news at the core

6 October 2008

Leading BraziLian magnesite produc er, magnesita refratários sa, has acquired germany based refractory dolomite producer, LWB refractories gmbH, creating the third largest refractories group (by revenue) in the world, after Vesuvius and rHi ag (see table).

magnesita’s deal with rhone Capital LLC, a private equity group with majority shareholdings in LWB, includes $392m. cash and magnesita assuming a $538m. debt.

the move is seen as part of magnesita’s expansion plan to target customers outside its core market in south america to the global market, focusing on LWB’s client base in China, europe and the Usa.

“this is a milestone in magnesita’s strategy to accelerate its international growth,” said ronaldo iabrudi, chief executive officer of magnesita.

in Brazil, magnesita controls 70% of the steel refractories market and 80% of the cement refractories market, while the majority of LWB’s sales are in europe and the Usa. magnesita expects the acquisition of LWB will result in a wider spread of customers across a broad geographical base in south america, europe, and the Usa (see chart).

LWB leads world refractory dolomite production with an estimated 260-280,000 tpa combined capacity in europe, sourcing dolomite raw material from mines in Belgium and germany, and a further 150,000 tpa refractory dolomite from its York, Pennsylvania operation in the Usa. it also runs a 55,000 tpa refractory dolomite plant in Chizhou, anhui province, China.

“the LWB expansion gives us the opportunity for considerable growth in China, where we plan to double capacity of the existing LWB refractories plants to 180,000 tpa,” said iabrudi.

magnesita also intends to

increase magnesite production to meet demands in asia.

maurício Lustosa de Castro, chief financial officer of magnesita, told IM: “to supply asian clients with the amount of products they are demanding, we will have to make strong investments at Brumado mine [in north-east Brazil] in order to increase the production capacity currently at 320,000 tpa.”

LWB has an overall refractory products manufacturing capacity of 700,000 tpa, with manufacturing facilities in China, France, germany, and the Usa. the total H1 2008 refractories output from both companies was 1.1m. tonnes.

No.1 by 2012magnesita believes the deal will have nearly no overlaps in terms of sales, but plenty of scope for raw material and upstream integrations.

“[there will be] no other company like ours in the refractory industry,” said Castro, in a conference call.

according to Castro, LWB consumes 80-100,000 tpa of sintered or electro fused magnesite and accounts for 18% of sales, which magnesita could now supply. magnesita also manufactures dolomite products, so could now exploit LWB’s raw material reserves in europe and the Usa.

magnesita’s upstream synergy plans could involve combining LWB’s magnesite operations into magnesita’s Brazilian plants, while LWB facilities focus solely on dolomite products. it estimates synergies could save $35.5m. per annum.

the acquisition will also allow magnesita to offer a range of magnesite and dolomite products to its combined customer base, including large clients currently supplied by LWB, but not by magnesita and vice versa. these include LWB’s long established relationships with stainless and carbon steel producers.

“[it’s an] awesome opportunity for cross selling,” said Castro.

magnesita has set targets to be the largest refractories producer (by revenue) in the world by 2012. domestic refractories demand is expected to be driven by the Brazilian steel industry, with steel demand predicted to grow by 13% this year according to the Brazilian steel institute.

Securing feedstock the world’s second largest refractories producer, Vienna based rHi, has also revealed intentions to expand via acquisitions, with focus on mineral producers.

“We have several projects under consideration,” said andreas meier, rHi chief executive officer, adding: “a key area in this context is raw materials, not only magnesite and dolomite, but also bauxite and melting raw materials.”

rHi and tata refractories Ltd have already announced magnesite projects in China, in an attempt to secure supplies (see p.8). magnesita’s acquisition of LWB is the

news at the core

Brazil’s leading magnesite producer acquires German dolomite and refractories group, gaining a global customer base and raw material supply

by Kwok w wan, Assistant Editor

Magnesita buys LwB

Refractory dolomite: LWB’s mine in York, Pennsylvania, USA.

Refractory dolomite: LWB’s mine in York, Pennsylvania, USA.

news at the core

October 2008 7

Brazilian’s first foray into China in terms of raw materials.

Before this deal, magnesita was recently secured by gP investments Ltd (see IM September ’07, p.29) and had announced plans to triple dead burned magnesia capacity (dBm; currently 320,000 tpa) and double refractories production (currently 590,000 tpa; see IM September ’08, p.28).

dBm accounts for 10% of magnesita’s sales and the company believes demand is strong, representing a good opportunity. “even if we see a slight slowdown in steel demand growth, refractories demand is still set for significant growth,” said iabrudi of magnesia.

supplies of magnesite have been tight as the world’s leading producer, China, has used licences and quotas to reduce exports of the refractory mineral. this has lead to a raft of producers outside China announcing capacity expansions to meet demand (see IM September ’08, p.28).

20 Microns 14

Agrium 13

Alcoa 17

Alfluorco 17

Almatis 20

American Iron & Steel Inst. 9

Angang Steel Co. 33

Artikol 25

Australian China Clays Ltd 12

Austpac Resources NL 25

Bai Yin Fluoride 17

Baosteel Group 33

Bemax Resources 25

BHP Billiton 25,33

Boliden Odda 16

Bollore Group 10

Buss Chem 17

Carnegie Minerals 25,27

Casagrande Pisos Ceramicos 30

Ceramica Atlas 30

Ceramica Batistella Ltda 30

Ceusa-Ceramica Urussanga 30

Chemetall 11

China Gengsheng Minerals 33

China National Offshore Oil Corp. 34

China National Petroleum Corp. 34

China Petroleum and Chemical Corp. 34

Consolidated Rutile Ltd 27

Derivados des Fluor 17

DFD Chemical Co. 17

DuPont 11

EDF 10

Fluorsid 16

Galaxy Resources Ltd 11

Gansu Kunlun 17

General Motors 11

Gulf Fluor 17

Hunan Xiang Lv 17

IDC 17

Iluka 27

Industrial Quimica de Mexico SA 16

JP Morgan 13

Kaolin AD 12

Keliber 11

Kenmare Resources 27

Lehman Brothers 9,29,31

LWB Refractories GmbH 6,8

Magnesita Refratarios SA 6,8

Mesa Uranium Corp. 13

Metorex 17

Minerals Corp. Ltd 12

Minmet Financing Co. 16

Mitsubishi Corp. 10

Monto Minerals 24

Mosaic 13

Mountain Capital Inc. 13

National Titanium Dioxide Co. 25

New World Resource 10

Nitro Quimica Brasileira 17

Noralf 17

Nordic Mining ASA 11

Potash Corp. of Saskatchewan 13

PricewaterhouseCoopers 24

QB Industrias SAB de CV 16

RHI AG 6,8

Rhone Capital 6

Richards Bay Minerals 25

Rio Tinto Alcan 17,21

Rio Tinto Plc 20,25,33

Roskill Information Services 11

Sichuan Sheng Ni Kei Guorun 11

Societes des Industries Chimique du Fluor 16

SQM 10,11

Steel Authority of India 8

Talison Minerals 11

Tata Group 11

Tata Refractories Ltd 6,8

Tata Steel 8

Tertiary Minerals 20

Titanium Resources Group 11,27

TRU Group 11

USGS 25

Vergenoeg Mining Co. 17

Western Potash Corp. 13

Whitemud Resources 12

Wolkem 14

Xinyu Abrasives Co. Ltd 33

Zibo Nanhan Fluoride 17

companies in the news

courtesy Magnesita

courtesy Magnesita

Top refractories companies by revenues (million euros)

