Titanium and Zircon

REMSI is part of a rapidly expanding, global titanium and zirconium industry. This industry extracts the minerals that are processed to create titanium and zirconium metals, dioxides and other useful products. In 2009, mining companies produced an estimated 5,190,000 tons of ilmenite, 529,000 tons of rutile and 1,230,000 tons of zircon.

The global economic slowdown caused a drop in demand and a decrease in production in 2009. Demand is recovering rapidly as GDP growth returns and emerging markets like China continue to expand. Zirconium production has been forecast to recover and grow 3% per year through 2015. Already there appears to be worldwide shortages of these strategic materials.

Australia and South Africa together are responsible for more than half of the world's production of both titanium and zirconium minerals. Other important producers are China, Canada, India, Norway, Ukraine, Sierra Leone and the United States.

A number of explorations occurred in the titanium and zirconium mining industry between 2008 and 2010. There are titanium and zirconium exploration and mining products currently in Australia, Canada, Chile, India, Kenya, Madagascar, Mozambique, Russia, Senegal, Sierra Leone, South Africa, the United States and others. The United States, however, may have depleted its known resources within the next ten years. There are indications Australia's resource is waning as well.

Titanium and zirconium are recovered either from hard rock or mineral sands. Mineral sands deposits are formed by the erosion of hard rock by a rivers and oceans.

The titanium and zirconium industry depends greatly on the fortunes of the global economy at large. The economic slowdown in 2008 and 2009 decreased demand and production significantly. Because 95% of titanium is used to produce titanium dioxide pigment, the consumption of pigment is the major driver for demand of titanium. Low rates of construction and automobile manufacturing have resulted in lower demand for pigment. The majority of titanium in pure metal or alloy form is used for the manufacture of aircraft. During 2008, construction of many aircraft was delayed, resulting in lower production of titanium sponge metal and lower prices. There was also lower demand for products that use zirconium. Global production was 4% lower in 2009 than in 2008. The recovery of the global economy and the rapid growth of India and China are bound to spur demand of titanium and zirconium during the next decade.

Exports and Imports

Canada exported over $211 million of titanium products and $70 million of zirconium products in 2009. Titanium ores and concentrates were a mere $700 thousand of the total, down from $67 million in 2008. Zirconium ores and concentrates were $191 thousand, down from $213 thousand in 2008.

Canada imported over $280 million of titanium products and $55 million of zirconium products during the same period. Canada imported $23 million of titanium ores and concentrates in 2009 after only buying $1 million in 2008. The county imported $3 million of zirconium ores and concentrates in 2009, down from $4 million in 2008.13 The volatility in imports and exports underlines the challenges that the industry faces from changes in demand and in finding a consistent supply of minerals. Overall, Canada is a net exporter of zirconium products and will likely become a net exporter of titanium products. Figure 55.4 shows a gradual increase in exports of titanium over the past five years and a steady drop in imports. Figure 55.5 demonstrates that the growth of zirconium imports has been outpaced easily by zirconium exports. The recession damaged Canada's exports in 2009, reversing the pattern for that year. Appendix A includes tables with further information on Canada's exports and imports of titanium and zirconium14Trade Partners

An overwhelming majority of Canada's exports and imports of titanium and zirconium involve the United States as its trade partner. In 2009, Canada sent approximately 91% of its titanium exports to the United States. Approximately 70% of Canada's titanium imports and 88% of its zirconium imports came from the United States.

This relationship has a number of explanations. The United States, with the largest economy in the world and a variety of advanced industries, is a major consumer of these metals. The United States used approximately 1.4 million tons of TiO2 in 2008, or 30% of the world's consumption of 4.7 million tons. The commodities also have a high weight-to-value ratio which makes Canada's proximity advantageous in terms of transportation.

An exception to the pattern of reliance on the U.S. is in zirconium exports. In addition to the United States, Japan, China, North Korea and South Korea are major buyers of Canadian zirconium. See Appendix C for tables and graphs on Canada's trade partners.

Australia has been a major supplier to China, although recent indicators are there are growing shortages of raw material.

Market Analysis

The market for titanium and zirconium minerals is enormous. Global consumption of titanium dioxide (TiO2) was estimated at 4.7 million tonnes in 2008. The global consumption of zircon and its derivatives was estimated at 1.3 million tonnes for the same year.