One of the world’s biggest mineral sands operations has temporarily closed. This is how ASX stocks could benefit
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Rio Tinto (ASX:RIO) has declared force majeure on customer contracts at Richards Bay Minerals (RBM) in South Africa, ceasing operations until the safety and security position improves.
But it isn’t all bad news for mineral sands players like Sovereign Metals (ASX:SVM), who could benefit from the expected shortage of titanium feedstock.
The company’s Kasiya rutile project in Malawi is close enough to add to the African supply chain – with rutile being the purest, highest-grade natural form of titanium dioxide (TiO2) and the preferred feedstock in manufacturing titanium pigment and producing titanium metal.
And according to managing director Dr Julian Stephens, being in the “warm heart of Africa” certainly helps to reassure any nervous offtake partners that their supply is secure.
“In terms of the mineral sands market and specifically for us, it will create a significant shortage in the high-grade titanium feedstock market,” Sovereign managing director Dr Julian Stephens told Stockhead.
“That market is about 6 million tonnes a year and I understand RBM is about 15-20% of that market, and the market at the moment is tight to extremely tight – so taking another 15-20% out of the market will create significant supply issues and we would likely see further price rises because of that.
“Specifically for rutile, our mineral, that obviously is sold into the same market as RBM’s titanium flag product, so basically, they are interchangeable, so we would think that rutile prices would continue heading up.”
“Malawi is not South Africa and Tronox are operating in South Africa as well and they’ve had no issues – so I think it’s a relatively isolated local problem they’ve got there at Richard’s Bay,” Dr Stephens said.
“Most other mining operations in South Africa are operating without any significant issues.
“For us in Malawi, they don’t call it the warm heart of Africa for nothing, they’re probably the friendliest people in the world and we are very happy working there and haven’t seen anything at all like what’s happening in Richard’s Bay.”
The company has just completed a scoping study at the project and expects to release news in the near-term.
“We’ll probably be announcing details around that within the next week or so, we’re just putting that all together now,” Dr Stephens said.
“In addition to that, we’re engaging with a significant number of potential future offtake partners.
“We’ve also continued drilling both exploration and infill to bring up the resource from inferred up to indicated so that it can form the base of our scoping study.”