Eramet, Mineral Deposit Create Joint-Venture In Mineral Sands
July 28 2011 - 1:14AM
Dow Jones News
French mining group Eramet SA and Mineral Deposits Limited
("MDL") said Thursday they have signed the definitive agreements
for the creation of a joint venture to combine Eramet Titanium
& Iron and MDL's Grande Cote Mineral Sands project.
MAIN FACTS:
- As proposed in the terms of the Memorandum of Understanding
announced on June 17, Eramet and MDL will both hold 50% of the
shares of the newly created entity.
- Eramet will contribute to the joint venture its 100%
shareholding in ETI and cash of $30 million, and MDL will
contribute its 90% participation in the Grande Cote Mineral Sands
project, the other 10% of the project being held by the Republic of
Senegal.
- The transaction creates a new major player in the mineral
sands industry which presents attractive growth prospects given the
supply deficits forecast in the titanium dioxide and zircon markets
in the short and medium term, and the low substitution risk of
these two products.
- Titanium dioxide is mainly used for the production of pigments
(91% of consumption) and of titanium metal - notably for the
aeronautics industry - (5%). Zircon is used in the production of
ceramics (55% of consumption), zirconia and chemicals (18%),
refractory materials (11%) and foundry parts (11%).
- ETI owns the Tyssedal plant in Norway, which is the only
facility in Europe producing titanium dioxide (TiO2) slag for use
in the pigment sector. Current capacity is approximately 210 ktpa
of TiO2 slag, and approximately 115 ktpa of high-purity pig iron as
a very important co-product, which is sold to ductile iron
foundries, notably for the production of parts for wind turbines.
Ilmenite is the major feedstock of the plant.
- Located on the coast of Senegal in West Africa, the Grande
Cote Mineral Sands Project, with an expected mine life of at least
20 years (based on identified reserves and resources), is
anticipated to produce approximately 85 ktpa of zircon and 575 ktpa
of ilmenite (and small amounts of rutile and leucoxene) when in
full production.
- Construction of the Project will commence during the current
quarter, and after a two year build, production is expected to
commence late in 2013. The capital cost of the Project, estimated
at $516 million, will be financed using Eramet's cash contribution
of $30 million to the joint venture, a $45 million shareholder loan
provided by Eramet to the joint venture, third party debt financing
and equity contributions or shareholders loans set up at parity
between the joint venture and the two parties. Grande Cote is one
of only a few major new projects globally that is expected to be
developed in the medium term.
- The combination of ETI and Grande Côte will provide ETI with
the opportunity to benefit from a new source of high quality
ilmenite, which provides for expansion and product diversification
opportunities, while Grande Côte will be able to secure off-take
for the majority of its ilmenite production. Grande Cote's zircon
production will allow the joint venture to have a strong position
in another attractive market.
- Finally, the joint venture will benefit from Eramet's broad
expertise in mining, metallurgy, logistics, R&D and marketing,
and from MDL's development expertise (having successfully
commissioned the Sabodala gold project in Senegal in 2009) and
mineral sands mining experience..
- By Paris Bureau, Dow Jones Newswires; +331-4017-1740;
geraldine.amiel@dowjones.com
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