A First Look at the Australian Mineral Sands Sector
This is a very brief overview of the industry, to be followed with more detail in later posts.
There are at least 14 ASX listed mineral sands companies, of which 5 are in production. In addition, there are about 12 companies that are either private or public but unlisted, several have been suspended by ASX. Virtually all projects are in Australia or Africa, with one project in Sri Lanka.
There is a huge range in project size, and in grade and composition of the heavy mineral suite. The biggest deposits are in the billion tonne range, the smallest being a few 10’s of millions of tonnes. Total heavy mineral content is typically in the 2-5% range, but can exceed 20-30%. Composition is highly variable but ilmenite is usually the largest component, with zircon usually being the next most common. Except for garnet-bearing mineral sands, where garnet is the most common mineral.
The main minerals recovered from mineral sands are titanium minerals (ilmenite, rutile and leucoxene), zirconium/ rare earth minerals (zircon and monazite), and garnet (almandine).
Mineral sands are mainly processed using density and magnetics, often first in a wet plant, followed by refinement in a dry plant. While the flowsheet is relatively straightforward, there are a number of issues that can prevent production of a saleable product.
An interesting case study is the Beenup deposit in Western Australia, developed by BHP at a cost of $300 million. Using “innovative” process techniques (and the world’s largest dredge), BHP thought it had resolved the issue of high clay content,which was otherwise not able to be separated from valuable minerals. But they hadn’t. The plant ran for two years, at a substantial loss, and was closed in 1999 to great embarrassment. This is by no means an isolated case.
Processing is often complicated at times by an inability to fully separate the various minerals and by contaminants within the mineral lattice. For example, ilmenite may have a titanium content ranging from 40% to 52%, and contain variable amounts of contaminants such as Al and Si. Consequently, pricing is also variable, with some ilmenite being particularly suitable for some end users and not for others.
Finally, in common with many other commodities, prices can be highly variable. For example, the zircon price was around USD250/mt FOB in 1993, and over USD2,500/mt FOB in 2012. Mineral sands projects have to be viable throughout a price cycle, and they are often not.
Because of the above, mineral sands has been one of the least successful sectors in the resource industry. This has resulted in many potential investors avoiding the sector. However, with a general lift in prices over 2017, interest has returned. But caution is recommended.