Current and Future Mineral Sands Industry

Perspectives from TiPMC Consulting

NYC Mining Club • March 1, 2019

Gerry ColamarinoManaging Director

TiPMC Consulting

Welcome

Educate & deliver insights & knowledge

on the TiO2, Pigments,

Minerals & Chemicals Industries

to help Business Leaders & Financial Analysts

make decisions.

What We Do

Educate & deliver insights & knowledge

on the TiO2, Pigments,

Minerals & Chemicals Industries

to help Business Leaders & Financial Analysts

make decisions.

What We Do

TiPMC Consulting presentation data are obtained from reliable sources; however, the accuracy of the information cannot be guaranteed.

Moreover, the opinions issued are those of the presenter and may change at any time.

In addition, events and changes in the marketplace may alter or outdate those opinions.TiPMC is NOT an investment advisor, and nothing in any TiPMC presentation is intended to constitute

investment advice. Any reference to publicly traded companies is for educational purposes onlyand should not be deemed in any way to promote the purchase or sale of any securities.

Forward Looking Statement

• Consulting for Industry Leaders & Financial Analysts

in the TiO2, Pigments, Minerals & Chemicals Industries

• Education through Publications & Engagements

- Ti Observer™ Insights for Analysts, monthly industry reports

- TiO2 (Quarterly) and Mineral Sands Price Forecasts ( Semi-Annually)

- Industry Data and Analysis (Import/Export, Historical Pricing, cost analysis)

- Customized industry and company analysis (Reports and Verbal

Consultation)

- Webinars & Seminars

- Customized One-on-One or Group Sessions

Our Expertise6

Mineral Sands: Primary MarketsTi

tan

ium

Fee

dst

ock

s • TiO2 Pigment (90% + of all feedstock)

• Sulfate

• Chloride

• Titanium Metal

• Titanium Chemicals

Zirc

on • Ceramics

• Tile

• Sanitary Ware

• Refractory

• Foundry

• Zirconia chemicals

7

TiO2 Pigment

• Coatings

• Plastics

• Paper

• Specialties

End

Use

s

Highly corelated to housing and construction

Correlated to GDP

Fastest Growth in Asia and Developing World

2018: 7.3MT TiO2 2018: 1.2MT

$0

$500

$1,000

$1,500

$2,000

$2,500

$3,000

$3,500

$4,000

$4,500

1980

1981

1982

1983

1984

1985

1986

1987

1988

1989

1990

1991

1992

1993

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

2018

Global Average TiO2 Price History(at Fx of the day, in US$ pmt)

TiO2 Cycles: Brief History

8Low volatility

/Depressed earnings

Bubble

Earnings depressed/

Feedstock and pigment

Source: Ti-Insights LLC/TiPMC Consulting

Industry

Growth/Prosperity 0.800.901.001.101.201.301.401.501.60

Indexed to 1Q16 Global Price

TiO2 Industry Fundamentals

4000

5000

6000

7000

8000

2005200620072008200920102011201220132014201520162017201820192020202120222023

Global TiO2 Demand Correlated to GDP

TiO2 TiO2 growth @ 2% TiO2 growth @ 3% GDP

Source: TiPMC Estimates/Ti-Insights

• Quality of Life Product• No real substitute• Traditionally grow with

global GDP

Paint58%

Plastics22%

Paper9%

Inks4%

Fibres2%

Others5%

Titanium Pigment Consumption by End-use Sector

9

Regional /Technology Dynamics

China26%

APEC22%WE

17%

EE4%

ME7%

LA8%

NA16%

2017 REGIONAL DEMAND6.2M TONNES

Source: "Trade Map (or Market Access Map), International Trade Centre,

www.intracen.org/marketanalysis”/ Ti-Insights

10

NA33%

LA5%WE

30%

EEMEA8%

AP24%

2000 DEMAND3.9M TONNES

NA21%

LA6%

WE23%EEMEA

10%

AP40%

2010 DEMAND5.0M TONNESWE/North

America dominant

Americas/EMEA still majority

Asia nearly 50% of demand/Developing Nations growth

Increasing TiO2 Content

Incre

ased

Pro

cessin

g

Consumer

Secondary

Beneficiation

Beneficiation

Mined OresSulfate

Ilmenite

Chloride

IlmeniteLeucoxene*

Natural

Rutile**

Sulfate

Slag

Synthetic

Rutile

UGS

Sulfate

Low Grade

Chloride

Low Grade

Sulfate

High Grade

Chloride

High Grade

Chloride

Super

High Grade

Rock

Ilmenite

Feedstock Driven by Plant

Design & Operations 11

Chloride

Slag

Chinese Producers Chemours Only European Plants Global Chloride

*Chemours and welding**Ti-metal/welding rods

Zircon

Chemours19%

Cristal Global11%

Kronos8%

Tronox7%

Venator9%

Lomon Billions10%

China (Others)29%

Others8%

Pigment

Pigment Suppliers

• MNPs – Consolidated

• Low Capacity Growth

• Chinese

• Sulfate (Currently)

