The company announced the completion of construction of its Gangama dry mine project in Sierra Leone in the back end of April, just in time to ride on a wave of positive market commentary on the outlook for titanium, and especially titanium pigment.
Is this coincidence?
One suspects not, given the long years of experience the company has in producing titanium oxide in the form of rutile in Sierra Leone.
Most of the commentary relates to demand for titanium as pigment, which is the primary industrial use of the metal, but there’s also growing demand for titanium metal itself, as evidenced by Sierra Rutile’s own resumption of sales into that market last month.
All told, the outlook presented by Sierra Rutile at the end of March that “a broad-based pick-up in rutile prices is on the horizon” is now finding real support elsewhere in the market.
For example, David Robb, the outgoing managing director of Iluka Resources (ASX:ILU), highlighted in what amounts to his parting address to the market that demand for zircon and rutile is improving.
Mr Robb told Iluka shareholders at the company’s annual meeting that a recovery in mineral sands markets was now evident.
Iluka is the world’s leading mineral sands producer and, as such, pronouncements from its management team are paid close heed to by an industry that is sometimes hampered by an opacity in regard to supply, demand and pricing.
Iluka’s marketing department had, said Robb, “observed over April and into May a recovery in demand from March.”
And there’s more.
“We are seeing the most positive combination of factors for the pigment sector and ultimately for high-grade feedstock demand we have seen since 2012,” said Mr Robb.
That positivity dovetails nicely with pronouncements from Tronox (NYSE:TROX) made a couple of weeks ago in which the US$300 mln company called the bottom of the mineral sands market.
Although first quarter results for Tronox were disappointing, the company did note that average pigment selling prices rose towards the end of the quarter. It looks, said Tronox, like “the turning point of the long decline in TiO2 pigment selling prices.”
In response to this apparent new dynamic Tronox has rolled out price increases and expects this to result in better realised prices for pigments in the second and third quarters of this year.
Meanwhile, Huntsman is also putting up prices for TiO2 pigment, Norsk Titanium is talking about strengthening demand, Kenmare’s sorted out its balance sheet, Base Resources (ASX:BSE) has raised money, and Sierra Rutile itself has also raised money in a placing that was oversubscribed.
So investors are once again picking and choosing which companies they want to back and things are beginning to move.
Of course, the pick-up in titanium could be presented as part of a wider improvement in commodity prices across the board.
But be that as it may, Iluka’s customers have now asked it to accelerate shipments. And after years of anaemic growth right across the mining sector, that sort of news comes as very welcome indeed.
Source: Proactive Investors
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