Mineral sand mining outlook

THE output of mineral sands is expected to expand over the period to 2011-12, reflecting, rising demand and the start-up of new operations.

The output of mineral sands is expected to expand over the period to 2011-12, reflecting, rising demand and the start-up of new operations.

Exports will continue to absorb the bulk of production.

The Douglas mineral sands project, owned by Iluka, is due to commence operations in 2007.

The project, located near Horsham, Victoria, will be capable of annual output amounting to about 98,000 tonnes of rutile, 200,000 tonnes of ilmenite, 135,000 tonnes of zircon and 10,000 tonnes of leucoxene.

Iluka is also progressing assessment of its KWR project near Ouyen in Victoria, and anticipates committing to the project, with the aim of commencing production in late 2007 or 2008.

The capital cost of the project is tentatively placed at $150 million to $200 million.

BeMaX Resources NL Pooncarie project in the New South Wales portion of the Murray Basin is also under construction.

The mine, Gingko, commenced production in December 2005 and annual output is expected to amount to 59,000 tonnes of rutile, 136,000 tonnes of ilmenite, 41,000 tonnes of zircon and 110,000 tonnes of leucoxene.

A number of other projects are under investigation and at least some are likely to proceed during the outlook period.

Ticor (wholly owned by Kumba Resources) acquired the smaller firm, Magnetic Minerals Ltd in 2003, gaining a substantial mineral sands resource, the Dongara project, located near its existing operations at Eneabba in Western Australia.

Kumba is reviewing options for development at Dongara, which include using it to provide feedstock for the Tiwest project.

The Mindarie Zircon Project in South Australia is expected to commence operation in 2007, producing up to 50,000 tonnes of zircon, 110,000 tonnes of ilmenite, 12,000 tonnes of rutile and 9,000 tonnes of leucoxene.

Monto Minerals Ltd committed to its Goondicum mineral sands project, located in northern Queensland, in the second quarter of 2005, subject to finance.

A pilot plant has been operating since early 2004 and a feasibility study completed in mid 2005 indicated that the project would be profitable and also had substantial upside potential.

Monto Minerals anticipates that the project will have a capital cost of $43 million, and anticipates commencing production in 2007.

Annual production is expected to comprise about 100,000 tonnes of ilmenite, 100,000 tonnes of felspar and 20,000 tonnes of apatite and the mine is expected to have a 20-year life.

The deposit contains indicated and inferred reserves of 9.1 million tonnes of ilmenite.

Further resources exist, but have not been delineated.

The production of the various mineral sands will follow somewhat differing trends during the outlook period.

While rutile output is expected to rise from the low levels of the mid 2000s, production will nonetheless be constrained by lower ore grades at existing operations and competition from synthetic substitutes will tend to depress output, and production is not expected to exceed 250,000 tonnes by 2011-12.

Ilmenite output is expected to rise solidly, with production reaching 2.7 million tonnes by 2011-12.

The bulk of ilmenite output will continue to be exported.

Similarly, leucoxene output is expected to expand strongly to about 110,000 tonnes.

By the end of the outlook period, Australia’s output of zircon is expected to amount to about 610,000 tonnes.

Strong growth in the output of steel in Asia, especially China, is expected to keep the demand for zircon expanding solidly during the outlook period.

However, producers will face increasing competition from chromite, higher production and sales of zircon from South Africa are also expected to lead to greater competition for Australian producers than in the past.

The prices of most mineral sands are expected to remain relatively buoyant during the outlook period. Strengthening world growth is expected to boost the demand for pigment and hence titanium minerals in North America and Europe.

Rising steel production in Asia, most notably China, is also expected to keep the price of zircon relatively high, although it is expected to retreat from the extreme levels of the mid 2000s.

Overall, real industry revenue is expected to expand by about 4.4% per year during the outlook period, with value added rising at about the same rate.

N IBISWorld

03 9655 3881

www.ibisworld.com.au

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