Sovereign Metals (SVM) - Industry Players Fighting for Rutile Access

Sovereign Metals Ltd. is an Australian exploration and development company focused on the advancement of its high-grade Rutile and Graphite project in Malawi, namely the Kasiya project. The company aims to develop the project into an environmentally and socially sustainable operation with the ability to be a major supplier of critical raw materials.

The Kasiya project holds a mineral resource estimate (MRE) of 6.9 million tons of Rutile and 9.5 million tons of Graphite in the Indicated category and 11 million tons of Rutile and 14 million tons of Graphite in the Inferred category. The mineralisation of the Kasiya project lies in laterally extensive flat blanket-style bodies, with the project’s mineralisation occurring in a single, large and coherent deposit. The majority of the high-grade mineralisation occurs within 5 m from the surface and enables the project to implement hydro-mining.  The Kasiya project is envisioned to consist of a simple processing system consisting of a wet concentration plant and a mineral separation plant for Rutile processing and a flotation plant for the Graphite resources.

Titanium Dioxide (TiO2) is primarily produced from either Ilmenite or Rutile. Ilmenite is the mineral form of titanium dioxide that is most commonly found and mined globally and consists of approximately 40% to 60% titanium dioxide, whilst Rutile consists of up to 95% titanium dioxide. The processing of Ilmenite is energy and carbon-intensive and creates various waste products. The processing of Rutile on the other hand saves up to 2.8 tons of CO2 per ton of ore processed.

Sovereign Metals Ltd. served as one of the key sponsors for the TiO2 World Summit, which was held between 5 and 6 October 2022. The attendance of the company at the summit was well deserved seeing as it possesses the largest Rutile deposit globally, namely its Kasiya project. The company’s participation at the TiO2 World Summit was a successful endeavour which served to assist the company in showcasing its Kasiya asset. The summit also assisted various downstream consumers of TiO2 in comprehending the long lifecycle of a TiO2 operation.

TiO2 World Summit

Sovereign Metals Ltd. served as one of the key sponsors for the TiO2 World Summit. The global titanium market is split into three distinct sectors, namely TiO2 pigments, welding and metal. The use of TiO2 pigments accounts for 60% of the global TiO2 sector according to Sapan Ghai, the Chief Commercial Officer of Sovereign Metals Ltd. The company’s goal in attending the summit, according to Ghai was to be able to better understand the entire TiO2 supply chain and the part Sovereign Metals Ltd. will play therein in the future.

“You had your pigment producers from around the globe who were there, the guys who take our material, who would essentially be our future customers, taking our rutile and producing a white pigment TiO2, which is then used by their customers. We wanted to figure out where we stack up and what that entire supply chain looks like. Ultimately, we're the guys digging this stuff out of the ground, and we wanted to understand where it all ends up.”

Ghai explains that the summit was attended by various large corporations, showing the calibre of clientele in the TiO2 space as well as the demand therefore to be used in various pigment applications including plastics and paint.

“It was interesting because our future customers were the likes of Apple, Ikea, Jaguar, Land Rover, and Renault - big names who were all in attendance at this summit. Essentially, they all use and need this product. They all produce goods that need some kind of high-quality, longevity type of paint or pigment, whether that be paints, plastics, coatings, etc, and it was interesting to figure out where we would stack up within that ecosystem.”

The Rutile Market

Titanium Dioxide is primarily produced from either Ilmenite or Rutile. Ilmenite is the mineral form of titanium dioxide that is most commonly found and mined globally and consists of approximately 40% to 60% titanium dioxide, whilst Rutile consists of up to 95% titanium dioxide. The processing of Ilmenite is energy and carbon-intensive and creates various waste products, the processing of Rutile on the other hand saves up to 2.8 tons of CO2 per ton of ore processed

“In order to manufacture pigment, TiO2, you need the raw materials, which are either rutile or ilmenite, and rutile's about 500,000 tons per annum volume compared to about 7.5 million tons of ilmenite and other lower-grade types of input raw materials, the difference being that rutile is 95% to 96% TiO2 already, so it's more ready to be turned into a final product, whereas ilmenite is 40% to 60%, and it obviously undergoes quite an energy-intensive, carbon-intensive process to turn into one of the alternatives to natural rutile, whether that be a synthetic alternative or a titanium slag. In both those cases, it still doesn't get up to the 90%-type of quality that our product naturally has.”

