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APB plans construction and awaits permits United States // Borates American Pacific Borates Ltd has enjoyed a productive December quarter and is ready to begin construction at its Fort Cady Borate Project in California once final permits have been approved. The company is targeting increased sulphate of potash (SOP) production, which under the current plan will produce 108,000 tonnes per annum. This increase in SOP production is expected to increase project internal rate of return (IRR) and net present value (NPV) as well as targeting US$345 million annual earnings before interest, tax, depreciation and amortisation (EBITDA) once in full production. An enhanced DFS is expected to be released before April 30, 2020.
During the December quarter the company began initial site works to prepare for the construction of the borate mine, which included improvement to roads, site clearing/clean-up and infrastructure improvements for construction activities. A network gas contract has been signed and initial payment made to ensure network gas is available for first production at the site. The company expects a final, positive permit to be awarded for the project over the coming months. The ABR board believes there is an opportunity to increase production to take advantage of the fact that USA is a net importer of SOP and the only incumbent producer is a high-cost producer. The company will also have
a very low cost of production relative to USA production and imported SOP. Other potential advantages are: • The mine is on the West Coast, which is a major consuming area for SOP; • Growth rates for SOP consumption are stronger than USA GDP given the link to highvalue crops; and • The mine will have the required electricity and gas to power the additional Mannheim furnaces, as the mine has access to grid electricity and network gas The mine will also have access to a convenient logistics solution for increased production, with the process plant within four kilometres of a national rail network and a major interstate highway On December 11, 2019,
the company announced it had completed a placement of 11 million ordinary shares at 25 cents to raise A$2.75 million to three global institutional investors. The placement included a five for six attaching option at 30 cents and funds will be used to progress construction related activities. Discussions are ongoing with major Chinese state-owned enterprises (SOEs) with respect to boric acid and SOP offtake agreements. The company has advised that it is not prepared to sign offtake agreements in the absence of prepayments to support construction or project level investment. Chinese SOEs are expected to visit the site in March 2020.
China market share to continue falling? World // Soda Ash China’s share of the global soda ash market is set to continue declining amid new capacities in Turkey and inflow of US supplies to Asia. In 2019, China exported less than 1.3m tonnes of soda ash, down 6.1% from the previous year. The market outlook for 2020 is downbeat in view of ample supply on both the domestic and global fronts. During the week ended 8 January 2020, dense grade soda ash prices fell $5/tonne to $200-210/tonne FOB (free on board) China; while prices of light grade soda ash fell $3/tonne to $200-207/tonne FOB China, ICIS data showed. China’s import prices of dense grade material in northeast and southeast Asia likewise decreased, slipping $5-10/tonne, to $215-220/tonne CFR (cost and freight) NE (northeast) Asia and to $215-230/tonne CFR SE (southeast) Asia, respectively. Spot prices were at their lowest levels since around October 2016, according to ICIS data. Bulk lots from the US supplied under term contracts for delivery
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in the first two quarters of 2020 were available at lower prices. This includes a 20,000- to 30,000-tonne lot of dense grade natural soda ash which is close to being settled at around $200/ tonne CFR SE Asia, according to market sources. Term 2020 supplies from Turkey were being negotiated at around $200-210/tonne CFR SE Asia to as much as $220/tonne CFR NE Asia. The US and Turkey enjoy lowcost manufacturing processes
due to vast reserves of the trona mineral which is mined and refined into soda ash. In China, two major producers – one from Jiangsu and the other from Shandong - foresee a 5% to 14% reduction in their export volumes for 2020. “Last year, we exported 350,000 tonnes of dense and light grade soda ash and this year we [forecast] 300,000 to 350,000 tonnes,” a source from the Jiangsu-based producer said. In South Korea, the 2020
Potential new soda ash capacity Capacity (tonnes/ Company year) Tata Chemicals
Yildirim Holding
Inner Mongolia Berun Group Sisecam Group & Ciner Group JV
900,000 (+ 250,000)
400,000
5m 2.5m
term import volumes are expected to be cut by 20% for dense grade soda ash due to depressed demand from a major downstream glass manufacturer as the country’s economy struggles with weak exports and construction investments. China may see a consolidation of production bases in the long run given the lack of cost advantage of manufacturing soda ash through chemical processes. New soda ash projects are mostly located outside China.
Location
Status/Start-up schedule
Mithapur, Gujarat, India
Received environmental clearance for capacity addition; targeted to come on stream in late 2021.
Togyzkent village, Sarysu district, Zhambyl, Kazakhstan Inner Mongolia, China Green River, Wyoming, USA
Construction scheduled to start in late 2019; no further update available.
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