Combined customer base of Magnesita and LWB

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Asia 13%

NorthAmerica 30%

SouthAmerica 90%

Africa 2%

Europe25%

Asia 7%

NorthAmerica15%

SouthAmerica51%

SouthAmerica4%

Africa 1%

Europe 5%Asia 2%

NorthAmerica 2%

Africa 4%

Europe49%

Asia 13%

NorthAmerica 30%

SouthAmerica 90%

Africa 2%

Europe25%

Asia 7%

NorthAmerica15%

SouthAmerica51%

SouthAmerica4%

Africa 1%

Europe 5%Asia 2%

NorthAmerica 2%

Africa 4%

Europe49%

Asia 13%

NorthAmerica 30%

SouthAmerica 90%

Africa 2%

Europe25%

Asia 7%

NorthAmerica15%

SouthAmerica51%

SouthAmerica4%

Magnesita LWB Magnesita & LWB

news at the core

8 October 2008

tata reFraCtories Ltd (trL), part of india’s tata group, is signing a memorandum of understanding to acquire a lease for a magnesite mine in Bayuquan, Liaoning, north-east China, to ensure supply to its Chinese production plants

the mine, near trL’s existing 64,000 tpa refractories plant at Bayuquan, still needs exploration work and will be operated under a newly formed company. it is also part of trL’s strategy to include raw materials into its operation.

C d Kamath, managing director of trL, told IM: “We consider backward integration as a critical foundation of our business model. We plan to be a major supplier of mag-C and other magnesia based products to the global steel industry, and hence the plans for an investment in mining operations.”

trL also expects the mine to protect it from magnesite price fluctuations, as well as securing a reliable source and plans to increase capacity of its Bayuquan refractories plant from 64,000 tpa to 100,000 tpa.

“it will not only become cheaper, it will be more assured in terms of quality, quantity and timeliness of supply,” said Kamath, adding trL would be investing further into raw material deposits in China, commenting there was “a lot of scope”.

the move by trL follows a similar strategy undertaken by rHi ag of austria, when it secured its Chinese magnesite source through a joint venture (j-v) with Liaoning Jinding magnesite group Co. Ltd (Jdmg), of dashiqiao, China (see IM September ’08, p.28).

Leading Polish refractories producer, zaklady magneztow “ropczyce” sa, has also set

up a j-v in Haicheng, China, with Chinese magnesite producer, Liaoning Xinrong minerals group Co. Ltd.

trL has also selected Visakhapatnam, east india for its second major refractories plant, with alumina refractory production starting in 2009. an additional high-tech monolithics plant might also be built at a later date.

a 30 acre plot in the city of Vizag has already been identified for the proposed for the $19m. facility. trL’s current main plant, in Belpahar, east india, has 250,000 tpa capacity.

Public offeringin response to its rapid expansion rate, trL intends to enter the stock market by offering an initial public offering in 2009, though an exact date has not been set.

“We would have to go for an iPo, but as of now we have not decided on the

timing. it is very clear that the way the company is growing it has to go public, and i am sure that would happen some time during 2009,” said C d Kamath.

trL is unlisted, with the two largest shareholders being tata steel (72%) and steel authority of india Ltd (10%). the remainder is held by smaller organisations and individuals. trL’s five year target is to increase turnover to $428m. by 2013, exploiting the heated steel demands in asia, though uncertainty in raw material supply could affect prices.

China, the leading producer of magnesite, has already decreased exports to 1-1.2m. tpa which has squeezed supply and increased prices, while the actions of the government during the olympics has reduced bauxite production (see p.33).

this has tempted producers outside China to ramp up magnesite production to meet demand, including plans from Brazilian magnesita refratarios sa to triple dead burned magnesite production to 1m. tpa by 2010 (see IM September ’08, p.28).

magnesita has also acquired german refractory dolomite producer, LWB refractories gmbH, creating the third largest producer in the world, while the world’s second largest producer, rHi ag, has also eyed several acquisition targets (see p.6).

However, some producers may think twice before expanding, in light of a potential Us challenge to China’s mineral export restrictions to the World trade organisation. the action, if successful, could result in the removal of barriers for cheaper Chinese exports in the future (see p.9).

tata invests inchinese magnesite

Magnesite hotspot: the Haicheng-Dashiqiao district of Liaoning, China, is renowned for its

magnesite reserves, accounting for 20% of global deposits.

Magnesite hotspot: the Haicheng-Dashiqiao district of Liaoning, China, is renowned for its

magnesite reserves, accounting for 20% of global deposits.

news at the core

October 2008 9

Us trade oFFiCiaLs are close to filing a case against China to the World trade organisation (Wto), challenging export restrictions on raw materials used in steelmaking, such as silicon carbide, bauxite, and fluorspar, as well as coking coal and molybdenum.

China is the leading producer in refractory minerals (including magnesite, bauxite and fused alumina), and the Usa is expected to argue that export taxes and quotas unfairly drive down Chinese domestic prices while increasing global prices for such materials.

this is a violation of Wto rules and, Us authorities claim, puts Us companies, such as steel producers, at a disadvantage.

industry sources have told IM they are “surprised this hasn’t happened sooner” adding they were sure the current export system broke Wto rules.

other sources said the mood in China was of indifference, as the collapse of Lehman Brothers had given the Usa enough problems to deal with. “the Chinese are a bit embarrassed for the Usa because it was the west that started rumours about China’s economy being a ‘deck of cards’ that will probably collapse after the olympics.

Well, it seems that the Us banking system is the ‘deck of cards’ and it is expected to affect much of the world economy.”

a Chinese refractory producer told IM it did not believe the news would change China’s export policy. “even if they do decide to make a case, nothing is going to happen for a good few years,” he commented.

But Us officials have refused to speculate on the case. sean spicer, spokesman for Us trade representative (Ustr) said: “We do not discuss, confirm or comment on potential litigation.”

despite this, the news was welcome for steel producers and organisations, such as the american iron and steel institute (aisi) and the national association of manufacturers, as they have lobbied for the Us government to bring more Wto trade cases against China.

nancy gravatt, vice president of communication at aisi, told IM: “the [steel] industry is encouraging the government to make China reform.”

the Usa has spent several months narrowing down a list of raw materials that have breached the “protocol of accession”, which China signed when joining the Wto in 2001.

Us trade officials are focusing on silicon carbide

and fluorspar, though other minerals considered include bauxite, which has been subject to several taxes and quota restrictions over the past year, reducing exports by 15-20% (see IM June ’08, p.26).

the final decision to proceed is yet to be taken, though there is speculation that the Usa could act before the presidential election in november 2008 to boost the republican claim of being tough on Wto trade talks with China.

WTO reviewthe Wto recently released a trade Policy review of China, which seems to support the Us accusations against China. Under the trade Polices and Practices by measures section, the Wto states: “China’s already complex export regime has become considerably more restrictive.”

the paper, published in april 2008, also reported that: “a variety of measures, including export taxes, reduced rebates of Vat on exports, and export prohibitions, licensing and quotas, are used to restrain, if not prohibit, exports of a considerable and growing number of products.”

“although some of these export restraints are implemented

to meet China’s international obligations, many are intended to, inter alia, reduce exports of products using large amounts of natural resources and energy, or to reduce China’s large trade surplus in an attempt to reduce trade friction.”

despite the review not giving specific mineral examples, the Wto estimates that “the number of tariff lines subject to interim export duties was almost doubled in the last two years”.

“China’s past behaviour has not conformed to the requirement of being a participant of the Wto,” said gravatt of aisi.

the Ustr annual review on foreign trade barriers in 2008 also reflects the Wto report, stating: “China maintains export quotas and sometimes export duties on antimony, bauxite, coke, fluorspar, indium, magnesium carbonate, molybdenum, rare earths, silicon, talc, tin, tungsten, and zinc, all of which are of key interest to Us downstream producers.”

