One of the largest mineral sands operations in the world has temporarily closed its doors. Here’s how ASX stocks could benefit
Rio Tinto (ASX: RIO) has declared force majeure on Richards Bay Minerals (RBM) customer contracts in South Africa, ceasing operations until the safety and security situation improves.
But it’s not all bad news for mineral sands players like Sovereign Metals (ASX: SVM), which could benefit from the expected shortage of titanium raw materials.
The company’s Kasiya rutile project in Malawi is close enough to add to the African supply chain – rutile being the purest and highest natural form of titanium dioxide (TiO2) and the preferred raw material in the manufacture of titanium pigment and the production of titanium metal.
And according to Managing Director Dr Julian Stephens, being in the “warm heart of Africa” certainly helps reassure all nervous harvesting partners that their supply is secure.
Rutile prices could increase
“As far as the mineral sands market is concerned and in particular for us, this will create a significant shortage in the market for high quality titanium raw materials,” said Sovereign Managing Director Dr Julian Stephens. Stock.
“This market is about 6 million tonnes per year and I understand that RBM is about 15-20% of that market, and the market right now is tight to extremely tight – so taking an additional 15-20% of the market will create supply issues and we would likely see further price increases because of it.
“Particularly for rutile, our mineral, which is obviously sold in the same market as RBM’s titanium flag product, so basically they’re interchangeable, so we think rutile prices would continue to rise.”
Warm Heart of Africa
“Malawi is not South Africa and Tronox also operates in South Africa and they haven’t had any issues – so I think it’s a relatively isolated local issue that they have in Richard’s Bay,” Dr Stephens said.
“Most of the other mining operations in South Africa are operating without any major problems.
“To us in Malawi they don’t call it the warm heart of Africa for nothing, they are probably the friendliest people in the world and we are very happy to be working there and haven’t seen anything at all like what happens in Richard’s The Bay. “
Scoping study in progress
The company has just completed a scoping study of the project and plans to release news in the near term.
“We will probably announce details on this within the next week, we are in the process of putting everything in place now,” Dr Stephens said.
“In addition to that, we are engaging with a significant number of potential future direct debit partners.
“We also continued both exploration and infill drilling to bring the inferred resource to indicated so that it could form the basis of our scoping study. “