industrial minerals basics: executive primer
TRANSCRIPT
Industrial Minerals
Basics Executive Pr mer
Mike O’Driscoll Industrial Minerals Consultant
© Mike O’Driscoll 2014 ▪ www.modriscollminerals.com
Mike O’Driscoll Industrial Minerals Consultant
Making sense of industrial minerals
Experienced ▪ Independent ▪ Insightful
Comment ▪ Advice ▪ Research ▪ Analysis
www.modriscollminerals.com
[email protected] ▪ +44 (0)1372 450 679 ▪ mobile +44 (0)7985 986 255
© Mike O’Driscoll 2014 ▪ www.modriscollminerals.com
Industrial Minerals Basics Executive Primer
1. What are industrial minerals?
2. Why are they so important?
3. How is the market structured?
4. How is the market driven?
5. Summary
6. Which key factors influence success?
Key points
© Mike O’Driscoll 2014 ▪ www.modriscollminerals.com
Industrial Minerals Basics Executive Primer
1. What are industrial minerals?
The generic term industrial minerals is used to
define a wide range of individual minerals, and rocks
containing minerals, which are exploited for their
non-metallurgical value.
They possess physical and chemical properties which
make good their application in a wide variety of
industrial and domestic uses.
Without industrial minerals, most of mankind’s
material achievements and products, involving the
simplest to the most sophisticated methods, would
not be possible.
© Mike O’Driscoll 2014 ▪ www.modriscollminerals.com
Industrial Minerals Basics Executive Primer
1. What are industrial minerals?
Some examples of industrial minerals and their uses:
End use markets = heavy & light industry, diverse, global, consumer driven
Bauxite
Clay
Limestone
Gypsum
Magnesite
Potash
Sand
Talc
Abrasives
Ceramics
Cement
Plasterboard
Milk of Magnesia
Fertiliser
Glass
Cosmetics
© Mike O’Driscoll 2014 ▪ www.modriscollminerals.com
Industrial Minerals Basics Executive Primer
1. What are industrial minerals?
In general, industrial minerals are large volume, low
value commodities.
They are extracted from surface and underground
mines.
Crude ore undergoes mineral processing (refining) to
make the desired grade for sale to the end user.
Grades are transported and traded to local, regional,
and international markets
6
© Mike O’Driscoll 2014 ▪ www.modriscollminerals.com
Industrial Minerals Basics Executive Primer
1. What are industrial minerals?
Comparison of mined metallic and non-metallic
commodities in the USA
7
Commodity No. mines Output (tonnes) Value (US$m)
Gold 50 227 10,200
Silver 42 1,090 84
Copper 27 1,220,000 9,000
Construction
sand & gravel
6,600 861,000,000 6,700
Phosphate 11 32,300,000 3,000
Barytes 4 660,000 78
Source: USGS 2013 data
Industrial minerals are generally high volume, low value commodities
© Mike O’Driscoll 2014 ▪ www.modriscollminerals.com
Industrial Minerals Basics Executive Primer
1. What are industrial minerals?
Industrial minerals are processed to refine the mineral to a
specific modified form and/or to liberate chemical
compound(s) to make an intermediate mineral product, eg.
Specific grain size
Silica sand
Titanium dioxide
High brightness; high opacity;
surface modified;
specific grain size
Ilmenite
Magnesium oxide
Hard; chemically inert; heat resistant;
specific grain size
Magnesite
Specific grain shape & size;
surface modified; high brightness
Wollastonite
© Mike O’Driscoll 2014 ▪ www.modriscollminerals.com
Industrial Minerals Basics Executive Primer
1. What are industrial minerals?
Industrial minerals processing may comprise a few simple,
or many, and complex stages, eg.
Classification
Screening
Secondary crushing
Primary crushing
Grinding
Drying
Filltration
Flotation
Classification
Grinding
Drying
Screening
Secondary crushing
Primary crushing
Construction aggregates Talc
Solvent extraction
Reduction/Oxidation
Thickening/Filtration
Roasting
Acid leaching
Drying
Thickening /Filtration
Flotation
Chemical conditioning
Grinding
Screening
Primary crushing
Rare earths
© Mike O’Driscoll 2014 ▪ www.modriscollminerals.com
Industrial Minerals Basics Executive Primer
What are industrial minerals?
