03-08 ·...
Current and Future Mineral Sands Industry
Perspectives from TiPMC Consulting
NYC Mining Club • March 1, 2019
Gerry ColamarinoManaging Director
TiPMC Consulting
Welcome
Educate & deliver insights & knowledge
on the TiO2, Pigments,
Minerals & Chemicals Industries
to help Business Leaders & Financial Analysts
make decisions.
What We Do
Educate & deliver insights & knowledge
on the TiO2, Pigments,
Minerals & Chemicals Industries
to help Business Leaders & Financial Analysts
make decisions.
What We Do
TiPMC Consulting presentation data are obtained from reliable sources; however, the accuracy of the information cannot be guaranteed.
Moreover, the opinions issued are those of the presenter and may change at any time.
In addition, events and changes in the marketplace may alter or outdate those opinions.TiPMC is NOT an investment advisor, and nothing in any TiPMC presentation is intended to constitute
investment advice. Any reference to publicly traded companies is for educational purposes onlyand should not be deemed in any way to promote the purchase or sale of any securities.
Forward Looking Statement
• Consulting for Industry Leaders & Financial Analysts
in the TiO2, Pigments, Minerals & Chemicals Industries
• Education through Publications & Engagements
- Ti Observer™ Insights for Analysts, monthly industry reports
- TiO2 (Quarterly) and Mineral Sands Price Forecasts ( Semi-Annually)
- Industry Data and Analysis (Import/Export, Historical Pricing, cost analysis)
- Customized industry and company analysis (Reports and Verbal
Consultation)
- Webinars & Seminars
- Customized One-on-One or Group Sessions
Our Expertise6
Mineral Sands: Primary MarketsTi
tan
ium
Fee
dst
ock
s • TiO2 Pigment (90% + of all feedstock)
• Sulfate
• Chloride
• Titanium Metal
• Titanium Chemicals
Zirc
on • Ceramics
• Tile
• Sanitary Ware
• Refractory
• Foundry
• Zirconia chemicals
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TiO2 Pigment
• Coatings
• Plastics
• Paper
• Specialties
End
Use
s
Highly corelated to housing and construction
Correlated to GDP
Fastest Growth in Asia and Developing World
2018: 7.3MT TiO2 2018: 1.2MT
$0
$500
$1,000
$1,500
$2,000
$2,500
$3,000
$3,500
$4,000
$4,500
1980
1981
1982
1983
1984
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1987
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1989
1990
1991
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1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
Global Average TiO2 Price History(at Fx of the day, in US$ pmt)
TiO2 Cycles: Brief History
8Low volatility
/Depressed earnings
Bubble
Earnings depressed/
Feedstock and pigment
Source: Ti-Insights LLC/TiPMC Consulting
Industry
Growth/Prosperity 0.800.901.001.101.201.301.401.501.60
Indexed to 1Q16 Global Price
TiO2 Industry Fundamentals
4000
5000
6000
7000
8000
2005200620072008200920102011201220132014201520162017201820192020202120222023
Global TiO2 Demand Correlated to GDP
TiO2 TiO2 growth @ 2% TiO2 growth @ 3% GDP
Source: TiPMC Estimates/Ti-Insights
• Quality of Life Product• No real substitute• Traditionally grow with
global GDP
Paint58%
Plastics22%
Paper9%
Inks4%
Fibres2%
Others5%
Titanium Pigment Consumption by End-use Sector
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Regional /Technology Dynamics
China26%
APEC22%WE
17%
EE4%
ME7%
LA8%
NA16%
2017 REGIONAL DEMAND6.2M TONNES
Source: "Trade Map (or Market Access Map), International Trade Centre,
www.intracen.org/marketanalysis”/ Ti-Insights
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NA33%
LA5%WE
30%
EEMEA8%
AP24%
2000 DEMAND3.9M TONNES
NA21%
LA6%
WE23%EEMEA
10%
AP40%
2010 DEMAND5.0M TONNESWE/North
America dominant
Americas/EMEA still majority
Asia nearly 50% of demand/Developing Nations growth
Increasing TiO2 Content
Incre
ased
Pro
cessin
g
Consumer
Secondary
Beneficiation
Beneficiation
Mined OresSulfate
Ilmenite
Chloride
IlmeniteLeucoxene*
Natural
Rutile**
Sulfate
Slag
Synthetic
Rutile
UGS
Sulfate
Low Grade
Chloride
Low Grade
Sulfate
High Grade
Chloride
High Grade
Chloride
Super
High Grade
Rock
Ilmenite
Feedstock Driven by Plant
Design & Operations 11
Chloride
Slag