“these types of export restrictions can significantly distort trade by allowing Chinese producers to pay much lower prices for the raw materials than foreign producers face on the world market.”

Usa challenges chinese export policy

In the dock: US officials claim China is breaking WTO trade regulations with its export restrictions. Here, talc and barytes are being loaded for export at Fangcheng port in Guangxi, China.

Us trade officials claim that china is violating wto rules with its export taxes, licences and quota restrictions

by Kwok w wan, Assistant Editor

news at the core

10 October 2008

WHen it Was announced in may 2008 that the Bolivian government had approved a lithium (Li) pilot plant on the salar de Uyuni, a flood of interest was inevitable considering this was the last great untapped Li salar in south america (see IM May ’08, p.8).

the message this also sent out was that Bolivia is willing to allow development of other smaller Li rich salars which cluster in the country’s south-west.

this now appears to be the case as Canadian group new World resource Corp. has signed a letter of intent to mine Li from the smaller resource, the Pastos grandes lithium-potash brine project, located Bolivia’s south-west sud Lipez province.

in addition, French investment company, the Bolloré group, headed by French billionaire Vincent Bolloré, has also heavily flirted with the country’s Li resources as it seeks to secure raw material for its electric car joint-venture with Électricité de France (edF).

as IM revealed at the time, next-door neighbour admiralty resources Ltd, which is mining Li from the salar del rincon in argentina, already has a foot in the Bolivian door and was already in talks with the government as news broke.

A New World for Boliviagold and copper exploration co mpany, new World resource Corp., has entered the world of industrial minerals by signing a letter of intent with gonzalo miranda salles to acquire 99% of the Pastos grandes lithium-potash brine project, located in sud Lipez province, south-west Bolivia.

the 119.5km2 Pastos grandes project, part of the altiplano basin, covers all but 5% of Lagunas Pastos grandes, one of the country’s many salt rich lagoons. Historical data suggests the resource contains 0.16% Li grade.

through its subsidiary, new World Bolivia sa, the company expects to be the sole manager and operator of the project and will pay for all exploration and development costs.

don Flahiff of new World’s corporate development division told IM: “We are very keen on [lithium production from the Pastos grandes project]. it is in the same region as the salar de Uyuni… and it has fabulous potential for lithium and potash production”

“there is not a big capital investment needed for brine deposits, but we first need to

get a handle on [the lithium] concentration [of the resource].”

Flahiff was positive in the market direction for Li: “We are confident that the direction the market is going [with electric cars & portable electric devices] and we will continue to go that way.”

Chemical analyses indicate that Pastos grandes is of alkaline composition with high concentrations of Li, potassium and boron.

an additional bonus to this project could include the production of potash as a by-product of Li, as the valuable fertiliser mineral could be derived from the evaporation of the brines. the demand for potash has also gone through the roof over the last year reflected in price increases of nearly ten fold to around $900/tonne (see news, p. 13).

the altiplano basin contains over 200 alkaline saline lakes,

including salar de Uyuni - one of the largest brine deposits in the world. the salar de Uyuni is estimated to hold 5.4m. tonnes of Li.

Bolloré goes to sourceFrench investment consortium, the Bolloré group, has also expressed keen interest in mining Bolivia’s Li from the salar de Uyuni as it looks to secure raw material for its Li-ion battery production at its ergué-gabéric plant in north-west France.

this facility is part of batscap, a joint venture (j-v) between Bolloré (80%) and energy group, edF (20%). the Li-ion batteries are being developed for Bolloré’s Blue Car, an all electric vehicle, developed in a 50-50 j-v with italian car designer Pininfarina spa.

Bolivian President, evo morales, publically stated approaches from parties in this aspect: “For some time, we have a proposal from France… to build cars with lithium batteries”, except now appears to be the right time for Bolivia to make the most out of its natural resources.

Japanese trading conglomerate, mitsubishi group, is reported also to have taken an interest in Bolivia’s Li.

With consumers demanding more fuel efficient vehicles, a raft of carmakers have announced a range hybrid Li-ion cars going into production next year, which will increase demand for lithium considerably (see IM September ’08, p.27).

Presently, sQm is the largest Li minerals producer in the area, with an output of 42,000 tpa at the salar de atacama in Chile.

LSM09 - CALL FOR PAPERSdiscussion and analysis on all the news and trends affecting new and established lithium production, processing techniques, and markets driving demand will take place at LSM09: Lithium Supply & Markets 2009, 26-28 January 2009, Sheraton Santiago Hotel & Convention Centre, Santiago Chile.

For more information see p.90 and visit www.indmin.com/lithium

For speaking opportunities contact: gerry Clarke at gmclarke1@ntlworld.com

new world resource and Bolloré head pack of lithium developers eyeing Bolivia as the last great untapped south american resource

by simon Moores, Snr Assistant Editor & Kwok w wan, Assistant Editor

sun riseson Bolivia’slithium industry

As the sun rises on the world’s largest lithium resource, the Salar

de Uyuni in Bolivia, the country is set for a new dawn of lithium

production as interest and demand from the automotive industry

rockets. courtesy Leo Koolhoven

news at the core

October 2008 11

gaLaXY resoUrCes Ltd, an australia-based exploration company, has revealed that its reverse circulation (rC) drilling program at mount Cattlin, near ravensthorpe, Western australia, had achieved significant developments recently.

galaxy is conducting a bankable feasibility (BFs) study at mount Cattlin into the development of a 1m. tpa spodumene concentrates mining and processing operation from a series of local pegmatite swarms. a previous pre-feasibility study suggested that mount Cattlin is commercially viable for such an operation.

the operation, with an estimated mine life of 10-15 years, is also looking to include the development of lithium carbonate (Li2Co3) and by-product tantalum concentrates.

the most recent aspect of the program, which involved drilling below the existing near-surface pegmatite resource to 200 metre depth, found two new spodumene-bearing pegmatites. these initial results support galaxy’s estimation that the pegmatites repeat at depth.

managing director of galaxy,

michael Fotios, commented: “these are very encouraging results… the next phase will include further drill testing of these deep targets to allow assessment of their impact on medium-term resource definition activities beyond the completion of the current BFs.”

From cars to phonesthe Li charge has continued this month with a number of developments in the Li-ion battery market.

Us car manufacturing conglomerate, general motors Corp. (gm), has unveiled the production version of its highly anticipate Chevrolet Volt car, touted by some to be the key to the Li debate.

With the world watching, the success of the Volt, which utilises Li2Co3 as the main component in the battery design, could be a deciding factor as to whether Li-ion batteries are up to the task of even partially replace petrol fuelled cars. it is designed to run up to 64km allow most commuters travel to and from work in one charge.

gm wants to bring the Volt to wide-scale commercial

production by 2010, along with additional Li-ion hybrid, the saturn.

the indian trading group, tata, has revealed that it is to launch a Li-ion powered version of its indica automobile in norway, 2009 and in india, 2010.

tata is seeking to tap into the huge indian automobile market with affordable cars, launching the $2,500 priced tata nano earlier this year. should tata pursue the affordable Li-ion car route with gusto, a huge market for Li2Co3 would gradually open up.

Finally, in a development which highlights the demand for Li2Co3 not just from the automobile industry, sony Corp. has invested $106m. in a singapore plant to produce Li-ion batteries for mobile phones. the plant will ramp up to a capacity of 8m. units/month by 2010.

