The Economics of Fluorspar (10th Edition 2009) is available at
GBP2400 / US $5000 / 4000 Euros from Roskill Information Services Ltd,
27a Leopold Road, London SW19 7BB, England.
Spot prices for acid grade fluorspar, landed in the USA, increased four fold between January 2003 and November 2008 as the market responded to the reduction in supply from China and soaring freight costs. The extent of the availability of Chinese fluorspar has been the main factor affecting fluorspar prices since the mid 1980s. Acidspar prices were low throughout the 1990s as a result of declining world demand coupled with a surge in exports of low price fluorspar from China. Following the introduction of anti-dumping measures in Mexico and Europe and the closure of some mines, the supply/demand balance began to normalise. Further stabilisation of the market occurred at the beginning of the 2000s as China reduced export quotas and introduced export tariffs. Exports of Chinese fluorspar halved between 2002 and 2008.
In the meantime, mine production in the rest of the world had declined in the 1990s in response to low prices and diminishing production of fluorochemicals in the rest of the world. It has taken some time for production to increase elsewhere, but by 2008 Mexican producers had practically doubled their output since 1998 and output had also increased significantly in Mongolia, Russia and Namibia.
The supply situation was also eased by the increasing availability of downstream products from China. Exports of aluminium fluoride, for example, increased from 17,550t in 2003 to over 100,000t in 2008. Exports of hydrofluoric acid also soared between 2003 and 2006 but have levelled off, partly owing to the imposition of a 15% export tax in 2008, which indicates that the government is encouraging the production of added value fluorocarbons. Exports of HFCs to Europe and North America have already started to make an impact.
The diminishing availability of fluorspar from China and strong growth in demand from 2002 to the third quarter of 2008 has led to a number of proposed new mining operations. Of the total identified potential output of 1.4Mtpy it is estimated that about 0.7Mt has attracted significant funding. Possible new producers from new deposits include the Nui Phao Mining Company in Vietnam, Tertiary Minerals in Sweden and Mongolia Minerals. A number of companies are investigating reopening old mines or exploiting deposits adjacent to old workings, and these include Burin Fluorspar in Canada and Hastie Mining in the USA. In China, companies that have previously exploited deposits in Zhejiang are now developing new deposits in Inner Mongolia, Fujian and Jiangxi.
Over the past decade as a whole, demand for fluorspar has grown at just 2.2%py but in the years from 2003 to 2007, growth rates exceeded 4%py as the industry started to recover from the effects of restrictions on the use of some fluorocarbons. Of the 5.5Mt of fluorspar consumed in 2007, an estimated 50% was used in the manufacture of chemicals, 24% in iron and steel and 17% in the manufacture of aluminium. Growth has been associated with production of chemicals and aluminium fluoride, both of which are derived from acidspar. This has led to some tightness in supply of acidspar, as production has grown by 6.6%py since 2002 while consumption has grown by 7.4%py over the same period. Over the four years from 2003, it is likely that stockpiles have been drawn down to contribute to supply.
The market for fluorocarbons is recovering from the impact of phasing out the use of chlorofluorocarbons (CFCs), which are being replaced by fluorocarbons with a lower ozone depleting potential. It is estimated that around 1.8Mt of fluorspar was consumed in 2007 in the manufacture of fluorocarbons for applications such as refrigerants and foam blowing. Replacement fluorocarbons (HCFCs and HFCs) require more fluorspar in their manufacture but this positive factor is increasingly offset by further restrictions on the use of HCFCs and HFCs, as several of the compounds have been identified as exhibiting global warming potential. These further restrictions and the phasing out of CFCs in China and other industrialising countries over the next few years will limit growth to 1%py.
The other main application for fluorochemicals is the manufacture of fluoropolymers and fluoroelastomers for use in materials such as PTFE, PFA, ETFE and PVDF. The main product is PTFE, which is used in insulation of electrical wire and cables as well as in aerospace, coatings and electronics. Demand for fluorspar in the manufacture of fluoropolymers and fluoroelastomers is strong and growth is likely to exceed 5%py, once the global economy recovers.
The addition rates of metspar flux in the steel industry have been declining. Thus, while crude steel output reached record levels in 2007, consumption of metspar fell as old steel mills were replaced and the use of alternative fluxes increased. Demand for metspar in steel will continue to decline.
Demand for fluorspar in the manufacture of aluminium fluoride and synthetic cryolite used in aluminium smelters has grown by 6-7%py from 2000 to 2007. Future growth will be tempered by a decline in unit consumption as smelting technology improves. Other factors that could limit demand for fluorspar, despite continued growth in aluminium production, are the increased use of FSA as a source of fluorine for AlF3 and increased recycling of fluorine units at the smelter.
Over the next five years, prices are likely to stabilise as environmental pressures moderate demand. Although some Chinese fluorspar has been removed from global trade this has been largely offset by increased production in Mongolia and Mexico and by exports of fluorspar derivatives from China. The easing of prices seen at the end of 2008 is likely to continue through 2009.