Chinese Producers Chemours Only European Plants Global Chloride
*Chemours and welding**Ti-metal/welding rods
Zircon
Chemours19%
Cristal Global11%
Kronos8%
Tronox7%
Venator9%
Lomon Billions10%
China (Others)29%
Others8%
Pigment
Pigment Suppliers
• MNPs – Consolidated
• Low Capacity Growth
• Chinese
• Sulfate (Currently)
• Moving to Chloride/Beneficiation
• Back-integration
• Majority of new capacity
Feedstock Suppliers
• Chloride High Grade
• Rio Tinto (Slag)
• Iluka (Natural Rutile/SR)
• Tronox (Back Integrated)
• Eramet (Acquisition)
• Ilmenite
• Fragmented
• Multiple Juniors
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Worldwide Top Suppliers(Estimated Market Share)
Rio Tinto22%
China29%
Tronox11%
India4%
Kenmare9%
Base5%
Eramet9%
Iluka11%
TiO2 Feedstock
TiO2 Feedstocks13
Existing Operations Depleting
Source: Company Reports/TiPMC EstimatesSource: Company Reports/TiPMC Estimates
Large Volume ReductionNew Projects: Difficult to meet requirements
Decline in Quality Reserves
Source: Iluka Investor Presentation
Estimated quality of mineral sands suites is declining
0
5
10
15
0
1
2
3
4
5
Current Operations Active Investigation Limited Information
Zircon Rutile (and Other High Grade TiO ) Chloride Ilmenite Sulphate Ilmenite Trash Combined RZ in HM (RHS)
Mineral Assemblage in ResourcesHM Grade RZ Assemblage
% %
Metric Trend Result
HM Grade Higher mining costs
Rutile/Zircon assemblage Lower margins
Trash/overburden Higher mining costs/Capital
Risk return needed: Investors/Lenders
Drain on cash
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Impact on TiO2 Producers15
Source: "Trade Map (or Market Access Map), International Trade Centre,
www.intracen.org/marketanalysis" and TiPMC Estimates
2018Numerous Disruptions in High Grade Chloride ProductionInventory low throughout the supply chain (Chemours Exception)
Growing Trends in Mineral Sands
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0
200
400
600
800
1000
1200
1400
2016 2017 2018
'000 Tonnes Monthly TiO2Chinese Ilmenite Imports
Standard Ilmenite concentrates
TiO2 Feedstock units from imports is reduced vs. 2017 ( stabilize ilmenite prices)New Projects: Ship Concentrate to China: MSP in country
Reduce Capital ExpenditureKeep all minerals in China
Support growing Chinese TiO2 production (Natural Rutile, Chloride Ilmenite, Sulfate Ilmenite)Sales of other minerals in China (Zircon, Garnet, Rare Earths)Chinese Beneficiation to chloride feedstocks set to grow
China: Source of New Capacity
0
50
100
150
200
250
300
350
400
450
500ktpa
Range of Latent Capacity/New Expansions: MNPs and Chinese Chloride
Latent Expansion
17
0
100
200
300
400
500
600
2018 2019 2020 2021 2022
ktpa
Chinese Sulfate Available Capacity Increase (2017 base)
Expansion Plans• MNPs favor “Value over Volume”• China: Large plans for chloride (little progress to date)• Sulfate: ”Net Expansion”
• Larger more sustainable producers expand• Smaller/Less environmentally friendly close
TiO2 Industry Growth Scenarios
-100
0
100
200
300
400
500
600
700
800
2019 2020 2021 2022 2023
Estimated Cumulative Capacity Additions (2018 Base)
Pori SD Chemours Tronox Chinese Sulfate Lomon Cl Chinese Chloride
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Source: TiPMC Estimates
⚫ Chinese Growth Intended on chloride⚫ Import Ilmenite/Beneficiate to chloride slag and SR
⚫ Limited Success to this point
⚫ Likely to require Natural Rutile and UGS
⚫ All growth outside China expected to based on High Grade Chloride Feedstocks
Summary
⚫ TiO2 industry expected to recover in 2019 from recent demand downturn
⚫ Recovery in AP
⚫ Destocking
⚫ MNPs face challenges to maintain profitability
⚫ Pace of Chinese and APEC growth
⚫ NA/EU Recession concerns
⚫ Feedstocks
⚫ “Value over Volume”
⚫ Most new capacity will come from China
⚫ Chloride/Sulfate mix to be determined
⚫ Back-integration: Beneficiation
⚫ Focus on low/mid-grade quality products
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Please stay in Touch!
Gerry Colamarino
+1 610.274.1603 (O) +1 408.368.7759 (M)
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for 50% off all products)
Tipmcconsulting.com20
Thank You!