LSM09 updateFor what is shaping to become the leading platform of discussion for the Li industry, a number of key companies and industry consultants have been confirmed for LSM09: Lithium Supply & Markets 2009 on 26-28

January 2009 in santiago, Chile.the world’s leading Li2Co3

producer from brines, sQm sa has confirmed a presentation at the event, together with leading german producer, Chemetall gmbH which produces a range of Li products through its subsidiary sdad Chilena de Litio (sCL). sQm and Chemetall have also agreed to hold a joint industry tour of their world leading Li operations on the salar de atacama on 29-30 January 2008.

Presentations will also be given by leading australian spodumene producer, talison minerals Pty Ltd (formerly sons of gwalia); China’s largest Li producer sichuan sheng ni Kei guorun Xin Cai Liao Co. (formerly sichuan CitiC); leading UK based market consultants, roskill information services; and battery consultant company, trU group.

in addition, leading Li consultant, Keith evans will be adding to the Li resource debate, together with south american analyst Juan Carlos zuleta Calderón.

For more information on LSM09 see p. 90 for more details and visit www.indmin.com/lithium

FoLLoWing ConFirmation oF nordic’s takeover of Keliber – the Finland based potential spodumene (and Li carbonate) producer – the company announced further details on its production plans for the project which cost nordic €816,000 cash up front, 5.1m. shares for Keliber (worth noK1.53 or $0.29 each).

in addition, two cash instalments are to be paid by nordic to Keliber: €768,000 in april 2009; and €816,000 on Li plant commissioning. the

total cash value of the deal could reach €3.32m.

nordic’s project plans for the remainder of this year include: completion of the Lantta mine plan, screening and prioritisation of surrounding Li deposits, and establishing a plan for exploration of these deposits.

the company also aims to push ahead with discussions of possible partners with the Li project, including Li offtake agreements.

Rutile focusnordic spent the first half of 2008

putting relevant administration in place for the purchase, and ultimately, production of the engebøfjellet (engebø deposit) rutile deposit in norway.

the world’s largest titanium dioxide (tio2) producer, duPont, flirted with the deposit between 1995-1997, and documented a 382m. tonne eclogite resource, averaging content 3.96% tio2 – one of the largest single proven mineral resources in norway.

nordic stated: “Previous studies indicate an annual production of approximately 200,000 tpa

of rutile, based on the mining of 10m. tpa of ore, amounting to annual revenues of noK 600m. [$102m.].

global natural rutile supply took a blow in July when titanium resources group’s five-story, 40,000 tpa rutile dredge toppled killing two and immediately ceasing production from the structure. trg was planning a significant production ramp up from the dredge in sierra Leone, which at the time account for 40% of its output (see Strandlines, p.27).

Lithium: mine to market developments

nordic unveils Li plans & rutile ambition

news at the core

12 October 2008

sasKatCHeWan, Canada, reCentLY added kaolin to the growing list of minerals now mined and produced in the province with the official opening of Whitemud resources inc.’s metakaolin plant near Wood mountain.

Construction of Whitemud’s $50m. metakaolin facility began in autumn 2006. metakaolin is manufactured from kaolin sourced from nearby gollier Creek quarry. raw kaolin is dry fed to a coal-fired rotary calciner and transformed into metakaolin through dehydroxylation at 800ºC. the finished product is

then cooled and conveyed to the storage area.

the plant’s initial production capacity will be 150,000 tpa. Whitemud expects to increase production in line with demand, pushing it to 175,000 tpa, and possibly exceeding 350,000 tpa, assuming a second plant, with a working life of the mined resource thought to be just over 25 years.

the company claims that its metakaolin product can replace up to 20% of cement used to manufacture concrete (see Making the Grade for details, p.83).

according to Whitemud’s

estimates, the price per tonne of metakaolin is expected to be between Us$400-$600/tonne and the company further estimates the cost of production per tonne over the life of the mine to be C$125.42/tonne.

ministers from the saskatchewan government attended the metakaolin plant opening. Highways and infrastructure minister, Wayne elhard, commented: “We will be identifying a major project on the provincial highway system in which metakaolin will be used.”

in June 2008, the oregon department of transportation (odot) confirmed that

Whitemud’s metakaolin product had been added to odot’s Qualified Products List. Compressive strength gain, permeability reduction, mitigation of alkali silica reactivity, and sulphate resistance were some of the key performance criteria analysed by odot prior to their acceptance.

the local government is encouraging Whitemud to showcase its metakaolin product potential to transportation agencies, concrete suppliers and heavy construction industries in the Us and Canada.

in a reCent announcement to the australian stock exchange, minerals Corp. Ltd (mCL), sydney, conveyed an optimistic outlook for “green Cement” sales from its skardon river kaolin project as well as the proposed float of its operating subsidiary australian China Clays Ltd (aCCL).

aCCL holds all mCL’s clay assets (skardon river and swan river kaolin projects) and the proposed aim float of aCCL for Q4 2008 is now expected to proceed “…at a significantly

enhanced premoney valuation…”, with directors anticipating its value exceeding 100% of that of mCL.

Prospects have been boosted after months of kaolin trials with “major construction industry buyers” which, according to mCL, have resulted in letters of intent or sales agreements with large volume buyers in the UK, europe, Usa, and the Uae, as well as smaller buyers in australia.

mCL claimed that sales volumes were expected to

reach plant capacity (175,000 tpa; 75,000 tpa calcining capacity) by mid-2009.

mCL consolidated its clay marketing operations last year, and during 2008 has reported substantial expansion of its customer base for green Cement products in australia, europe, asia, and the middle east.

While operating costs in the kaolin operation were maintained, finance and investment related costs increased sharply owing to the

delayed float of aCCL. in addition to progress at

its skardon river Kaolin mine and plant at Cape York, Queensland, aCCL successfully completed the pilot plant programme at swan river (also kaolin). Product specifications and customer interest levels have been determined enabling an attractive business plan to be established for commercialising the project. mCL expects to commence developing this project after the float of aCCL.

BULgaria’s Leading indUstriaL minerals producer, Kaolin ad, of senovo, recorded a 17% increase in its consolidated revenue for H1 2008.

Kaolin ad’s sales rose 21% to Bgn66.7m.($48.31m.) for H108 and the company has forecast a 2008 sales increase of at least 20%. earnings posted a real decline of 43% to Bgn6.18($4.47m.).

the company reported that its serbian subsidiaries srbokvarc ad and Kopovi ad, and Ukrainian subsidiary PKsP made the biggest contribution to H1’s consolidated earnings.

established in 1924, through operations in Bulgaria, serbia, romania, turkey, and Ukraine, Kaolin ad produces dolomite (44,000 tpa, mainly for glass), na-feldspar (60,000 tonnes, for

glass and ceramics), kaolin and calcined kaolin (250,000 tpa for ceramics and paper, silica sand (1.1m. tpa for glass, construction, chemical, foundry, and ceramics), and limestone (130,000 tpa for Fgd and glass).

in a recent interview with a local news agency, Petar Petrov, executive secretary of the Bulgarian Chamber of mining and geology revealed that major Bulgarian producers of kaolin and gypsum had recently upgraded their equipment which allowed for increased productivity.

Petrov also underlined the challenges of Bulgaria joining the eU, and in particular the challenge of meeting the demands of the mining Waste directive by 2012, which contains stringent requirements and provides for specific methods of mining waste treatment.