• Moving to Chloride/Beneficiation

• Back-integration

• Majority of new capacity

Feedstock Suppliers

• Chloride High Grade

• Rio Tinto (Slag)

• Iluka (Natural Rutile/SR)

• Tronox (Back Integrated)

• Eramet (Acquisition)

• Ilmenite

• Fragmented

• Multiple Juniors

12

Worldwide Top Suppliers(Estimated Market Share)

Rio Tinto22%

China29%

Tronox11%

India4%

Kenmare9%

Base5%

Eramet9%

Iluka11%

TiO2 Feedstock

TiO2 Feedstocks13

Existing Operations Depleting

Source: Company Reports/TiPMC EstimatesSource: Company Reports/TiPMC Estimates

Large Volume ReductionNew Projects: Difficult to meet requirements

Decline in Quality Reserves

Source: Iluka Investor Presentation

Estimated quality of mineral sands suites is declining

0

5

10

15

0

1

2

3

4

5

Current Operations Active Investigation Limited Information

Zircon Rutile (and Other High Grade TiO ) Chloride Ilmenite Sulphate Ilmenite Trash Combined RZ in HM (RHS)

Mineral Assemblage in ResourcesHM Grade RZ Assemblage

% %

Metric Trend Result

HM Grade Higher mining costs

Rutile/Zircon assemblage Lower margins

Trash/overburden Higher mining costs/Capital

Risk return needed: Investors/Lenders

Drain on cash

14

Impact on TiO2 Producers15

Source: "Trade Map (or Market Access Map), International Trade Centre,

www.intracen.org/marketanalysis" and TiPMC Estimates

2018Numerous Disruptions in High Grade Chloride ProductionInventory low throughout the supply chain (Chemours Exception)

Growing Trends in Mineral Sands

16

0

200

400

600

800

1000

1200

1400

2016 2017 2018

'000 Tonnes Monthly TiO2Chinese Ilmenite Imports

Standard Ilmenite concentrates

TiO2 Feedstock units from imports is reduced vs. 2017 ( stabilize ilmenite prices)New Projects: Ship Concentrate to China: MSP in country

Reduce Capital ExpenditureKeep all minerals in China

Support growing Chinese TiO2 production (Natural Rutile, Chloride Ilmenite, Sulfate Ilmenite)Sales of other minerals in China (Zircon, Garnet, Rare Earths)Chinese Beneficiation to chloride feedstocks set to grow

China: Source of New Capacity

0

50

100

150

200

250

300

350

400

450

500ktpa

Range of Latent Capacity/New Expansions: MNPs and Chinese Chloride

Latent Expansion

17

0

100

200

300

400

500

600

2018 2019 2020 2021 2022

ktpa

Chinese Sulfate Available Capacity Increase (2017 base)

Expansion Plans• MNPs favor “Value over Volume”• China: Large plans for chloride (little progress to date)• Sulfate: ”Net Expansion”

• Larger more sustainable producers expand• Smaller/Less environmentally friendly close

TiO2 Industry Growth Scenarios

-100

0

100

200

300

400

500

600

700

800

2019 2020 2021 2022 2023

Estimated Cumulative Capacity Additions (2018 Base)

Pori SD Chemours Tronox Chinese Sulfate Lomon Cl Chinese Chloride

18

Source: TiPMC Estimates

⚫ Chinese Growth Intended on chloride⚫ Import Ilmenite/Beneficiate to chloride slag and SR

⚫ Limited Success to this point

⚫ Likely to require Natural Rutile and UGS

⚫ All growth outside China expected to based on High Grade Chloride Feedstocks

Summary

⚫ TiO2 industry expected to recover in 2019 from recent demand downturn

⚫ Recovery in AP

⚫ Destocking

⚫ MNPs face challenges to maintain profitability

⚫ Pace of Chinese and APEC growth

⚫ NA/EU Recession concerns

⚫ Feedstocks

⚫ “Value over Volume”

⚫ Most new capacity will come from China

⚫ Chloride/Sulfate mix to be determined

⚫ Back-integration: Beneficiation

⚫ Focus on low/mid-grade quality products

19

Please stay in Touch!

Gerry Colamarino

+1 610.274.1603 (O) +1 408.368.7759 (M)

gcolamarino@tipmcconsulting.com

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Tipmcconsulting.com20

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