Irish miner Kenmare Resources, which owns and operates the Moma Titianium Minerals Mine in the Nampula province of Mozambique, has reported that it achieved record production of ilmenite, rutile and zircon last year. Not only was 2016 a record year for production and shipments, but the last quarter of the year (Q4) was a record quarter and December a record month. Company MD Michael Carvill told the London Daily Telegraph that the company had undergone a “complete rebirth”.
The company reported that its production of heavy mineral concentrates (HMC) last year came to 1 405 500 t, a 28% jump over the 2015 figure of 1 100 600 t. Ilmenite production of 903 300 t rose 18% in comparison to 2015’s 763 500 t. Zircon output soared 32% to 68 200 t, from 51 800 t in 2015. Total shipments of finished products also jumped 28% last year, in comparison to 2015, reaching a record of 1 024 200 t (the 2015 figure was 800 400 t). The company’s net debt dropped by 87% to $44.9-million at the end of last year. In 2015, its debt had come to $353.5-million.
“2016 saw Kenmare deliver a record year of both production and shipments of all products,” he said in the company’s report. “Q4 2016 was another record quarter, continuing the increasing production trend and improving on the record set in the prior quarter.”
The company was a beneficiary of improved stability and reliability in its electricity supply from Mozambique’s national power utility, EdM, last year. This supply is supplemented, when required, by diesel-powered generators. The improved power supply resulted in better dredge operating times. Increased levels of utilisation and better mining conditions led to higher HMC production. The company was also able to increase the mechanical reliability of its plant, because of improvement projects concluded during 2016. As a result, plant availability was improved.
“Cash generation at the mine has shown quarter on quarter improvements since bottoming in Q2 [second quarter] 2016,” he observed. “Nevertheless, average Kenmare realised ilmenite prices lagged the spot market increases in 2016 as contracts had been agreed prior to the market resurgence.”
For this year, the company expects to produce between 950 000 t and 1 050 000 t, which would be an increase of between 5% and 16% on 2016’s production. Total cash operating costs are forecast to remain within the guidance range for the current financial year (2016/2017) of $131/t to $141/t, “subject to completion of the full financial results” noted the company. “Production in 2017 is expected to rise further as mine optimisation continues, while unit costs of production are anticipated to fall further,” stated Carvill. “Spot prices have been steadily rising for the past nine months and Kenmare expects this trend to continue as demand remains strong. Average received prices for H1 [first half] 2017 will show a significant improvement on 2016, benefitting from new contract prices and higher spot prices.”
Low product inventories worldwide, plus rising consumption of titanium feedstocks, give a positive outlook for ilmenite prices throughout this year. During last year’s Q4, titanium feedstock demand continued to exceed supply, driving up ilmenite prices, which had fallen to low levels early in 2016. “China is the world’s largest titanium feedstock market, dominated by consumption of ilmenite,” pointed out the company. “Demand for imported ilmenite in China in 2016 has grown by approximately 40%, due to increased demand from the pigment and slag sectors, and a decline in domestic ilmenite production.”
As for zircon, its prices stayed stable during the second half of last year, after a period of weakness during the second quarter of that year. Global stockpiles have continued to fall and some major producers have signalled zircon price rises during the first half of this year.