GMA Garnet eyes increased share of abrasives market following acquisition – CEO

➤ GMA Garnet is working to grow its share of the abrasives market while boosting the global garnet market.

➤ The garnet industry benefits from both global decarbonization efforts and fossil fuels, being used for wind turbines, hydrogen infrastructure and in the oil and gas industry.

➤ GMA Garnet has been seeing increased interest in garnet recycling as waste disposal costs rise globally.

Grant Cox, CEO of GMA Garnet. Source: GMA Garnet Pty. Ltd.

Singapore-based industrial conglomerate Jebsen & Jessen Pte. Ltd. closed its acquisition of GMA Garnet Pty. Ltd. in July. The target company pioneered the use of garnet as a blast abrasive in the small West Australian coastal town of Port Gregory 40 years ago and has grown into the world's largest supplier of the mineral.

GMA Garnet has three mine sites and 10 process plants across Australia, the US, the United Arab Emirates and Saudi Arabia. The company also has an offtake deal on Mineral Commodities Ltd.'s Tormin mineral sands mine in South Africa and operates five garnet recycling facilities.

Garnet is used as a gemstone as well as in industrial blast-cleaning, polishing, filtration and water jet cutting.

S&P Global Commodity Insights interviewed GMA Garnet CEO Grant Cox about the company's role in the garnet market. The following interview has been edited for clarity and space.

S&P Global Commodity Insights: What is the global garnet market at the moment?

Grant Cox: The global garnet industry that we think about is the whole world excluding China, as we just don't have a lot of visibility of what gets produced for internal consumption and what gets used there. Outside that, about 1 million metric tons a year is produced. We're producing between 550,000 and 600,000 metric tons a year from the Port Gregory alluvial mine in Western Australia and from our Montana hard rock mine and have processed in the US plants our offtake from Tormin for the last 10 years.

In September, we commissioned an upgrade in Montana which has improved garnet recoveries from a 20% yield historically to over 70%, and there is opportunity to optimize from there as well. We're very focused at the moment on growing our share of garnet in abrasive blasting applications and displacing other abrasives. Garnet is more efficient, cost effective, and is a safer and environmentally friendly product. So we think there's a really big opportunity to grow GMA's share of that market and at the same time, grow the garnet industry.

Today, garnet is in very slight undersupply, but that will change by the end of the year with new production coming online. Garnet's use in abrasive blasting is growing, so that provides opportunity for new supply coming online to be absorbed relatively easily. So we expect a balanced market in the medium to long term. Some of the projects that are coming online also have their own technical and commissioning production challenges, so it really depends on how well they hit their straps and what volumes and what quality they're going to be able to produce.

What is the biggest challenge in the garnet industry at the moment?

The biggest challenge we're going to see is supply coming online from Nordic Mining ASA's Engebo project in Norway which is targeting first production in the fourth quarter. In Australia, our competitor next door, Resource Development Group Ltd. subsidiary Australian Garnet Pty. Ltd., is commissioning increased production this quarter, while Heavy Minerals Ltd. is another potential developer.

That's not a bad thing, because one of the challenges we see in growing the garnet industry is there's some really inferior garnets out there. This new supply coming online should be better quality than some of the product coming out of China, India, etc. So I think that will establish a better brand of garnet relative to other abrasives.

Where is your growth coming from?

GMA Garnet's Port Gregory mine in Western Australia. Source: GMA Garnet Pty. Ltd.

We're moving into a new ore body at Port Gregory which has different characteristics of what we've been mining in the past. That's why we're expanding our production capacity to about 500,000 [metric tons] from around 400,000 [metric tons]. It's going to be lower grade than what we've mined in the past, so we're building a plant that can process that. We're about to commence one part of the expansion now. The full expansion is probably commissioning in early 2028.

We're always looking for M&A opportunities, because unlike a lot of commodities like gold, where the gold in one mine is the same as in the next mine, we're looking for certain gaps in our product portfolio around the actual products' technical performance. So we're looking for opportunities to acquire projects that can bring us that.

There is good quality garnet in Australia, but the grades in existing or known tenements outside ours are quite low, and there are cost challenges of operating in Western Australia. So we don't think it's necessarily going to come from here. South Africa has its own challenges and complexities, but there are some pretty decent deposits there and we're a customer of Tormin there as well. I also see some potential in Sri Lanka where some new projects are coming online as well, and maybe to a lesser extent in the US.

Does the electrification and decarbonization investment thematic have an impact on the garnet industry?

Yes. While the world is moving away from fossil fuels, the pipeline in oil and gas looks extremely strong for the next five to 10 years. There are a lot of big projects being done and asset owners are sweating their assets a bit more. There's a lot more maintenance involved which requires garnet for surface preparation. So the macro trends in oil and gas are still strong.

In regards to what will replace fossil fuels, there is not much garnet used in solar, but garnet is used in surface preparation for wind turbines. Hydrogen is also going to have all the same infrastructure and maybe more than oil and gas as well. So the decarbonization trends don't concern us. I think there's actually a good opportunity in the energy space in the years to come.

We also do recycling, by getting used garnet back from customers and putting it back as a concentrate through the plant to produce a finished product. This is a growing side of the business, particularly in the US, as customers are starting to get the sustainability angle a bit more, but also waste disposal costs are going up pretty much everywhere in the world as well. So from a commercial point of view, that's driving uptake in recycling.