As 2016 is also expected to be challenging for mineral sands feedstock markets, Australian heavy minerals miner Mineral Deposits Limited (MDL) will focus on production efficiencies and cost-reduction initiatives to ensure the competitiveness of its operations at all stages of the commodities price cycle.

The Grande Côte mineral sands operation (GCO), in Senegal, will this year focus on improving its operational efficiency and sustainable throughput rates, increasing efficiencies with respect to mining recoveries and processing yields.

Further, cost-reduction initiatives to enhance the GCO’s competitiveness are under way and will continue during the course of the year, states MDL.

Also, to produce chloride titanium slag used in the production of titanium dioxide and titanium metal, MDL will use ilmenite produced by the GCO. This will secure supply of ilmenite from within the group and reduce exposure to the more volatile ilmenite market, thereby mitigating the risk profile of the business.

Financial Figures
MDL last month announced an underlying net loss of $27.2-million for the year ended December 31, owing predominantly to capital expenditure (capex) projects.

The results reflect the commodity price environment, in conjunction with the status of operations at MDL’s Norway-based TiZir joint venture (JV) with French metallurgy company Eramet – particularly, a lower contribution from the TiZir titanium and iron ilmenite upgrading facility (TTI) and operating losses from the GCO.

MDL explains that TTI’s losses for the year ended December 31 are the result of to a three-month shutdown required for the completion of the furnace relining and capacity expansion project, which was responsible for the bulk of TiZir’s capex in 2015. This was partially offset, however, by funding received from California-based online-lending company Enova.

The successful restart of operations at TTI in December represents the on-budget culmination of the furnace relining and capacity expansion project, highlights MDL.

Following the restart, TTI’s primary focus is the ramp‐up of operations. It is expected that the upgraded furnace and water‐cooled copper‐ceramic roof will increase smelting capacity by about 15% and improve maintenance performance by lengthening periods between scheduled shutdowns.

The GCO’s losses can be attributed to the ongoing mining and production ramp-up project and dismal market conditions, notes MDL, which, going forward, expects capex to be limited to the maintenance of the GCO and TTI.

MDL executive chairperson Nic Limb notes that, despite 2015’s challenges, several key milestones were reached, enabling the completion of the original strategic vision of the JV, which was the integration of the GCO and TTI.

The integration of these assets will allow TiZir to produce chloride and sulphate titanium slag, enabling MDL to alternate between products as dictated by market supply and demand dynamics.

TTI’s earnings before interest, taxes, depreciation and amortisation (Ebitda) for 2015 were $3.9-million, 84% lower than in 2014, primarily as a result of lower production volumes owing to the shutdown.

MDL notes that, despite a concerted effort (starting late, in 2014 and continuing to the first half of 2015) to build up inventory before the shutdown, titanium slag sales volumes were lower than expected, exacerbated by titanium feedstock market conditions.

Consistent with titanium slag trends, high‐purity pig iron sales volumes were lower as a result of restricted production capacity. Pricing for high‐purity pig iron was strong during the first half, reflecting tighter supply because of geopolitical tensions in Eastern Europe and a weakening of the euro against the dollar. However, a reduction in demand from both European foundries and factories in China, together with increased competition from Eastern European producers during the fourth quarter, saw prices decrease towards year‐end.

The GCO recorded an Ebitda loss of $7.4-million in 2015. After a disappointing first half, characterised by unplanned electrical outages and tailings management and other commissioning issues, a focus on ensuring consistent throughput from the wet concentrator plant (WCP) and improved efficiencies and recoveries at both the WCP and mineral separation plant resulted in a significant turnaround in operational results in the second half of the year.

MDL comments that, despite weakening market conditions, the GCO was able to negotiate sales contracts with external customers for the bulk of its ilmenite production last year.

The GCO’s zircon sales rose as production increased. Consequently, the operation has several initiatives in place to further increase production this year. Unlike titanium and pig iron pricing, zircon’s was relatively stable during the year under review.

TiZir’s cash flow from operations in 2015 resulted in a $38.5-million loss, compared with a $75.3-million loss, in 2014. The primary reasons for the substantial decrease in cash outflows were a drop in working capital following sales of TTI inventory during the furnace shutdown period and a lower-than-expected working capital build‐up at the GCO.

While cash flow from operations remains under pressure owing to near‐record low commodity prices, confidence in operational performance continues to improve. The GCO broke numerous production records in the second half of 2015 and recorded five consecutive months of positive Ebitda.