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Titanium poised for transformational growth, experts say

Mineral sands could be vulnerable to pressures forcing investment offshore Australia, but others believe the local future is bright due to macro factors and the country's low sovereign risk, as well as still-rich prospectivity.

Chemicals and raw materials expert Red Adams, founder of database portal Artikol, believes that the environmental drive such as that surging in China could supercharge the titanium dioxide market so it could one day challenge the much bigger aluminum market.

Adams, who opened the Mineral Sands Conference in Perth, Australia, the week of March 21, said environment-driven policies in developing economies such as China and India could prompt a big expansion of the use of nanoparticulate titanium dioxide, or TiO2, but even he is of two minds about that potential.

"There is also the possible application for cheap titanium metal, and there are several processes out there, like Metalysis Ltd., so the potential is there, but my belief is that it just isn't going to happen," he told S&P Global Market Intelligence on the conference's sidelines.

"I just don't think that either new applications for TiO2 or of titanium metal are going to happen within the 10- to 15-year time frame.

"If they did, it would have a huge impact. It would go all the way upstream and you'd have titanium metal, for example, competing with applications for aluminum, which is a 20 million-tonne-a-year global industry, whereas titanium metal in elemental metal form is something like 200,000 tonnes a year in a good year."

It is still worth developing related mines, however, as titanium dioxide's conventional applications paint and plastics are strongly linked to GDP.

Adams said per capita use of paint in India is 0.2 kilograms per head and about 2 to 2.5 kilograms per head in Western economies, leaving plenty of room to grow.

"China is in a slightly better position because it's the workshop of the world, so a lot of the world's TiO2 is consumed there, but the painted products and TiO2-containing plastics are exported," Adams said.

"Per capita TiO2 consumption in China is just under 1 kilogram per head, but even that's got potential to grow. That's [what underpins] my 4.1%-per-annum forecast for TiO2 pigment demand growth for at least the next 10 years, which is healthy — more so than global GDP growth, but it's not going to be this explosive thing."

MinEx Consulting strategist John Sykes told the conference March 22 that mineral sands investment could go offshore as the wider mining industry is moving more into underground operations, which does not entail the visible, large footprint of surface mining.

Mineral sands, however, are not amenable to underground mining.

Local confidence

Broken Hill Prospecting Ltd. Managing Director Trangie Johnston, whose company recently picked up a swathe of new tenements in New South Wales' Murray Darling Basin, is a strong believer in mineral sands' future in Australia and more broadly.

"There's plenty at surface globally that we need to extract before we need to go deep, which is our business model in the Murray Basin focusing on the shallow, high-grade deposits left behind by the majors [such as Iluka Resources Ltd. and Cristal Mining Australia Ltd].

S&P Global Market Intelligence data appears to back him up. While global exploration, including for titanium, had been falling until 2017, Australia has had a particularly strong percentage of "significant" intercepts in the rising number of drill holes since then.

Though the outlook remains dire for greenfields exploration, Australia saw 63 significant intervals in 75 drill holes in the fourth quarter of 2017, which grew to 96 in a total of 107 holes in the first quarter of 2018.

Sykes noted that there had been no "major" mineral sands discoveries, classified as more than 50 million tonnes, in the past 20 years, with nothing found at all in 2001, 2002, 2009, 2014, 2016 and 2017.

Then again, he said aluminum gave a precedent as a metal that experienced transformational change, going from being "essentially a precious metal" in the 19th century to 45 million tonnes of global consumption in 2017.

"The nickel industry did a similar thing as well after the First World War, and uranium experienced similar transformational change for 30 years or so after the Second World War," he added.