Alkane inks worldwide zirconium deal with Minchem Ltd.
Australian listed gold producer, Alkane Resources Ltd. (ASX: ALK | OTCQX: ANLKY) revealed that it signed a marketing and sales agreement for its Dubbo Zirconia Project (DZP) with ceramics manufacturer, Minchem Ltd. for all its zirconium materials produced by DZP.
Minchem Ltd. was formed following a management buyout of the minerals and chemicals division of Palabora Europe Ltd., a wholly owned subsidiary of Palabora Mining Co. Ltd. As such the company represents the sales and marketing interests of Palabora Mining Company’s zirconium ores. As such, the arrangement ensures that Alkane is provided with an experienced partner to market DZP’s zirconium products directly to key industry-end users.
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Under the arrangement, DZP will initially supply Minchem for five years from the date DZP commences with its zirconium production, with an option to extend for a further five years thereafter by mutual agreement. Currently the company is in the construction phase with the demonstration pilot plant (DPP) trials scheduled to have started in August with the aim of producing zirconium products and hafnium and rare earth concentrates.
The plan is to produce around 16,000 tpa of zirconium products including zirconium dioxide, speciality zirconium chemicals and value-added zirconium products.
The market reacted positively to the marketing arrangement as Alkane’s share price rose from AUD0.2650 to AUD0.3250 (US$0.204 to US$0.25) on the back of the announcement on the 16th of August. The share price has been maintained at this level.
The majority of zirconium is consumed by the ceramics industry (47%) with the balance being split between chemicals (21%), refractory (17%), foundry (12%) and other uses (3%).
Whilst the milled zircon for use in ceramics has come under pressure due to increased competition from lower cost substitutes such as calcined alumina, feldspar and alumina-silicate mixtures, it is expected that DZP will be focused primarily on zirconium-based chemical products, which Core Consultants is forecasting will rise by roughly 25% CAGR over the next five years. Currently the majority of these chemicals is expected to be produced by China which has invested heavily in chemical facilities over the last decade and currently dominates 80% of zirconium production.
Moreover, 80% of the global zircon chemical capacity, which stands at 525,000 tpa, is comprised of zircon oxychloride (“ZOC”) which is forecast to grow ZOC offers lower levels of radioactivity as uranium and thorium are concentrated in waste streams. Again, China dominates the ZOC market, supplying over 90% of global production and now needs to manage and dispose of these waste streams. This makes Alkane an interesting play, as its zirconium products offer an alternative to Chinese sources and without the issues of radioactivity presented by current producers using zircon.
Lara has been an analyst for over ten years, starting her career as an equity analyst at Foord Asset Management and more recently as the ... <Read more about Lara Smith>