Cristal declares FM on TiO2 in Australia

11 June 2008 22:46  [Source: ICIS news]

HOUSTON (ICIS news)-- US pigment producer Cristal Global has declared force majeure (FM) on titanium dioxide (TiO2) at its 105,000 tonne/year Kemerton plant near Bunbury in western Australia, the company said on Wednesday.

A 3 June explosion and fire at Apache Energy's offshore Varanus Island natural gas pipeline facility, which supplies Cristal's facility through a distributor, led Apache to declare FM and forced Cristal to shut down its operations, said Gary Cianfichi, vice president of corporate communications for Cristal Global.

Cristal is not on formal allocation from Apache, he said, but although the company was provided some natural gas by another distributor, it was not enough to restore the plant to full operation.

Natural gas supply could remain disrupted for as long as four months, Apache officials said, though partial restoration of one of the damaged pipelines could be completed in about two months.

The Varanus gas hub is located on Australia’s Northwest Shelf, about 60 miles (97km) off of the Australian coast, and supplies about 30-40% of Western Australia’s gas needs.

Cianfichi said the FM was not yet directly affecting North American customers, as the Kemerton plant supplies TiO2 mostly to the Pacific Rim and Asia.

"We have some inventory and some options to source other plants," he said, "and we are working on that now. Our objective is to minimise disruption to our customers."

Other companies have also been affected by the natural gas supply disruption. Ore producer Iluka, which supplies titanium ore to pigments plants globally, has restricted operations at its two western Australian mining and processing sites, according to the company's website.

Cristal said it was uncertain how long its FM would continue.

Cristal has joined other US TiO2 producers seeking contract price increases of 5 cents/lb ($110/tonne, €72/tonne) for 1 July, the first such effort since a push for 6 cents/lb in January. Implementation of that initiative and a previous 6 cent/lb effort in October 2007 are still being pursued by suppliers.

US contract prices for TiO2 have remained flat for most of the past year at 98-108 cents/lb FD (free delivered), according to global chemical market intelligence service ICIS pricing. 

Other US TiO2 producers include DuPont, Huntsman, Tronox and Kronos.

($1 = €0.65)

For more on TiO2, visit ICIS chemical intelligence
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By: Larry Terry
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