US Tronox moves on plant upgrades, synergies after Cristal deal

Source: ICIS News

2019/04/11

HOUSTON (ICIS)--Tronox plans to quickly upgrade the 200,000 tonne/year Cristal titanium dioxide (TiO2) plant at Yanbu, Saudi Arabia, top executives of the US-based integrated TiO2 major said in a webcast conference call on Thursday.

Upgrading that plant, which was part of Tronox’s acquisition of Cristal’s TiO2 business, will be one big opportunity to quickly achieve synergies from underutilised pigment plants following this week’s completion of the Cristal deal.

The Yanbu plant, designed in the early 1990s, is a replica of Tronox’s US TiO2 plant in Hamilton, Mississippi.

Tronox plans to make “minor changes” to the equipment, surface additives and other operational aspects, and “within months” the Yanbu plant should benefit from the improvements in pigment quality Tronox achieved over the years, said chief operating officer Jean-Francois Turgeon.

After the upgrade, Yanbu will not just add more volume, but it will also produce the better-quality products Tronox makes in Hamilton, he said.

The combination with Cristal was about “increasing asset utilisation, lowering our cost position, unlocking incremental production volume and generating strong cash flow,” Turgeon added.

By year-end, Tronox already expects $100m in synergies, on a pre-tax run-rate, which should rise to $200m by end 2021.

LARGEST INTEGRATED TiO2 COMPANY
CEO Jeffry Quinn said the closing of the Cristal deal was “a game-changing, transformational moment”, creating the world’s largest vertically integrated TiO2 producer, with nine pigment plants and eight mineral sands facilities globally.

"New" Tronox’s TiO2 pigments plants:

Capacity, in ‘000 tonnes/year
Hamilton, Mississippi, US 225
Salvador, Bahia, Brazil 60
Stallingborough, UK 165
Botlek, Netherlands 90
Thann, France 32
Yanbu, Saudi Arabia 200
Fuzhou, China 46
Kwinana, Australia 150
Bunbury, Australia 110

About 30% of Tronox’s global team will be located in South Africa, 15% will be in Australia, and another 15% in Europe. The remaining 40% will work at Tronox’s operations in the Middle East, the Americas and Asia, Quinn said.

In terms of the company's $2.54bn total TiO2 pigment sales, about 21% are in North America, 11% in the Middle East and Africa, 29% in Europe, 30% in Asia-Pacific and 9% in Latin America.

While Tronox’s historical roots are in the US states of Oklahoma and Mississippi, “now it is a truly global organisation”, the CEO said.

FAVOURABLE FEEDSTOCK MARKETS
John Romano, chief commercial officer, said the closing of the Cristal acquisition comes at time of favourable market conditions for TiO2 feedstocks and co-products.

“As a vertically integrated producer in a strong feedstock environment, we expect to gain significant and differentiated benefits, relative to non-integrated pigment producers,” he said.

The direction of the global TiO2 pigment market was the subject of much debate, he said.

However, for its part, Tronox believes the market was at a pause, with normal customer demand and inventory levels to return as destocking runs its course by mid-year, Romano said, adding: “We are starting to see that happen.”