“this is a serious challenge as our facilities were built 30 or 40 years ago in other conditions and methods. some of the older facilities will have to make serious investments.” said Petrov.

whitemud metakaolin plant on stream

skardon river kaolin future appears promising

Kaolin aD forecasts 20% 2008 sales

news at the core

October 2008 13

tHe PotasH striKe at Potash Corp. of saskatchewan inc. has an increased chance of spreading to other producers, as different mining unions have signed a statement of solidarity.

the Union of steelworkers (UsW), which is striking at PotashCorp’s allan, Cory and Patience Lake mines, has met with miners at mosaic Co. and agrium inc. and agreed to form a consolidated group of unionised potash miners to formalise strategy and bargaining positions.

the group consists of around 2,500 members and has signed a public pledge of solidarity. some 500 workers at three of PotashCorp’s mines are on strike and asking for increased wages and benefits.

in a recent research note on PotashCorp., JPmorgan said the company warned north american customers that a strike may impact deliveries, which could further limit supply. it is thought that in the absence of a settlement, PotashCorp may be forced to declare force majeure. in early september, shares of the company were down nearly 20% over the past three months, but still up 86% over the last year.

rodger Falcon, head strategic campaigns officer

at UsW, told IM: “We intend to take the message to every site in saskatchewan, setting up leaflets and distributing information in the plants.”

the UsW is also meeting with miners further afield in addition to transport unions, who transport the potash to ports.

“saskatchewan is land-locked and we’re going to see if the they [the transport unions] can help,” added Falcon.

Canadian potash producers, PotashCorp (9m. tpa), mosaic (8.6 m.tpa) and agrium (3m. tpa), have reported record earnings as prices for argriminerals skyrocket, prompting the union to hold out for more money as contracts come up for renewal.

so far, around 500 UsW members have been on strike since 7 august 2008, halting 30% of PotashCorp’s capacity. mosaic and agrium labour contracts expire in early 2009 (see IM September ’08, p.6)

meanwhile, PotashCorp has restarted operations at allan mine (1.74m. tpa) with management staff from other operations, but stated that: “Production rates will be determined as we go forward.” it is also investigating contingency

plans to restart Cory and Lake Patience mines.

the UsW, which has formed picket lines at the three sites, revealed to IM that it has real concerns about safety, if management tried to work down the mines.

Falcon said: “From past experience of a situation like this, someone always gets hurt. We’ll maintain the picket lines and try and dissuade them [management] from going in.”

Potash permitsinterest in claiming potash deposits continues unabated in north america.mountain Capital inc., of Vancouver has signed an agreement to purchase a 100% interest in the 77,665 acre Vermilion 15 Potash Property, located in east-central alberta. the property consists of four metallic and industrial minerals permit applications that were recently awarded through private bid by the department of energy, alberta.

Western Potash Corp. has been granted Potash exploration Permit QP-172 by manitoba science technology energy and mines. the permit, covering 49,000 hectares is located immediately south, and is contiguous

with the company’s russell-miniota property, and lies approximately 40km south-east of PotashCorp.’s rocanville potash mine.

the third exploration hole at its russell-miniota exploration permit targeted the esterhazy Potash member, the same member being mined by PotashCorp. at rocanville. the main potash mineralised zone was intersected from 889-892 metres.

in the Usa, mesa Uranium Corp. has filed potash exploration permit applications for the White Cloud project, which it claims has excellent potential for potash from both solution mining and naturally occurring potash brines. the project is located 2km north of intrepid Potash’s Cane Creek potash mine.

Intrepid adjustmentUtah and new mexico potash miner intrepid Potash inc. is adjusting its full year production guidance for potash downward by 20,000 s.tons (2%). the adjustment is a result of the decision to extend its turnaround schedule to include approximately 3-5 additional days of planned downtime and also lower than expected recovery rates experienced at the company’s West mine during the third quarter owing primarily to the decreased performance of a binding chemical purchased for use in the flotation circuit.

the result is an adjusted full year production range of 850,000-870,000 s.tons of potash and has the effect of increasing the full year potash production cost of goods sold forecast by $15/s.ton to $155 -165/s.ton. intrepid also expects its net realised price per s.ton of potash for Q3 to be approximately $620-640/s.ton.

Potash miners unite

PotashCorp has restarted operations at its Allan mine, in Saskatchewan (pictured here, 1.74m. tpa potash in 2007) with management staff from other operations.

500 union members have been striking since 7 August 2008, halting 30% of PotashCorp’s capacity.

courtesy Potashcorp.

PotashCorp has restarted operations at its Allan mine, in Saskatchewan (pictured here, 1.74m. tpa potash in 2007) with management staff from other operations.

500 union members have been striking since 7 August 2008, halting 30% of PotashCorp’s capacity.

courtesy Potashcorp.

news at the core

14 October 2008

estaBLisHing a mining operation in india is not an easy process, particularly for overseas companies. india’s mining industry has been stifled by the bureaucracy of a country with differing mining laws and regulations among its 28 states and 7 union territories.

the world’s leading wollastonite producer, Wolkem india Ltd has established a mining consultancy service to smooth the potential pitfalls that mining creates. Wolkem Consultancy services (WCs) aids with geological evaluation and planning of mineral deposits, preparing mining plans, schemes and mine closure plans.

guarang singhal, director of the Wolkem group explained to IM the rationale behind the move: “We have set up WCs to provide consultancy to specifically the mining and mineral processing industry, in addition to other industries in general.

“[one of the main services is to aid customers in] obtaining approvals under statutory laws of environment, forest protection for example, prevalent in india for any mine/plant expansion or new project” added singhal.

Wolkem has been mining

business for the last 36 years, primarily operating wollastonite mines from rajasthan state. its mines in Belkapahar and Kheratharla are located in protected forest area and as a result the company had to file for a number of licences before production including: the Forest Conservation act 1980; environment Protection act 1986; mines and minerals (development and regulation) act, 1957; and mineral Concession rules,1960 for approval of mine plan.

singhal continued: “as a result a group of our engineers and staff have developed expertise by keeping a tab on changing laws and in applying and obtaining permission required at the start of any mining project or even at the time licence renewal”

“at the same time there are number of mine owners willing to start a new project but are not educated in this field and do not have the expertise to file application under the various statutory laws.”

“the mining industry is growing fast in india and with a view to assist such mine owners we have decided to start WCs with an object to help them in applying

and obtaining permission under various acts.” He said.

WCs’ target markets are industrial minerals, metals, cement, steel, and aluminium, for either new companies wishing to begin mining in india, or existing companies who need to have mining/processing plant licences renewed.

at present, WCs is handling over 30 applications.

20 Microns IPOFollowing the news that gujarat based industrial minerals company, 20 microns Ltd, announced an initial public offering (iPo) to generate $5.5m., the company has fixed a price band for the iPo of rs 50-55/equity share ($1.07-1.18). the iPo was launched in the company’s bid to increase overall industrial mineral capacity by 50% on today’s output of 180,000 tpa.

in addition, the iPo has been assigned a Credit analysis & research Ltd grading (Care) of 3 out of 5, indicating “average fundamentals”. Care is one of india’s leading independent service rating groups, giving a performance grade of between 1-5 – grade 5 indicating

“strong fundamentals”, grade 1 indicating “poor fundamentals”.

Care explained the reason behind the average rating: “the grading takes into account 20 microns’ long and established track record in the micronised minerals industry, operating captive mines and geographical spread of its manufacturing facilities in a logistics intensive industry.

“the grading is constrained by unsatisfactory financial performance in the recent past including availing of Corporate debt restructuring package, competition from players in the organised as well as unorganised sector, increasing cost of fuel, iPo linked project and modest financial profile as reflected by high overall gearing and moderate profit margins, especially in a rising interest rate scenario..”

20 microns mines kaolin, calcium carbonate, and dolomite from deposits in gujarat, rajasthan, and tamil nadu; the company highlighted talc, ground calcium carbonate (gCC) and calcined kaolin as the most in demand minerals of the moment.

