JOHANNESBURG (
Business Day) --South Africa has two major fluorspar producers: the Vergenoegd mine owned by Metorex, which produces about 180,000 wet tonnes of acid-grade fluorspar a year, and Sallies’ Witkop, which produces about 120,000 tonnes a year.
Dale, who recently returned from the annual fluorspar conference held in Montreal, Canada, this year, said in an interview the global market for acid-grade fluorspar was about 4.5-million tonnes a year, of which China produced half.
Most fluorspar was sold on contract and only about 1 million tonnes a year was freely traded. South African producers tended to sell in the freely traded sector.
In recent years China has been attempting to grow its local industries and has imposed export quotas on a number of industrial minerals. Whereas five years ago it exported about a million tons of acid-grade fluorspar a year, this year it would export only 500,000 tonness and it could reduce further next year, Dale said.
Acid-grade fluorspar is used mainly to make refrigerant gases and there is no practical substitute. Another third of the market is aluminium producers, which need aluminium trifluoride to reduce temperatures in smelters.
The remainder is used in uranium enrichment and lithium batteries.
Dale said Sallies was in a stronger financial position than 18 months ago.
The last of the contracts for Witkop mine to supply fluorspar at $180/tonne ended in its past financial year. At the end of June last year, Witkop’s costs were well above its selling price but it was now “highly profitable”. The Buffalo fluorspar mine, which Sallies bought for R65 million two years ago, had been losing cash at a rate of R1.5 million a month. It had now been placed on care and maintenance.
In the past financial year Sallies had raised R150 million in two tranches and at the end of June held R25 million in the bank and R16 million in undrawn facilities.
Even if former customer Honeywell, which has taken Sallies to international arbitration over the cancellation of its contract, were to win its case, it would not deal a fatal blow to Sallies, Dale said. The decision of the arbitrators was due early next year.
Sallies had 70-million tonnes of fluorspar in reserves, giving it a 40-year life at its mining rate of 1.8-million tonnes a year.
Management was looking at ways to improve efficiencies in the plant to accelerate production as well as other opportunities to develop the company.
