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Kenmare ups production but prices worry

Thursday, October 11 10:19:14

Irish-based, Mozambique-focussed miner, Kenmare Resources, this morning said that it saw improved output during the third quarter but short-term pricing remained uncertain as demand fell, especially in the building sector.

The company, which owns the Moma mine, in Mozambique, delivered a 21pc increase in ilmenite production to 174 100 t during the third quarter, with a record-high monthly production of 73 400 t reported in August. This was up from 143 900 t produced in the second quarter and 132 700 t in the first quarter.

Ilmenite is used in the production colour for paints, paper and plastic.

Kenmare said that the favourable supply and demand conditions in the industry over the last two years led to significant price increases in both pigment and feedstock.

Primary grade zircon output jumped 31pc to 8 800 t during the quarter under review, from 6 700 t produced in the second quarter. Secondary grade zircon production fell 40pc to 3 800 t in the third quarter, from 6 300 t in the second quarter.

Further, over 229 000 t of heavy mineral concentrate was produced - up 16pc from the 198 200 t recorded in the prior quarter.

However, Kenmare pointed to a global softening in demand for pigment and the expected seasonal second- and third-quarter improvements in pigment demand faltered, placing pressure on short-term prices.

Many pigment producers have curtailed production to align to the subdued demand and, to mitigate the cost pressures of rising feedstock prices, producers were shifting from higher- to lower-grade feedstocks where possible and revising their feedstock mixes, Kenmare said in a statement.

The short-term business outlook has been affected by softer markets for titanium minerals feedstock and zircon products, particularly in China and southern Europe, which are principal markets for zircon.

"The current zircon market is faced with significant producer inventories that will have to be drawn down before production can be brought back to its previous levels. This inventory overhang will continue to create some pricing uncertainty in the short term until demand returns to more regular levels," the company said.