There are also synthetic industrial minerals processed
from natural industrial minerals, such as:
Magnesite+Bauxite Spinel
Bauxite, kaolin Mullite
Lime+Carbon Dioxide Precipitated Calcium
Carbonate
Quartz+Coke Silicon carbide
Limestone+Salt+Coal+Ammonia Soda ash
Correct processing is key to producing grade meeting market specifications
© Mike O’Driscoll 2014 ▪ www.modriscollminerals.com
Industrial Minerals Basics Executive Primer
1. What are industrial minerals?
Metallic/Non-metallic synergies: certain minerals have
both metallic and non-metallic value; the dominant
market use may hold sway over availability of the
mineral for the less dominant value, eg.
Mineral Non-metallic use Metallic use
Bauxite Abrasives, refractories Aluminium metal
Chromite Foundry, chemicals Chrome, Ferrochrome
Lithium Ceramics, glass, batteries Lithium metal
Magnesite Chemicals, refractories Magnesium metal
Manganese Batteries, pigments Manganese metal
Quartz Glass, ceramics Silicon metal
Rutile White pigment Titanium metal
Zircon Ceramics, refractories Zirconium metal
© Mike O’Driscoll 2014 ▪ www.modriscollminerals.com
Industrial Minerals Basics Executive Primer
2. Why are industrial minerals so important? In spite of their necessity to modern industry and
living, industrial minerals compared with other
mined commodities, such as precious and base
metals, have sometimes been described as
“unglamorous”, “rubble”, and even “the third world
of the mining industry”!
But without industrial minerals, our world would be
much, much poorer
See the next two slides for two simple examples
highlighting industrial minerals in our world: by
seeing what is in a typical house, and the average
lifetime requirements of a human.
© Mike O’Driscoll 2014 ▪ www.modriscollminerals.com
Industrial Minerals Basics Executive Primer
2. Why are industrial minerals so important? Roofing materials
kaolin, iron oxide,
talc, calcium
carbonate, feldspar
Ceramics
silica sand, talc, calcium
carbonate, feldspar,
kaolin, wollastonite, zircon
Cosmetics/Pharma
talc, diatomite, silica,
magnesia, bentonite,
kaolin, mica, calcium
carbonate, fluorspar,
soda ash, borates,
iodine, lithium
Solar cells
quartz, fused silica,
silicon carbide,
fluorspar,
wollastonite, talc
Insulation
kaolin, bauxite, alumina, dolomite, basalt,
silica sand, soda ash, borates, calcium
carbonate, vermiculite, perlite, diatomite
Wallboard
gypsum
Paper
kaolin, talc, calcium
carbonate, TiO2
Computer/IT devices
rare earths, alumina
trihydrate, magnesium
hydroxide, talc, calcium
carbonate, quartz,
lithium, graphite
Source: Original house schematic Pinkpig
Paint
talc, kaolin, calcium carbonate,
barite, TiO2, wollastonite, mica,
iron oxide, diatomite, feldspar,
syenite
Light bulbs
silica sand, fused
silica, quartz, rare
earths, soda ash,
calcium
carbonate
Cat litter
bentonite, attapulgite,
diatomite, zeolite,
sepiolite
Saucepans – ALL metal/steel items
flux minerals: bauxite, olivine, lime,
wollastonite
refractory minerals: alumina, bauxite,
graphite, andalusite, fused alumina,
magnesia, zircon, spinel, chromite,
silicon carbide, kaolin “White” goods
talc, calcium
carbonate,
kaolin,
wollastonite
Oven/water heater/boiler
refractory minerals
Detergent
soda ash,
borates
Refrigerants
fluorspar
DIY tools
silica sand, fused
alumina, silicon
carbide
Automobile (+ ALL plastics)
