Mineral Sands — Shifting Up A Gear

By 25 October 2017Sector Report

In a full sector report, we take a detailed look at where things stand in the mineral sands sector. Over the past 18 months the mineral sands industry has moved through an inflexion point, creating the most favourable outlook for companies in the past five years. Product prices for TiO2 feedstock and pigment have been rising, and both markets are tightening. This improvement reflects stronger housing and construction markets, particularly in developing regions, robust demand for paints and plastics, and positive end markets for zircon. This all follows several years of low prices and profitability.

Further positive factors include the draw-down of previously-built inventories, production outages and some capacity cutbacks in China (due to government environmental controls). The feedstock and pigment industries are also continuing to benefit from industry consolidation and, arguably, some producer supply discipline. While we may see a pause in TiO2 feedstock prices in the next six months, the medium- and longer-term outlooks are for prices of both titanium feedstock and zircon to continue rising, with robust demand expected and limited new supply on the horizon.

In this report we have summarised the outlook for six key mineral sands companies: Iluka Resources, Base Resources*, Kenmare Resources, Mineral Deposits, MZI Resources and Sheffield Resources. We also provide brief descriptions of three potential mineral sands development projects. Although Base is the only company within the group that we have under formal coverage, we have provided descriptions of each of the companies and their outlooks. We have also modelled each of the companies.

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*RFC Ambrian acts as Nomad and Broker to this company