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Analysis

The Mexican Industrial Mineral Sector

Mon, 10/21/2013 - 12:09

According to the Mexican Geological Survey (SGM), Mexico has a generous supply of industrial minerals. The country produces 29 industrial minerals, from aggregates to zeolites, though some of these are produced only on a small scale, such as mica, talc, and vermiculite. Camimex studies rank Mexico as being between the second and 12th largest producer in the world for 13 industrial minerals: second in fluorite; third in celestite, sodium sulfate and wollastonite; fifth in diatomite; eighth in barite, graphite and gypsum; ninth in salt; 11th in kaolin and silica sand; and 12th in feldspar and sulfur.

One of the most important factors when evaluating the feasibility of any industrial mineral deposit is the market for that specific deposit. As the industrial mineral consultant Peter Harben states: “without a market, a deposit is merely a geological curiosity.” In this sense there are two critical issues for industrial mineral producers; the first is to strictly adhere to the particular industry specifications, both chemical and physical, and the second is to become a reliable supplier that meets its clients’ requirements and timeframes. For example, a silica sand deposit might easily provide products for different industries, such as the glass and ceramics sectors, where the chemical specifications are rather similar but the physical specifications are completely different. With regards to specifications, it is critical to comply with the minor elemental criteria: a 99.5% SiO2 silica sand cannot be used if the remaining 0.5% consists of metal or zircon. Another example is acidgrade fluorite, which must comply with low limits on silica, calcium carbonate, and arsenic contents. On the other side, the logistics behind transporting the industrial minerals to production centers is another challenge. For instance, two important barite deposits in Sonora have not been in production since 1997 because they are too far from the main industrial market in southern Mexico.

According to the SGM, the value of Mexican industrial mineral production has been on the rise since 2007 when it was at MX$40.8 billion (US$3.23 billion). By 2011 it had grown to MX$51.8 billion (US$4.1 billion), a 27.35% increase in five years. It is important to highlight that this increment is not related to the upturn in metal prices, because industrial mineral prices are not as volatile. Industrial minerals have to be considered as the basis for other important industries, an example of which can be seen in the Mexican automotive industry, which is becoming one of the largest exporting sectors in the country. Windshields are mainly made of silica sand, limestone, and feldspar, whereas the steel parts use dolomite in their production. Paint has several industrial minerals in its composition, as well. The agricultural, chemical, construction, electric and electronics, food and beverages, and paper industries all rely on industrial minerals, whether domestically produced or imported.

Options are not plentiful for the future of Mexican industrial minerals, since no adequate deposits of the most marketable industrial minerals, such as rare earths and lithium, have been found. Therefore, production and new projects should focus on the same known minerals, and mainly on value-added products such as micronized industrial minerals, which are not yet widely produced but have a higher market price. Furthermore, the trade balance for industrial minerals has not been favorable for Mexico since 2007; for each exported dollar, a little more than two dollars is imported. This figure increases each year. In order to locate the opportunities in the industrial mineral market, a detailed knowledge of what is being imported is required, but most importantly, an understanding of why it is imported. In its annual report, Camimex points out a continuous increase of silica sand production from 1.3 million tonnes in 1992 to 3.6 million tonnes in 2012, which amounts to US$140 million. However, last year silica product imports reached US$98 million, while barite imports accounted for US$93 million.

So is there room for new industrial mineral producers in Mexico? No doubt about it, but the producer would have to be prepared for a very long process involving market research, exploration activities, feasibility studies, development, and construction, in order to reach the production stage, not to mention gathering the required resources to fund each step of the mining process. As global business approaches have demonstrated in all kinds of industries, mergers and acquisitions involving foreign investment are generating better consumer-provider relationships. This is evident in the Mexican industrial mineral market in micronized calcium carbonate, or more recently in the consolidation of the fluorite market with European investment. A profitable deposit with foreign investment that provides market knowledge, experience, and client support could be the best business option for moving forwards in the industrial mineral sector.

NON METALLIC MINERAL PRODUCTION IN MEXICO