plastics/rubber: talc, calcium
carbonate, wollastonite, kaolin,
mica, silica sand, alumina, barite,
trihydrate, magnesium hydroxide
glass: soda ash, calcium
carbonate, silica sand, borates,
kaolin, lithium
engine: rare earths, graphite,
lithium, talc, borates
Bricks, mortar,
cement
kaolin, gypsum,
silica sand,
calcium carbonate,
bauxite, iron oxide
Carpet backing
barite, talc, calcium
carbonate, kaolin
Glass
silica sand, calcium
carbonate, soda ash,
fedlspar, syenite borates,
fluorspar, lithium
TV/DVD
rare earths, borates,
lithium, graphite, quartz
Lightweight construction
materials
diatomite, perlite, vermiculite
Garden
potash, phosphates,
sulphur, nitrates,
borates, vermiculite,
perlite
House of Minerals
© Mike O’Driscoll 2014 ▪ www.modriscollminerals.com
Industrial Minerals Basics Executive Primer
2. Why are industrial minerals so important?
Magnetite used in coal washing
Refractory and flux minerals required to smelt metals
Flux minerals and clay required for iron ore pelletising
Oilfield minerals required to extract oil and gas
Source: Original baby schematic Mineral Information Institute www.mii.org
Average lifetime requirements for each person born in the USA
© Mike O’Driscoll 2014 ▪ www.modriscollminerals.com
Industrial Minerals Basics Executive Primer
2. Why are industrial minerals so important?
Assessing the industrial minerals business can be confusing,
since each mineral can serve up to 4-20+ different markets,
and each market can demand a range of different minerals, eg.
Talc Paper
Plastics
Ceramics
Glass
Refractories
Chemicals
Borates
Rare earths
Magnesite
Kaolin
Silica
The World Wide Mineral Web!
© Mike O’Driscoll 2014 ▪ www.modriscollminerals.com
Industrial Minerals Basics Executive Primer
2. Why are industrial minerals so important?
Source: Original baby schematic Mineral Information Institute www.mii.org
Summary of major industrial minerals markets
Industrial mineral uses vary widely; minerals serve multiple markets
Abrasives Filtration Absorbents Flame retardants Adhesives/sealants Foundry Animal Feed Glass Batteries Insulation Catalysts Metallurgy Cement Nanomaterials Ceramics Oil/gas drilling Chemicals Paint Construction Paper Cosmetics Pigments Electronics Plastics Environmental Refractories Fertiliser Welding
© Mike O’Driscoll 2014 ▪ www.modriscollminerals.com
Industrial Minerals Basics Executive Primer
2. Why are industrial minerals so important?
Industrial minerals $42.3m
37%
Metalllic minerals $31.9m
28%
Coal $9.8m 35%
Industrial minerals account for the largest sector of
US mine production by value
Source: USGS 2013 data
© Mike O’Driscoll 2014 ▪ www.modriscollminerals.com
Industrial Minerals Basics Executive Primer
2. Why are industrial minerals so important?
The USA relies on significant industrial mineral imports
Source: USGS 2013 data
100%
70-100%
40-70%
20-40%
Asbestos Canada, Brazil
Bauxite & Alumina Jamaica, Brazil, Guinea, Australia
Fluorspar Mexico, China, S. Africa, Mongolia
Graphite China, Mexico, Canada, Brazil
Mica China, Brazil, Belgium, India
Quartz crystal China, Japan, Russia
Scandium China
Strontium Mexico, Germany, China
Yttrium China, Japan, Austria, France
Iodine Chile, Japan
Diamonds China, Ireland, Rep. of Korea, Romania
Antimony China, Mexico, Belgium, Bolivia
Potash Canada, Russia, Israel, Chile
Titanium minerals S. Africa, Australia, Canada,Mozambique
Garnet Australia, India, China
Barytes China, India, Morocco
Silicon Carbide China, S. Africa, Netherlands, Romania
Vermiculite South Africa, China, Brazil
Salt Canada, Chile, Mexico, The Bahamas
Perlite Greece
Chromium South Africa, Kazakhstan, Russia, Mexico
Magnesia China, Brazil, Canada, Australia
© Mike O’Driscoll 2014 ▪ www.modriscollminerals.com
Industrial Minerals Basics Executive Primer
2. Why are industrial minerals so important?
Several organisations are researching and evaluating the
supply risk and “criticality” of minerals deemed essential
to the performance of state and regional industries, eg.
Industrial minerals are economically important, and in some cases have
strategic value, but this will be relative to the end user market dynamics
© Mike O’Driscoll 2014 ▪ www.modriscollminerals.com
Industrial Minerals Basics Executive Primer
2. Why are industrial minerals so important? Owing to the scarcity of resources and supply issues, certain
industrial minerals are considered “critical” to industries eg.
