Industrial Minerals Basics: Executive Primer

Industrial Minerals

Basics Executive Pr mer

Mike O’Driscoll Industrial Minerals Consultant

© Mike O’Driscoll 2014 ▪ www.modriscollminerals.com


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


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




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.




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




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




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




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




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



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




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



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.



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



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




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!




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




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





The USA relies on significant industrial mineral imports


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




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



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




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



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



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



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




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



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




“Without a market, an industrial mineral deposit

is merely a geological curiosity”




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




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




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




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




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




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.



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



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:


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

[email protected]

Industrial Minerals Basics Executive Pr mer

Industrial Minerals Basics: Executive Primer

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