TZMI.COM

2011 2013

T Z M I

Feedstock pressure on the

titanium sponge market

DAVID McCOY

Oct 2013 ITA 2013 | FEEDSTOCK PRESSURE ON THE TITANIUM SPONGE MARKET © 2013 2

About TZMI

TZMI is a global, independent

consulting and publishing

company with offices in

Australia, the US, Europe,

Africa and China. The strength

of TZMI’s consulting services

stems from extensive practical

experience in the mineral

sands, titanium dioxide and

coatings industries and from a

comprehensive database,

which has been built up over

many years.

TZMI has proven expertise

gained from our consultants

having many years of direct

operating experience in the

industry in chief executive,

senior operational, analytical

and marketing roles.

TZMI’s publications and data

services support the consulting

activities and ensure up-to-

date, high quality and

comprehensive data, analysis

and information across the

mineral sands, zircon and Ti02

pigment industries.

Associated Companies

Allied Mineral Laboratories Resource assessment and flowsheet development for mineral sands, iron or and other heavy mineral deposits.

TZMI provides operational and technical expert advice on many areas including:

Mergers and acquisitions

Market assessments and industry analysis

Due diligence

Pre-feasibility studies incl. preliminary capital and operating cost estimation

Competitive cost analysis and benchmarking

Technical reviews and audits

Resource assessments

Physical separation test work

Flowsheet development

Customised data analysis and reporting

Oct 2013 ITA 2013 | FEEDSTOCK PRESSURE ON THE TITANIUM SPONGE MARKET © 2013 3

Value of mineral sands production: 1980 – 2012

Considerable value added over last two years.

20

00

19

94

19

92

19

90

19

88

19

86

19

84

19

82

19

80

20

12

+160.0%

+104.4%

+26.6% +193.5%

20

08

20

04

20

06

19

98

19

96

20

10

20

02

Zircon

Iron

Natural feedstocks

Beneficiated feedstocks

Oct 2013 ITA 2013 | FEEDSTOCK PRESSURE ON THE TITANIUM SPONGE MARKET © 2013 4

World’s known TiO2 resources

Oct 2013 ITA 2013 | FEEDSTOCK PRESSURE ON THE TITANIUM SPONGE MARKET © 2013 5

Major international suppliers

Oct 2013 ITA 2013 | FEEDSTOCK PRESSURE ON THE TITANIUM SPONGE MARKET © 2013 6

New feedstock project activity

0

5

10

15

20

25

30

35

40

45

0

500

1,000

1,500

2,000

2,500

3,000

3,500

4,000

4,500

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012

Number of companies

‘000 TiO2 units & ‘000 tonnes zircon

'000 TiO2 units '000 tonnes zircon

Reversal in industry activity from 2011

© TZMI 2013 NOT FOR REPRODUCTION

Oct 2013 ITA 2013 | FEEDSTOCK PRESSURE ON THE TITANIUM SPONGE MARKET © 2013 7

Production of mineral by type in 2012

High TiO2 content mineral is generally used to make titanium sponge

Sulfate ilmenite

Chloride ilmente/leucoxene

Sulfate slag Chloride fines

Chloride slag

UGS

Synthetic rutile

Rutile

© TZMI 2013 NOT FOR REPRODUCTION

Oct 2013 ITA 2013 | FEEDSTOCK PRESSURE ON THE TITANIUM SPONGE MARKET © 2013 8

Rutile – key to metal value chain

Sierra Rutile dredge

Iluka

Sierra Rutile

Cristal

Tronox

CRL

Rio Tinto

Ostchem

China various IRE

Forecast supply 2013

© TZMI 2013 NOT FOR REPRODUCTION

Oct 2013 ITA 2013 | FEEDSTOCK PRESSURE ON THE TITANIUM SPONGE MARKET © 2013 9

Rutile supply by country

Australia South Africa

Sierra Leonne India

Ukraine

China

‘000 tonnes Others

2014f 2013f 2012

© TZMI 2013 NOT FOR REPRODUCTION

Oct 2013 ITA 2013 | FEEDSTOCK PRESSURE ON THE TITANIUM SPONGE MARKET © 2013 10

Total titanium feedstock demand

6.9% 6.9%

85.4%

6.4

Million tonnes

7.1% 7.5%

2012

6.4

86.8%

5.9% 7.3%

+11.1%

0.0%

Pigment

Ti metal

Other

2014f

7.1

86.1%

2013f

Static demand for feedstocks in 2013 compared to 2012

TZMI is forecasting a significant step up in offtake in 2014

© TZMI 2013 NOT FOR REPRODUCTION

Oct 2013 ITA 2013 | FEEDSTOCK PRESSURE ON THE TITANIUM SPONGE MARKET © 2013 12

Sponge production in 2012

Does not include a small pilot plant in India

Russia

Kazakhstan

China

Ukraine

Japan

US

© TZMI 2013 NOT FOR REPRODUCTION

Oct 2013 ITA 2013 | FEEDSTOCK PRESSURE ON THE TITANIUM SPONGE MARKET © 2013 13

TiCl4 production costs

CIS US China Japan Average

+27.8%

Feedstock

CPC

Labour

Chlorine

Utilities

Other

© TZMI 2013 NOT FOR REPRODUCTION

Oct 2013 ITA 2013 | FEEDSTOCK PRESSURE ON THE TITANIUM SPONGE MARKET © 2013 14

TiCl4 prices in China

Ap

r-11

Ma

y-1

1

Dec

-11

Dec

-12

Ju

l-1

3

Au

g-1

3

Feb

-11

Se

p-1

3

Ja

n-1

3

Feb

-13

Ma

r-1

3

Ap

r-1

3

Ma

y-1

3

Ju

n-1

3

No

v-1

2

Oc

t-1

2

Ma

r-11

Se

p-1

2

Ja

n-1

1

Dec

-10

No

v-1

0

Oc

t-1

0

Se

p-1

0

Au

g-1

2

Ju

l-1

2

Ju

n-1

2

Ma

y-1

2

Ap

r-1

2

Ma

r-1

2

Ja

n-1

2

Feb

-12

Ju

n-1

1

Ju

l-11

Au

g-1

1

Se

p-1

1

Oc

t-11

No

v-1

1

-52.6% +121.4%

High

Low

Oct 2013 ITA 2013 | FEEDSTOCK PRESSURE ON THE TITANIUM SPONGE MARKET © 2013 15

TiCl4 is the largest cost in the manufacture of sponge and feedstock is the

large contributor to TiCl4 cost.

The weighted average cost of feedstock per tonne of TiCl4 increased by 13%

in 2012. But some sponge producers may have been caught by new

contracts kicking in.

The cash cost of producing TiCl4 varies widely between producers.

TZMI believes we have seen a 20 year peak in rutile costs to sponge

producers.

Take home messages

Oct 2013 ITA 2013 | FEEDSTOCK PRESSURE ON THE TITANIUM SPONGE MARKET © 2013 16

If you squeeze hard enough ……

Oct 2013 ITA 2013 | FEEDSTOCK PRESSURE ON THE TITANIUM SPONGE MARKET © 2013 17

Have you got your reference material yet?

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2011 2013

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