European Commission
Raw Materials Initiative
Heavy rare earths
Light rare earths
Natural graphite Magnesite
Fluorspar
Phosphate
Borate
Barytes
CRITICAL
NOT CRITICAL
Potash Diatomite
Bentonite, Perlite,
Clays, Feldspar,
Talc
Lithium, Gypsum,
Silica sand, Limestone
Economic importance
Supply
ris
k
Source: Original chart European Commission
© Mike O’Driscoll 2014 ▪ www.modriscollminerals.com
Industrial Minerals Basics Executive Primer
3. How is the market structured?
The industrial minerals market is structured on the supply
chain of the mineral product from mine to market.
Mined & processed
mineral grade
Intermediate mineral product
Intermediate mineral market
End user market
Ultimate end user market
Silica sand
Glass production
Construction
Ilmenite/rutile
Titanium dioxide
TiO2 pigment production
Paint production
Automobiles
Abrasive grade bauxite
Brown fused alumina
Refractories production
Steel production
Shipping
In general Some basic examples
© Mike O’Driscoll 2014 ▪ www.modriscollminerals.com
Industrial Minerals Basics Executive Primer
3. How is the market structured? Industrial mineral supply chains can be simplified into three
key business tiers which encompass the entire industrial
minerals market structure.
SUPPLY
LOGISTICS
MARKET
Direction
of supply Direction
of demand
© Mike O’Driscoll 2014 ▪ www.modriscollminerals.com
Industrial Minerals Basics Executive Primer
3. How is the market structured? These three tiers host a range of functional sectors.
MARKET
Direct market Intermediate market End market
LOGISTICS
Trading Processing Transport Inspection Stevedoring Storage Distribution
SUPPLY
Exploration Finance Engineering Production Processing
Each industrial mineral has its own specific supply chain characteristics
© Mike O’Driscoll 2014 ▪ www.modriscollminerals.com
Industrial Minerals Basics Executive Primer
3. How is the market structured? Each tier hosts sectors with different functions and priorities.
Developer
•Exploration
•Evaluates markets
•Secures reserves
•Develops project
•Pilot plant
•Not in commercial production
•Raising finance & profile
Producer
•Mine & plant operator
•Sells to existing and pursues new markets
•May sell crude ore to processor
•Seeks new reserves/facilities
•Close contact with consumers and/or processors
Processor
•No mine or reserves
•Operates plant to process crude or semi-processed minerals imported from producer for trader, consumer, self, or combination
•Sells to existing and pursues new markets/clients
Processing plant supplier
•Develops & manufactures processing innovations and plant equipment
•Sells to producers and processors
•Tracks market trends
•Close support with clients
SUPPLY
© Mike O’Driscoll 2014 ▪ www.modriscollminerals.com
Industrial Minerals Basics Executive Primer
3. How is the market structured?
Each tier hosts sectors with different functions and priorities.
Logistics organisation
• Sells services to deliver mineral from mine to market
• All transport modes
• Port handling
• Warehousing
• Distribution
• Seeks optimum logistics solutions and systems
• Develops logistics innovations
• Close support with producers, processors, traders, & consumers
• Tracks market trends
Trader
• Facilitates mineral supply to consumer
• Absorbs risks of supply chain issues
• Trading
• Marketing/Promotion
• Distribution
• Processing
• Logistics/Inspection
• Seeks new and alternative supply sources for consumers
• Close support with producers & consumers
• Tracks market trends
Inspector
• Quality control experts
• Hired by producers to inspect mineral grades
• Hired by traders, processors,& consumers to inspect contracted shipments at loading and discharge
• Seeks new and diverse clients
LOGISTICS
© Mike O’Driscoll 2014 ▪ www.modriscollminerals.com
Industrial Minerals Basics Executive Primer
3. How is the market structured? Each tier hosts sectors with different functions and priorities.
Consumer
• Buys minerals for manufacturing intermediate product or for direct end use
• Seeks long term security of low cost, high quality mineral sources
• Consistent mineral availability, quality, & price is paramount
• May source direct or use traders and/or processors
• Seeks new and alternative mineral sources
• Mineral demand by volume, type, and grade influenced by their customers’ demand
• Close co-operation with producers, traders, processors, logistics
MARKET
© Mike O’Driscoll 2014 ▪ www.modriscollminerals.com
Industrial Minerals Basics Executive Primer
4. How is the market driven?
“Without a market, an industrial mineral deposit
is merely a geological curiosity”
© Mike O’Driscoll 2014 ▪ www.modriscollminerals.com
Industrial Minerals Basics Executive Primer
4. How is the market driven?
To have any value, and any potential for development, an
industrial mineral source must be able to economically
deliver an acceptable product to a market in demand.
