Titanium
ores, despite the current problems, will have a more promising future.
by Roskill*
Anyone who is part of the titanium pigment and mineral industries went through a difficult time in 2015, due to production cuts faced by both producers of titanium dioxide pigments and producers of raw materials.
In its latest report on the titanium ore industry, Roskill predicts that in the long term the prospects for the industries are better. The production of titanium dioxide pigment (TiO2) is by far the sector that consumes the most titanium dioxide raw materials, accounting for 83% of production in 2015 and an average annual growth of 4.2% in the demand for raw materials by the titanium pigment industry by 2025 is forecast.
Raw material production levels will be slightly higher in 2016, above the total of 7.56Mt reached in 2015 worldwide. Overall, the production of raw materials has increased by an average of 3% per year since 2005, but within this figure the production of synthetic rutile and titanium slag has decreased, while rutile and ilmenite for direct use have grown faster.
China boosts demand for ilmenite
One of the main trends in the last ten years has been the influence of China, especially on ilmenite production levels. The consumption of ilmenite for the manufacture of TiO2 pigment obtained by sulfate process has increased by 80% between 2005 and 2015, this is largely attributable to the rapid expansion of China's titanium manufacturing industry.
Most of the expansion has its roots in domestic ilmenite production, but China has also been a major importer of ilmenite over the past ten years. Imports peaked in 2012, at about 1.6Mt (TiO2 units), but subsequently fell to just over 1Mt in 2015. Imports come mainly from Australia, Kenya, Mozambique, India and, until 2013, Vietnam.
Roskill estimates that rutile accounted for 9% of titanium raw material production in 2015. Among the main production companies are Iluka, Cristal and Sierra Rutile. The dominant force in the production of titanium slag is Rio Tinto, through its wholly owned subsidiary RTFT in Canada and the subsidiary GBR in South Africa, of which it owns 74%. Together they accounted for 57% of last year's global production.
Going forward, there will be a shift in the demand for raw materials as the processing capacity of titanium pigment evolves. In 2015, TiO2 pigment plants obtained by chloride process accounted for 39% of total raw material demand, while pigment plants obtained by sulfate process accounted for 44%, compared to 46% and 41%, respectively, in 2005.
By 2025, almost all of the net growth in demand for TiO2 pigments will come from chloride process pigment plants, which will account for just under 50% of total raw material demand, while sulfate-obtained pigment plants will account for just over 30%.
Average prices of titanium raw materials experienced little change before 2010; subsequently, there were several price spikes, which reached historic peaks in 2012. Average prices have subsequently declined to levels higher than historical standards up to 2015. Following the launch of new projects in 2013 and 2014, the situation has reverted to an oversupply of raw materials in 2016. Starting in 2017, Roskill expects prices in real terms to rise slightly for rutile, synthetic rutile and chlorinable slag. In the case of ilmenite, however, a longer waiting time will be required as sulphate ilmenite prices are expected to stabilise in 2017 and price increases (in real terms) will occur much later.
The TiO2 pigment industry is reformed
In the ten years to 2015 there were a significant number of mergers and acquisitions in the TiO2 pigment industry, expansions in production capacity in China and lately a rationalization, elsewhere, in terms of plant closures. Currently, there are 60 different companies that manufacture TiO2 pigment, 42 of which are based in China. China is the world's largest producer of TiO2 pigment and in 2015 accounted for 40% of the world's effective production capacity.
In recent years there has been an overproduction of TiO2 pigment, with an average capacity utilization within the industry of just under 80%. Consequently, none of the pigment producers outside of China are planning to build new plants. However, several of China's largest pigment producers have plans to install new production plants using the chloride process in order to replace existing production plants with the sulfate process.
Elsewhere, there may be two or three entirely new plants employing technology that cannot be categorized as a sulfate process or a chloride process. Three such projects are planned: the WhiteRock pigment plant near Buffalo, New York (USA), the Argex plant near Montreal (Canada), and the TNG plant in Darwin (northern Australia).
In terms of demand, almost all of TiO2 is used as a pigment, but there are some interesting alternative applications that constitute less than 5% of total global consumption. It is estimated that total world consumption in 2015 was just under 6 Mt.
The paint industry is the most important consumer sector and accounts for around 55% of global consumption. The plastics industry has consistently shown faster growth as a TiO2 consumer sector, with a CAGR of 3% between 2005 and 2015, with the TiO2 pigment being used in most polymer systems.
The paper industry has undergone structural changes in demand for TiO2, as the consumption of printing and writing papers and folding cardboard has declined, particularly in North America. On the other hand, the demand for TiO2 pigment has been increasing in the special decorative paper sector. The packaging sector has driven demand for TiO2 in the area of printing inks, offsetting the decline in the use of printing inks in the publishing sector.
Looking ahead, higher rates of economic growth in North America and Japan could lead to increased levels of TiO2 pigment consumption. Lower inflation rates in China could lead to a relaxation of the Chinese government's restriction on investment in infrastructure, including construction, which could lead to increased demand for TiO2 pigment. Roskill forecasts that global demand for TiO2 will increase by just over 4% annually, above the growth of the global economy, ensuring that the long-term outlook for the TiO2 pigment industry is positive.
* Roskill is a company specialized in market analysis. The fifth edition of the report "Titanium Minerals; Global Industry, Markets and Outlook" is now available on Roskill Information Services. https://roskill.com
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