Zircon supply shortfall on the horizon
Following a peak in industry demand for zircon sand of 1500kts during 2011, demand has dropped to levels of around 1100kts in 2015. Demand remains subdued although there is some growth in select applications.
Looking at current and forecast production outputs of zircon sand over the next 3 years, it is clear a supply shortage is developing that will become more apparent in the next few years.
There has been a significant depletion in output by major producers, particularly Iluka Resources, who have ceased production over the last year at various operations. Murray Basin and Jacinth-Ambrosia, Australia and Virginia, USA. This has been due to a number of factors including end of mine life, reducing ore quality, lower demand and reduced capital expenditure. While there has been some new output from small producers, this is not sufficient enough to fill the gap. Ilukas output has reduced from a peak of 515kts in 2011 to 346kts in 2015 and makes up around 1/3 of the global output of zircon sand.
Lower pricing of mineral sands over the last 3 years has led to a significant reduction in industry profitability, leading to low capital expenditure on new and existing projects. There will have to be an increase in mineral sand pricing over the next few years to ensure the necessary investment is made to meet future demand. The current price of zircon sand remains at the low level of USD 1000/mt CIF China port but the industry needs to see this increase.
Zircon sand is the starting raw material for the majority of zirconium chemicals and zirconium oxides
Date : 29-09-2016