As seen earlier, industrial minerals are absolutely essential
for markets manufacturing all kinds of products.
Thus, the performance of the mineral consuming market
drives industrial mineral demand.
No market = no mineral demand = no market development
© Mike O’Driscoll 2014 ▪ www.modriscollminerals.com
Industrial Minerals Basics Executive Primer
4. How is the market driven?
Industrial mineral market trends are shaped by:
1. Primary demand drivers which impact the overall market
performance in a state or region
• Economy
• Population
• Development
Primary demand drivers
© Mike O’Driscoll 2014 ▪ www.modriscollminerals.com
Industrial Minerals Basics Executive Primer
4. How is the market driven?
Industrial mineral market trends are shaped by:
2. Key influencing factors specific to the trade of minerals,
markets, and regions
• Resource-market proximity
• Specific market demand trends
• Limited resource distribution
• Reliance on imports
• China
• Pricing
• Logistics
• World events
Key influencing
factors
© Mike O’Driscoll 2014 ▪ www.modriscollminerals.com
Industrial Minerals Basics Executive Primer
4. How is the market driven?
Influencing factor example: China Remains a significant supplier of minerals to world markets,
as well as a growing mineral consumer
Rare earths 97%
Refractory bauxite 95%
Fused magnesia 85%
Graphite 80%
Mica (scrap/flake) 69%
Wollastonite 59%
Brown fused alumina 55%
Silicon carbide 55%
Fluorspar 53%
Barytes 48%
Dead burned magnesia 45%
Talc 30%
Vermiculite 22%
Share of global production
© Mike O’Driscoll 2014 ▪ www.modriscollminerals.com
Industrial Minerals Basics Executive Primer
4. How is the market driven?
Influencing factor
example: Pricing
Industrial minerals
pricing is opaque, there
is no exchange.
Apart from a few
minerals, there is no
formal listing of prices.
Pricing contracts are
often long term
Prices are influenced by
a range of factors
Price
US$/t
Quality
Volume
Processing
Packaging
Inspection
Insurance Logistics
Duties
Currency
Market
Relation-ships
© Mike O’Driscoll 2014 ▪ www.modriscollminerals.com
Industrial Minerals Basics Executive Primer
4. How is the market driven?
Influencing factor example: Logistics Logistics is one of the most important components of any industrial mineral
project, and one that is most often overlooked, it can make or break it.
Source: Logsitics graphic Santini, Barker, & Bentzen 2006
Mine to market
logistics embraces
many stages.
The cost of
logistics can
account for up to
70% of the final
delivered mineral
price to market.
© Mike O’Driscoll 2014 ▪ www.modriscollminerals.com
Industrial Minerals Basics Executive Primer
5. Summary
The main characteristics of the industrial minerals market
High volume, low value commodities
Used in a wide variety of industrial and domestic uses = fragmented market
Of economic, sometimes strategic, importance, essential to modern manufacturing and living
Certain industrial minerals have synergies and influence with metals markets
Minerals may be classified or grouped by the markets they serve, but…
Minerals supply multiple markets, each with different requirements and dynamics
Supply chain structure is built on three broad business tiers: supply, logistics, and market
Processing is key to meet market specifications, different markets require different grades
Logistics account for a large share of the final delivered price of the mineral
Industrial minerals are market driven: no market = no demand = no mineral development
Market performance is influenced by primary economic drivers and specific factors
Industrial mineral pricing is opaque, specific to markets and buyer/seller relationships
© Mike O’Driscoll 2014 ▪ www.modriscollminerals.com
Industrial Minerals Basics Executive Primer
6. Which key factors influence success?
• High quality, sufficient volume Reserves
• Mineral must meet market specifications Marketable grade
• Essential to have market & knowledge of it Market demand
• Funding for all aspects of project Financing
• Ensure correct and complete process route Processing
• Secure optimum logistics system & routes Logistics
• Awareness to diversify products & markets Flexibility
In no particular order, they all have top priority:
Mike O’Driscoll Industrial Minerals Consultant
Thank you for your attention.
If you have any questions or comments about this briefing,
or would like more information, please contact.
www.modriscollminerals.com
T: +44 (0)1372 450 679
M: +44 (0)7985 986 255
Industrial Minerals Basics Executive Pr mer