In the limelighta new report from india’s ministry of mines has placed limestone as the country’s most valuable industrial mineral, and the sixth most revered natural resource after coal iron ore, crude petroleum, natural gas, and lignite – all of which contributed to 93% of the mining industry’s value in may 2008.

in terms of tonnages amounts bauxite and chromite topped the mineral tables with 2.1m. tonnes, and 471,000 tonnes produced in may 2008, respectively.

the next industrial minerals to follow were apatite & phosphorite (134,000 tonnes), dolomite (344,000 tonnes), limestone (172,000 tonnes), and magnesite (21,000 tonnes).

wolkem seeksto smoothmining pitfalls

Wolkem’s new consultancy seeks to aid the industry innegotiating the bureaucracy that has stifled India’s industrial

minerals industry. Pictured is its wollastonite mine in Rajasthan.

Wolkem’s new consultancy seeks to aid the industry innegotiating the bureaucracy that has stifled India’s industrial

minerals industry. Pictured is its wollastonite mine in Rajasthan.

news at the core

16 October 2008

PriCes For FLUorsPar show no signs of softening and have continued their monthly ascent by rising since the start of the year from some $300/tonne to as high as $450/tonne currently (FoB China), or approximately $530-550/tonne CiF Us gulf Port/ european Port.

Prices are also catching up elsewhere, notably mexico where producers have reported that prices for filter cake as<5ppm (FoB tampico) are now $400-420/tonne, up from $330-350/tonne previously.

not surprisingly, higher fluorspar prices have also filtered through to prices for downstream fluorspar-based products, namely hydrofluoric acid (HF) and aluminium fluoride (alF3). While prices of HF are now over $1,000/tonne, producers of alF3 report that prices have at least doubled in the last three years from about $750/tonne FoB in 2005 to $1500/tonne FoB in 2008 on the back of not only to increases in fluorspar but also other key raw materials such as sulphuric acid and energy.

Looking ahead, producers of alF3 have warned that prices could rise to as high as $2,000/ tonne FoB in 2009 should raw material costs continue to rise to the same extent.

HF vs. AlF3HF is a basic starting point for a range of polymers such as teflon and used to produce chlorofluorocarbons (CFCs) used as aerosol propellants, refrigerant gases, blowing agents to expand plastic foams and solvents.

HF is also used in the preparation of uranium hexafluoride gas for enrichment. it is produced by reacting dried acidspar (97% CaF2), with concentrated sulphuric acid and 20% oleum in a rotary kiln. it takes approximately 2.2kg of fluorspar and 2.6kg of sulphuric acid to produce 1kg of HF.

alF3, which is the second largest market for HF after fluorocarbons, is produced by reacting HF or fluorsilic acid with alumina trihydrate (atH). it is used as a chemical additive in the primary aluminium production industry, or more specifically, as an electrolyte for the reduction of aluminium oxide to aluminium metal.

adding alF3 to the production process of primary aluminium is proven to lower the consumption of electricity required in the smelting process and consequently reduce production costs.

While the process technologies to produce alF3

and anhydrous hydrofluoric acid (aHF) from fluorspar are based on the same unit operations to generate the crude gaseous hydrofluoric acid, both HF and alF3 industries operate for the most part independently of each other.

most HF produced by alF3 is used as an intermediate product for alF3 production as opposed to being sold into the fluorochemical market. Part of the reason stems from the fact that HF is a hazardous material, and dangerous to transport.

AlF3 producers finedin sharp contrast to the current market forces at work, in June this year the european Commission (eC) fined three alF3 producers a combined €4.97m. for conspiring to fix the price of alF3 between July and december, 2000, a period of relatively low turnover in the industry according to the eC’s findings.

Fines were imposed on Fluorsid spa, italy, minmet Financing Company sa, switzerland, société des industries Chimique du Fluor, tunisia, industrial Quimica de mexico sa de CV and QB industrias saB de CV (both mexico). the company Boliden odda, norway, received full immunity from the fines.

the eC’s investigation was initiated following an application for immunity lodged by Boliden odda in march 2005. the eC’s decision established that the cartel members organised a meeting that took place on 12 July 2000 in milan where they agreed on a worldwide target price increase.

the eC found that “they looked at various parts of the world, including europe, to establish a general price level and, in some cases, a market division. they also exchanged commercially sensitive information. in the second half of 2000, the cartel members were in bilateral contacts with a view to monitoring implementation of the cartel arrangements agreed in milan.”

the fines imposed by the eC in this case were as follows:

l Fluorsid/minmet Financing Co.: €1.6m

l société des industries Chimique du Fluor: €1.7m

l industrial Quimica de mexico/QB industrias: €1.67m

Commenting on the action taken by the eC, Competition Commissioner neelie Kroes said: “this decision shows that the Commission takes all cartels seriously. Whatever the scope of the affected market, the duration of the cartel or the size of the companies involved; there is no safe haven for those who do not play by the rules.”

Appeal launchedalF3 producers named in the case are now fighting back. Fluorsid is appealing the decision before the eC First instance Court, arguing that three medium-size companies, representing a fairly small portion of the alF3 market in 2000, could not have

Fluorspar prices continue upward trend as alF3 producers appeal against ec cartel charge and fine

rising fluorspar prices have ripple effect

news at the core

October 2008 17

implemented a worldwide cartel against primary aluminium producers.

in a statement, the company commented: “as far as Fluorsid is concerned, yearly production and relevant market shares have almost doubled in the last 10 years, mainly on the basis of multi-year supply agreements with a pricing mechanism (“cost-plus” or “Lme aluminum linked”) applicable throughout all the contractual duration. Fluorsid believes that the european Commission has violated its rights of defense, the non-discrimination principles, as well as several procedural rules, among others how the leniency applications have been handled in this case.

the company has also pointed out that in 2007 the Us department of Justice closed its investigation into price fixing in the alF3 industry which was also initiated following a leniency application submitted by Boliden odda. “according to the Head of the Chicago doJ (antitrust division) there was no evidence of any infringement of antitrust laws whereas the european Commission has recently stated the opposite”, Fluorsid explained.

AlF3 driven by Al today, market demand for alF3 is considered stable globally and rising in the middle east and iceland in particular, where a rise in the construction of new aluminium smelters have resulted in an increase in local demand enabling producers to pass increases in production costs onto end users.

Commenting on current demand, one leading producer said: “market demand for alF3 is more or less in line with the past. Whilst improvements in technologies to produce

aluminium have reduced the specific consumption of raw material on one hand, these have been offset by an increase in new smelters which have provided opportunities for producers to allocate alF3 excess quantities on the other”.

Supply – China catching upWorld production of alF3 stands at an estimated 700,000 tpa, mainly from the Usa, norway, italy, tunisia, and Canada. the main HF-based alF3 producers of the western world (China and russia excluded) include: alcoa, Usa; rio tinto alcan, Canada; Fluorsid, italy; société des industries Chimique du Fluor, tunisia; noralf, norway; derivados des Fluor , spain; nitro Quimíca Brasileira, Brazil.

in russia, internal alF3 demand is sustained by local producers. China is a growing force in the world alF3 markets and according to some industry estimates may now account for more than 50% of the world’s production. Production has rapidly increased in tandem with growth in the Chinese aluminium industry (which has grown from a level of 2m. tpa in 2000 to 12m.tpa in 2007).

the top five Chinese producers are: Hunan Xiang Lv (65,000 tpa); dFd Chemical Co. (60,000 tpa); Bai Yin Fluoride Co. (25,000 tpa); gansu Kunlun (10,000 tpa); zibo nanhan Fluoride (10,000 tpa). “outside China, growth has been fairly slow with no new players and only a small number of plants have been modified or enlarged for existing producers”, explained one producer.

