Kenmare posts Q2 recovery as heavy mineral demand rises amid supply disruption

Ilmenite is used in paint pigments

KENMARE Resources produced record heavy minerals in the second quarter amid continued improvements in the demand, especially zircon for which orders were higher than the company could supply.

“Market conditions for ilmenite, and titanium feedstocks in general, remained strong in Q2 2021 with pricing strengthening quarter on quarter,” said Michael Carvill, MD of Kenmare in a second quarter trading update. “The outlook for zircon has also continued to improve, with price increases during the quarter and continuing to date,” he said.

Heavy minerals include the products ilmenite and zircon which are used to make paint pigments. The minerals are also used in the ceramics and welding industries.

Kenmare said today pigment plants were operating at high production rates, whilst the titanium metal and welding sectors are also experiencing a strong recovery. The tightness in the zircon market was exacerbated by supply disruptions. “Demand for Kenmare’s zircon products is currently exceeding its ability to supply,” it said.

Production of heavy mineral concentrate totalled 436,000 tons in the quarter representing a 41% quarterly increase year-on-year. This took production for the first six months of Kenmare’s financial year to 798,500 tons, a 43% improvement over the first half of the 2020 financial year during the onset of the Covid-19 pandemic.

The improvement in production was partly owing to the move of its Wet Concentrator Plant B (WCP B) facility from Namalope to Pilivili where grades of mineral sands are higher. Namalope and Pilivili are parts of Kenmare’s Moma mine which is situated in northern Mozambique.

Kenmare confirmed the installation of WCP B at Pilivili would have a capital cost of R127m, about R20m more than originally budgeted. However, it was the third and final capital project undertaken by Kenmare ahead of taking production of heavy minerals up about a fifth higher to 1.2 million tons (Mt) annually. Kenmare said full-year guidance of 1.1Mt to 1.2Mt was on track.

Net debt increased to $76.1m as of June 30 compared to $64m as of December 31. This was mainly due to the timing of capital expenditure payments and a reduction in the use of invoice factoring, said Kenmare.

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