S Africa Rio Tinto mining FM adds uncertainty to strained Europe TiO2 supply

Heidi Finch

05-Jul-2021

LONDON (ICIS)–European titanium dioxide (TiO2) feedstock supply uncertainty could be aggravated by a force majeure declaration on Rio Tinto’s mining operations in South Africa after workers’ raised security concerns.

Rio Tinto’s force majeure on the Richards Bay Minerals (RBM) mine last week has left TiO2 producers unclear about feedstock supply in the immediate aftermath of the outage.

Any feedstock supply gaps could impact TiO2 run rates and supply capabilities for Q3/Q4, as stocks are low.

Rio Tinto is a key global ore producer, particularly in the high-grade ore segment, accounting for around a 32% overall share of high-grade feedstock. The RBM mine represents a significant proportion of this, according to market estimates.

A lot will depend on the duration of the RBM mine outage. If it were to last only a few weeks, then the situation is likely to be manageable, but any longer, ie in excess of a month, would have more of an impact through the chain, particularly as feedstock and TiO2 supply are structurally short, and notably so in the western world.

Iluka’s Sierra Rutile mine in Sierra Leone, another high-grade feedstock asset, recently gave six months’ notice to temporarily stop mining operations in Sierra Leone in Q4, because of business and financial challenges.

These suspension plans and the uncertain future of this mine could further compound the feedstock supply situation, particularly for high-grade ores, if the RBM outage were prolonged.

There is unconfirmed talk that if the Rio Tinto outage were protracted, and the feedstock market tightened further, then Iluka might continue to run the Sierra Rutile mine, which could help temper the feedstock supply headwinds to some extent. Iluka was not immediately available to comment on this.

TiO2 volumes have been strictly allocated in Europe for some time, well before the force majeure at the RBM mine. This is because European TiO2 supply is being squeezed by strong downstream performance and greater domestic over import sourcing because of the reduced competitiveness of Asian imports.

Local output impacts for certain players have also added to the supply strain.

Feedstock supply tension for ore and chlorine, particularly in view of unexpected outages around the world, are being closely monitored.

Some players have commented that it is difficult to assess the effects of Rio Tinto’s RBM outage on the TiO2 market in isolation, with the various pulls on supply likely to have a more cumulative effect.

Front page picture: Rio Tinto’s RBM mine in South Africa 
Source: Rio Tinto

Focus article by Heidi Finch

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