New production in Middle Eastgoing forward, a number of substantial projects are

underway to boost supply of the alF3 outside China, offering evidence of the growth potential for the industry.

in the middle east, gulf Fluor, which is a privately owned chemical producer based in abu dhabi, is building a new fluorides complex in the second phase of the industrial city of abu dhabi (iCadii) which is located 30km from the city of abu dhabi.

the new complex, which has required an investment of $500m., will produce alF3 and anhydrous hydrogen fluoride to meet the growing demand from in the region driven by competitively priced energy and a construction boom. the complex is expected to start operations in the second quarter of 2010 and will be the first plant of its kind in the gulf. Buss Chem ag of switzerland, which is well established globally, and simon Carves of the UK, have been contracted as project engineers, with simon Carves acting as the main contractor. the complex will have the capacity of 60,000 tpa of aiF3, and 10,000 tpa of HF. Fluorspar will be sourced from a range of producers worldwide.

the new supply is designed to meet both expanding demand from nearby existing smelters following recent expansions, and also a number of new smelter operations that are planned for the region. according to gulfFluor estimates, demand for aluminium metal in the gulf is expected to grow from a current level of 1.7m. tpa to over 5m. tpa by 2011 which makes a new alF3 project all the more compelling.

in addition, gulf Fluor has said that is has been engaged in discussions with international companies operating in the fluorine industry with a view to establishing possible off-take

agreements for part of the HF produced at the operation and possibly licensing technology for the manufacture of certain fluorocarbons and nitrogen trifluoride in abu dhabi.

S. African AlF3 on trackin south africa, alfluorco, a hydrofluoric acid and alF3 joint venture, is working towards the start-up of a rand500m.($60.7m.) hydrofluoric acid plant, in richards Bay to feed nearby aluminium smelters. the state-owned industrial development Corporation (idC) and Vergenoeg mining Company, owned by diversified mining company metorex, each hold a 25% stake, and minersa, which operates one of the largest HF and alF3 processing facilities in europe, holds a 50% stake.

the project is steadily gaining momentum. metorex reported in July that the site selection study and the environmental impact assessment scoping report had been accepted by the local authorities and a full environment impact assessment (eia) has commenced.

specialist studies are now nearing completion, and a positive record of decision is expected in october/ november 2008. re-zoning of the property from agricultural and housing to industrial development is in progress.

the bankable feasibility study will be finalised in december 2008, and the basic engineering technology design package is already complete. Completion of the final costing and integrated design is expected imminently. electrical co-generation has been included in the design, to use the excess energy from the sulphuric acid plant, given the current power shortage in south africa.

news at the core

20 October 2008

tHe FUtUre oF rio tinto Plc’s industrial minerals assets could be decided in the next three months, as chief executive tom albanese “expects to announce $10 billion of divestments this year”.

a shortlist of potential buyers for its huge talc and borates assets – operated through rio tinto minerals – is being compiled at present, but there are doubts in the industry that any deal will be confirmed in this space of time.

H1 2008 earnings of $57m. for rtm were $3m. below the same period last year. rio tinto explained the figures were a consequence of “higher prices for borates, talc and salt and notably higher volumes for borates [which] were offset by higher energy, freight and consumables.”

rtm’s borates operation in

California, through rio tinto Borax, produced 324,000 tonnes in the first half of this year, an 18% increase on the same period in 2007. the company’s salt production, primarily through australia based dampier salt, had a H1 output of 2.5m tonnes, and the talc assets, through France based Luzenac group, produced 679,000 in 2008’s first six months.

H1 production of titanium dioxide feedstock, which falls under rio tinto iron & titanium, increased by 6% to 761,000 tonnes – primarily from ilmenite and rutile mining at richards Bay minerals, south africa.

rio tinto revealed record overall H1 profits for a second year in a row, attributing a 55% increase in the group’s underlying earnings

to strength in all existing markets, operations and management.

earnings before deductions were an astonishing $11,400m. for the first six months of this year, a 73% increase on the same period last year.

Indian aluminario tinto is set to enter india by establishing a new 12,000 tpa alumina processing facility in gujarat.

the London headquartered mining group has decided to set up a greenfield activated alumina facility through subsidiary, rio tinto alcan, with an initial investment of close to $35m.

For the proposed project, rio tinto alcan B&a would set up a wholly-owned subsidiary in india. it may route its investments either

directly or indirectly through its affiliates and group companies.

the activated alumina manufactured at the new facility would cater to a diverse set of applications including water treatment, oil and petrochemicals and other processing industries.

the subsidiary would not undertake any mining activities though it could look at supplying speciality alumina and other allied products in the domestic market in future.

the domestic demand for activated alumina is presently met through imports. in the past, alcan had entered into technical know-how agreements with various indian companies Hindalco, nalco, JsW aluminium and Utkal alumina.

See p.21 for an interview with the new general manager of Rio Tinto Alcan’s specialty alumina business.

UK mineraL eXPLoration company, tertiary minerals Plc, has revealed a reserve extension at its storuman fluorspar project in north sweden.

drilling along a 2km section of the deposit uncovered significant additional fluorspar resources ranging from 10.6% - 22.7% CaF2. not only does the news bode well in terms of volume of fluorspar available, but it maintains the company’s momentum in bringing storuman to production.

tertiary’s Chairman Patrick Cheetham said: “Because of the apparent loss of all of the drill core from the 1970s work at storuman, it has been important to demonstrate that the grades and continuity of mineralisation reported by gränges [the geologist who outlined initial results] are real, and it is particularly encouraging to find extensions to the mineralisation not found by gränges. meanwhile the price of fluorspar

continues to climb with prices of $460-480/tonne now being reported, up from $300/tonne earlier this year.”

Pat Cheetham of executive chairman at tertiary minerals will be discussing the storuman fluorspar project at IMs Fluorspar 08 in montreal, Canada, 15-17 october 2008.

For more details see p.18 and visit www.indmin.com/f08

Fluorspar prices upin further positive news for tertiary, fluorspar prices have continue to rise this month with the Chinese acid filtercake (dry basis, CiF Us gulf Port) increasing by $70/tonne.

Last month the Chinese acid filterckae grade stood at $460-480/tonne, but this has since risen to $530-550.

general increases in traditional fluorspar markets and demand for key raw materials such as sulphuric and hydrofluoric acid (HF) has served to push up fluorspar prices across the board; it takes approximately 2.2kg of fluorspar to produce 1kg of HF acid.

rtM sale by year’s end?

almatis increases alumina prices

tertiary reveals fluorspar extension

aLmatis gmBH, tHe leading Frankfurt-based manufacturer of speciality alumina products, has announced price increases which will affect all new contracts worldwide.

Citing “exceptional increases” in transportation, energy and raw materials prices, almatis confirmed that ex-works prices for standard tabular, calcined alumina and calcium aluminate cement products would be increased by up to $150-$200/tonne.

Prices for all other product lines will be increased correspondingly.

martin Laudenbach, chief executive officer of almatis, explained: “this price increase… is part of our efforts to sustain our business and make large investments, like our new calcines kiln in asia, viable.”

