Mineral Sands in an era of geopolitical uncertainty – what can we expect?

Although shy of its 2023 and 2024 forecasts, the mineral sands industry has shown resilience in the face of past geopolitical setbacks, with demand for Ti02 pigment – the sector’s primary downstream market – maintaining a stable growth rate over the last two decades.

But how will the industry weather against the rise in geo-fragmentation and global protectionism, resulting from the Trump administration, which has already seen the US impose hefty tariffs on a number of influential nations?

Reg Adams of Artikol UK – a keynote speaker at this year’s Mineral Sands Conference – warns that demand for pigment may continue to wane, with damaging effects for titanium producers. However, other segments of the mineral sands value chain could see a brighter future.

“Pigment has always been the main driver for getting titanium out of the ground. So if the TiO2 pigment industry catches a cold, the feedstock industry will naturally go down with influenza. And it is safe to say the pigment industry is suffering a cold right now, with global demand down by 6% over the past three years” Reg said.

In fact, worldwide demand for TiO2 pigment fell from 7.25 million metric tonnes in 2021 to 6.25 million tonnes in 2023. With consumers’ pigment inventories at a low ebb at the beginning of 2024 and hopes for renewed vigour in the construction and automotive sectors worldwide, Industry observers had been anticipating a bounce-back to at least 7 million tonnes for the year. Those predictions did not materialise.

“We were about 200,000 tonnes out – at 6.8 million tonnes for the year. And that figure included up to 0.3 million tonnes of pigment bought by traders and consumers in advance of threatened tariffs and price rises.

“In view of the world economic situation over the next two or three years, it is now considered unlikely that growth will be much better than 2.4 percent per annum going forward. That’s very different from the traditional long-term average of 3 percent per annum,” Reg said.

The US’s tariffs on a range of products from China, Canada and Mexico are the main culprit, with customers now paying higher prices for finished goods, like paints, plastics, and other mature titanium-based products. Downstream markets for zircon, like ceramics, are also been impacted. Wide-ranging US import tariffs are likely to be extended to other developed countries in Europe and the Asia/Pacific, which in turn will provoke retaliatory actions.

“Tariffs are having a dampening effect on world trade, particularly in the affected countries, but also in the global supply chain. It doesn’t look as though there’s going to be anything other than below-par growth in world consumption going forward, which will have a negative impact on feedstock producers and the mineral sands industry as a whole.”

China is also having an impact

In the current climate, China’s influence is being felt with increasing strength, with Chinese suppliers claiming a greater share of export markets for pigment, ceramics, and zirconium chemicals.

“They are entering these markets with relatively low prices and significant volumes of supply. They’re capturing more of Europe, India, Brazil, all of Latin America, and a lot of Southeast Asia too. High-cost TiO2 pigment plants in Finland, Germany, India, Italy and Taiwan have had to close and further plant closures have been announced in Japan.” Reg said.

The EU, Brazil and India have already imposed hefty tariffs on Chinese imports, in light of what they feel to be unfair competition and price undercutting by Chinese suppliers. Meanwhile, Saudi Arabia has instigated an anti-trust investigation against Chinese imports, which will likely see a similar result.

However, these measures will have adverse consequences – further elevating pigment prices and harming global demand. “It’s certainly not going to help to propel a big demand increase. It’ll have a dampening effect generally – particularly from China,” he said.

Opportunities for Australia

Despite this, China is increasing its production capacity for TiO2 pigment, and is due to exceed 7 million metric tonnes per year by 2026/27 – up from the current level of 5.9 million. This has a range of benefits for the Australian market.

Some Australian miners, such as Image Resources, for example, have adopted the business model of shipping intermediates – in the form of mixed heavy mineral concentrates – to China, for further processing into finished feedstocks and, ultimately, pigments made in China. Exponents of this model have saved on capital investment and benefited from the expansion of China’s pigment production.

Another approach has been to develop joint ventures, the most prominent example being the joint venture between Sheffield Resources and the Chinese steel giant, Yansteel.

“After lengthy exploration work in Western Australia, Sheffield Resources began mining a deposit in the Canning Basin at the beginning of 2024 and it has been shipping ilmenite concentrates to Yansteel out of the port of Broome (about 2000 km north of Perth).

“Meanwhile Yansteel is a new entrant to the industry, building a completely new plant in Hebei province. That’s a really big project at 0.5 million tonnes per year,” Reg said.

However, with other companies also adding to Chinese capacity – including another 0.5 million tonnes per year from a project in Fujian province – questions linger over where exactly the output of these joint ventures might be sold.

“The Fujian project, pioneered by another new entrant (Kuncai Zhengtai) is already producing a pigment that’s of good quality at a very competitive price – and that is also going to increase the availability of Chinese supply on the market.

“So it’s interesting times, really for the industry. It’s not exactly a booming market, but there will, of course, always be opportunities for good quality projects.”

Fresh prospects for titanium

Despite the geopolitical climate, the mineral sands sector can also take solace in some strengthening industry prospects.

The rise in military and defence spending, for example, could see heightened demand for titanium metal.

“Currently, titanium metal (and alloys) account for around 7 percent of total TiO2 feedstock demand, so it’s a much smaller end use sector for titanium minerals – the vast majority of which (90 percent) goes to pigment.

“But small as it may be, it is very likely to be increasing all around the world. Not only China, but also in in the West. So that’s that a bright spot for titanium feedstock, particularly of the richer variety.”

Further insight

Sharing more updates from around the world, Reg Adams will present at the Mineral Sands Conference, to be held 26-27 March at the Pan Pacific Perth.

Learn more and register your tickets here.

Visit Conference Website