Multinational mining and metallurgical company Eramet expects to receive an $18-million payment from titanium dioxide pigment manufacturer Tronox, following the collapse of a proposed smelter acquisition.

This payment arises as a result of the unilateral termination of the $300-million proposal for Tronox to acquire Eramet’s smelting facility, TiZir Titanium and Iron (TTI), a subsidiary of multinational mining and metallurgical company Eramet.

Tronox abandoned the deal on January 18, thereby triggering the agreed-upon break fee, after it had been announced that the British Competition and Markets Authority (CMA) intended to open a Phase 2 investigation into the acquisition, despite Tronox proposing substantial remedies.

The CMA revealed in its initial investigation last year that Tronox intended to use all of TTI’s chloride slag in its production of titanium dioxide and bar all future sales of chloride slag to third parties. This would have left mining major Rio Tinto, TTI’s main chloride slag competitor, in what effectively amounts to a monopoly position, the CMA claimed.

“Our investigation showed that Tronox’s purchase of TTI removes a key player in the global supply of chloride slag which, in turn, could have a knock-on effect on the creation of titanium dioxide pigment,” said CMA executive director for mergers and markets Andrea Gomes da Silva in a statement issued in January.

“Any deal that leaves one company as the only significant supplier in a market deserves closer scrutiny and, in this case, the acquisition could leave buyers and their customers facing higher prices.”

The proposed acquisition was first announced on May 14, 2020, and would have resulted in Tronox taking ownership of the TTI metallurgical conversion plant in Tyssedal, Norway, which produces about 230 000 t/y of titanium dioxide slag and 90 000 t/y of high-purity pig iron sourced from Eramet’s Senegalese mineral sands ilmenite mining subsidiary Grand Côte Operations (GCO).

As part of the transaction, Tronox would have entered into a supply agreement with GCO to continue providing ilmenite to TTI. For the first two years, Tronox expected the GCO mine to meet all TTI’s requirements. However, the volumes sold would have reduced throughout the term of the agreement, allowing Tronox the flexibility to supply TTI from its own mineral sands assets or other sources.

The GCO mineral sands mine, north of Dakar, in Senegal, comprises a concession of about 106 km and boasts a full complement of necessary industrial facilities and transport infrastructure.

The mineral sands mining operation produces ilmenite 54, containing 54% titanium dioxide, and ilmenite 58, containing 58% titanium dioxide. The operation has also started to produce Ilmenite 56 from the recycling of mining residues and is part of a circular economy approach. Ilmenite 56 is currently marketed to China. GCO also produces premium and standard grade zircon.

In a statement issued in May last year, Tronox CEO and chairperson Jeffry Quinn said the acquisition was “highly strategic”, and that it represented the next step in advancing the company’s vertical integration strategy.

He noted that it would have provided Tronox with increased titanium feedstock capacity to better fulfil its internal requirements. This, in turn, would have better served the company’s pigment customers with a low-cost, secure source of supply.

The Norwegian location would also have been “ideally situated” to supply feedstock to the company’s European pigment facilities.

Quinn added that the technology and manufacturing capabilities that Tronox would have acquired would have lowered its cost of obtaining the feedstocks needed to run the company’s pigment plants while broadening the geographic diversity of its titanium feedstock operations.

TTI would have been a “great complement” to Tronox because of the shared focus on operational excellence, safety and sustainability, he said.

Tronox previously said that the TTI acquisition would also have improved the likelihood of the successful commissioning, ramp-up and eventual acquisition of a smelter in Jazan, Saudi Arabia, for about $36-million from Saudi industrial conglomerate Tasnee in the first quarter of this year.

The commissioning, ramp-up and eventual acquisition of the Jazan smelter, however, still moves despite the TTI acquisition falling through, the company said after the TTI deal fell through.

“We are currently building significant momentum in the market and are already well positioned to execute on our strategic plans with our existing portfolio. We will continue to leverage our vertical integration and sourcing strategy to supply our pigment feedstock requirements and remain focused on our efforts to bring the Jazan smelter online,” said Tronox co-CEO, executive VP and COO Jean-François Turgeon in a statement issued in January.

He noted that, while TTI was an asset that would have furthered the company’s vertical integration strategy, the decision to terminate the agreement reflected the fact that – under the CMA’s rules – Tronox could not have obtained regulatory approval prior to the termination date under the agreement with Eramet.

“The transaction would benefit customers, consumers, shareholders and both companies, and I do regret that the CMA failed to recognise its value to competition," lamented Eramet chairperson and CEO Christel Bories in January.