JOHANNESBURG (miningweekly.com) – The titanium feedstock industry had faced a year of contrasts in 2012, with strong demand and steady price gains in the first half of the year being somewhat offset by pigment producers holding excess goods inventories towards the latter part of the year, London-listed Kenmare Resources said on Wednesday.
“This was addressed through the curtailment of production by most pigment producers starting midway through the year and led to a reduced demand for feedstock and some downward pricing pressure,” the mining company said in a trading update.
The company’s revenue for the year increased to $2.5-billion, up 40% on revenues of $1.6-billion earned in 2011, mainly as a result of improved ilmenite prices.
Ilmenite prices were, on average, 98% higher in 2012 and were up by 17% in the second half of the year, compared with the first half, the company said.
Further, total production of heavy mineral concentrate for the year amounted to 772 300 t, which comprised 574 400 t of ilmenite and 46 900 t of zircon.
The company shipped 680 800 t of finished product during the year – 7% less than the 730 400 t it shipped in 2011, owing primarily to reduced production levels.
Kenmare expected stronger market conditions to emerge, with an improving pricing outlook for feedstocks during the course of this year.
Demand for ilmenite was more resilient than feedstocks in general and Kenmare was able to sell more than it produced in 2012, resulting in drawn-down year-end inventories.
Global zircon market conditions were challenging in 2012, with weak consumption driven by significantly reduced demand from the ceramics sector, the company said.
“With a stronger economic outlook expected in China and completion of the destocking cycle in Europe, zircon demand growth is expected to resume in 2013,” Kenmare noted.
Meanwhile, the company had entered the commissioning phase of its expansion of facilities at its Moma mine, in Mozambique.
The production ramp-up would follow, leading to full production later this year.
Kenmare had successfully concluded an agreement with its lending banks to extend the period during which operating cash flow generated by the Moma mine could be used to fund the expansion costs from December 15, 2012 to June 30, 2013.
This agreement also provided Kenmare the flexibility to raise up to $40-million of additional debt.