Like many industrial minerals companies at present, almatis’ profit margins are feeling the pressure of high freight and energy prices. Laudenbach confirmed that these increases “leave us no choice but to reflect these developments in our pricing”.

speciality alumina products are presently experiencing solid demand from the abrasives, ceramics and refractories sectors. Prices recently quoted in IM include alumina, calcined 98.5-99.5% bulk FoB refinery at $800/tonne.

almatis’ price increases come two weeks after the company announced a $50m. investment for a new calcining facility in Qingdao, China, which will be incorporated with its existing operations (see IM September ’08, p.15).

news at the core

October 2008 21

Summarise the activities of the new Specialty Alumina unit of Rio Tinto AlcanPart of the Bauxite and alumina (B&a) division of rio tinto alcan (rta), specialty alumina is a newly created entity to focus on the manufacture, sales, marketing and development of non-metallurgical aluminas.

the specialty alumina business currently operates six plants (four in europe and two in north america) providing a total capacity of over 750,000 tonnes of alumina based products: these operations allow us to take in bauxite as our feed and include an alumina refinery, fusion plants and dedicated activated and tabular alumina plants.

as a result of this integrated approach, we are able to provide our customers with a wide range of products: dry and moist alumina hydrate, speciality white grades of alumina hydrate, calcined aluminas with varying characteristics, low soda aluminas, activated aluminas, tabular alumina,

sintered bauxite, and white and brown fused alumina. the business serves a large number of markets, including refractories, abrasives, solid surfacing, and ceramics and glasses.

How has Specialty Alumina fitted in with the Rio Tinto structure since the Alcan acquisition last year, and what have been the main challenges?rio tinto and alcan shared a common strong focus on Health, safety and environment (Hse). a key priority since the acquisition has been to maintain and strengthen further our commitments to the highest standards in terms of Hse. We have been able to take the best of both systems and Hse will continue to be a core value for all our activities.

one important initial decision following the acquisition by rio tinto has been the restructuring and creation, within B&a, of a dedicated specialty alumina

business, combining in a single entity headquartered in gardanne, France, all former alcan’s speciality alumina activities. this new structure allows us to take a global approach to the business and capture new opportunities.

specific focus has been immediately put to deal with the exceptional adverse conditions we and many manufacturers are facing on the cost input side. reviews are in progress to define our options for building a profitable and global leadership position in speciality aluminas by offering our customers high value propositions. additionally, we have identified opportunities for synergies with our new colleagues in rio tinto, not only within Bauxite and alumina, but also in other parts such as rio tinto Hse, rio tinto minerals, rio tinto marine and many others.

the integration has in fact allowed us to focus ourselves on our specific speciality alumina business and to identify new opportunities to grow and develop our businesses.

“Our greatest and immediate challenge is to put the business onto a firm financial footing”, Frédéric Ramé, general manager of the Specialty Alumina unit of Rio Tinto Alcan since March 2008. Ramé has a MSc in Economics from the London School of Economics, and started his career as a consultant in the industry sector. He joined Pechiney in 1999, first in charge of strategy and development in the ferroalloy division, and then as head of the silicon metal business unit. In 2005, he was appointed director sales and marketing of the make-up Europe business unit within Alcan Packaging, before joining Alcan Bauxite & Alumina as director strategic projects.

rio tinto’s dedication to speciality aluminasIM interviewed Frédéric ramé, general manager, of rio tinto alcan’s newly formed specialty alumina unit, to find out how non-metallurgical alumina fits in with the group’s restructured alumina business, following rio tinto’s acquisition of alcan last year

by Mike o’Driscoll, Editor

news at the core

October 2008 23

How would you describe RTA’s role and position in the non-metallurgical bauxite and aluminas market, its strategy, and planned developments?on a worldwide basis, rta specialty alumina is the largest supplier of non-metallurgical alumina; we have a long and proud history in the business with alumina having been produced continuously from gardanne since 1893. the gardanne plant was the first Bayer alumina plant ever built in the world and it continues to this day as an efficient and critical supplier of alumina hydrate and alumina to europe and the world.

We have been at the forefront of many areas of development and innovation in the industry and continue to maintain a strong technical development role today. We have invested significant sums in recent years in new alumina milling and associated equipment to meet growing demands for the refractory, glass and emission control markets. We have also made significant investments in equipment to deal with our bauxite residues; this is part of our strategy to ensure the long term sustainable viability of our operations in gardanne.

We are a major supplier to various regional and global industry segments, and our strategy is to reinforce our position in key markets such as advanced ceramics, refractories, solid surfacing, adsorbents and glass, while keeping our leading position in selected regional markets such as tiles and chemicals.

our ability to control all aspects of our production from the bauxite input through every stage of the process enables us to tailor make feeds which are optimum for each product grade.

on a geographical basis, we aim to leverage our abilities and be a significant player in all areas of regional growth, especially in asia, where we believe the opportunities make economic sense.

obviously, a key factor is the likely growth, profitability and sustainability of each opportunity. one specific part of this strategy which i can discuss is that we are currently finalising a feasibility review for a new activated alumina operation in india.

However, our first priority today is to improve our financial performance in the

critical economic environment climate now facing the alumina industry. the various costs (energy, freight, bauxite (both standard Bayer feed and calcined grades), chemical raw materials, etc.) have severely increased over the last few quarters. the rises have been so steep in the past six months that we are now in a situation where significant price increases are essential.

We have already started to pass through the value chain a portion of the cost increases, and our main objectives for 2009 are both to recover our prices to an acceptable level, and also to adapt our business approach to this new environment.

What is your view on the global non-met. alumina supply market, new supply sources, and outlook?With respect to calcined alumina in europe and north america, current capacity is fully utilised, creating a tight market for high alpha-alumina grades. significant expansions in the production of highly calcined speciality aluminas in europe and north america are highly unlikely, and very few companies globally are looking to expand in this area, therefore supply will continue to remain very tight.

We are continuing to work towards converting more of our capacity at gardanne from smelter grade alumina to highly calcined speciality alumina, which will help to alleviate the short supply situation in the future and meet our customers’ demands.

Whilst there are a number of major alumina expansion projects underway or planned, these projects are almost all designed to satisfy the continued growth in the aluminium market and are not expected to feed much product into the non-metallurgical alumina markets. We therefore consider the speciality alumina market as an exciting business activity for the foreseeable future.

What is your view on non-met. alumina demand, growth areas, and their outlook?this answer will of course be extremely dependant on the market and the geographic area. if european and north

american areas are mature in traditional markets such as chemicals or tiles, the same markets look very promising in emerging areas such as China and india. driven by steel industry growth, refractories will keep booming in asia, but are expected to grow only modestly in europe and north america.

then, speciality alumina markets such as ceramics or glass present some excellent growth opportunities in both Western areas (driven by innovation) and emerging regions (driven by standard of living improvement). mature markets such as water treatment are expected to grow at the same rate as gdP.

What are the greatest challenges for RTA and non-met. alumina producers in general?as previously explained, our greatest and immediate challenge is to put the business onto a firm financial footing. this will necessitate that we pass through a significant part of the cost increase we have experienced since the end of 2007.

our 2009 price negotiations will need to reflect the cost increases we have experienced and the change in the nature of this market, especially to prevent the volatility in cost factors. in the longer term, the key challenges will be to capture the growth in both the speciality markets we already serve and also that in the fast growing areas. thanks to our integrated position, we can manage our feedstock and use this advantage to focus on growth projects in india and China.

Where do you see the most potential opportunities for RTA and/or the non-met. alumina market in general?to summarise, speciality markets and emerging regions are definitely the greatest opportunities for us. We are excited about these opportunities and believe that we are very well positioned to benefit from this growth into the future. to capture this, our plan is to use our integrated position (from bauxite via hydrate to alumina) and develop the adapted service level (eg. on supply chain, commercial and technical support) to that of our customers with a cost-efficient and professional organisation.