The global Rutile supply is depleting with the current supply of rutile being 500,000 tons per annum, down from 700,000 tons per annum in 2017. The rutile deficit is accredited to no new rutile operations globally and the dwindling in mineralisation grade. The Kasiya rutile project, being the largest rutile deposit in the world, will according to Ghai produce 250,000 tons per annum of rutile, but will not flood the global rutile market but rather serve to alleviate future deficits.

“One of the key messages that we got across to some of the players was the huge supply deficit that rutile itself is facing. Natural rutile is now about 500,000 tons. It was 700,000 tons back in 2017. In another 36 months, it's predicted to be below 300,000 tons, and that's just because the rutile mines are slowly depleting or getting harder to mine, the grade is becoming lower. The fact that we found the largest rutile deposit in the world and the first big rutile deposit for the last half a century, that knocks that whole supply system around a bit. But even at the levels that we're looking at potentially producing - 250,000 tons - we're nowhere near even the 2017 levels of rutile feeding into the market. It's not like we'd be glutting the market with any extra supply, so I don't see us having any major impact on those future assumptions around rutile prices.”

Ghai believes that the TiO2 market in the future will be large enough for various new players, with the global cognisance of greener and more environmentally friendly production systems also supporting the future rutile market.

“The reality is that with this new wave of uses for TiO2 upstream, into cleantech and various other uses, I think everyone is feeling the pinch with current energy prices, etc, but if we're looking ahead 5 years from now, I think the view is that there's more than enough room for all these players to come online. When it comes to rutile, the big USP that we have over alternatives is our ESG credentials and the lower carbon footprint that rutile has over ilmenite-derived alternatives.”

ESG

Ghai explains that even though ESG has been around for the last few years, and may not be a buzzword any longer, it is still of utmost importance.

“Even if your lay investor is not thinking about it, at the C-suite level, I think everyone is still thinking about it. We recently heard about Rio Tinto and their decarbonization program in Canada, where they are looking at new technology to help smelt their ilmenite and lower their carbon footprint by 95% or so. They're also looking to get into the titanium metal space, and they're getting backing from the government of Canada, something to the tune of over CAD$ 500 million over the next 8 years in order to get there. Hence, it's still very much a key focus.”

The proper implementation of ESG will, according to Ghai, be a separating factor in the future of the TiO2 market. He believes that companies that have empirical data behind their ESG strategy will be better suited than those without. Sovereign Metals Ltd. has been able to quantify its ESG through the assistance of an independent consultancy firm, Minviro Ltd., which succeeded in showing that the company’s Kasiya project has a 95% lower carbon footprint than similar traditional operations.

“Everyone was talking about the uses of TiO2, how they're changing, how they're becoming more attuned to sustainability and environment, and yes, we were all banging the ESG drum in one form or another 12-24 months ago. I think you're going to slowly find that the companies that have empirical data behind their ESG strategy, almost bifurcate from the rest of the market which is still trying to get there.”

The envisioned operations of the Kasiya project also include the majority of the project’s power coming from a solar power plant, with the remaining power necessary supplied by the electrical grid of Malawi, which included hydropower.

“In our scoping study, for example, that came out earlier this year, we thought about everything from that power situation, and most of our power will be coming from a solar power plant that we've engaged a Canadian company that has built many of these solar plants around Africa, and a couple of them actually in Malawi as well, we've been talking to them about how we plug into a solar array there. Thankfully, we're in a part of the world where even the grid is run off hydropower, so that helps us with the renewable side of stuff.”

Ghai believes that the mining industry will conform to standard ESG reporting in the future, with accredited persons required for ESG to ensure not only the environmental aspect of ESG is on standard, but also the social responsibility associated and governance.

“We've done that in whatever sense you'd expect a mining company at our stage of its life to do through a life cycle assessment. As we progress, I can see the sector getting a standardised approach to its ESG reporting and really focusing on all those three: the environment, the social and the governance stuff, because it's very easy to do the environment in a world where everything is focused on decarbonisation. It's a little harder to make sure you're ticking all the boxes across the board.”

Future endeavours

Ghai believes that the company’s participation at the TiO2 World Summit was a successful endeavour which served to assist the company in showcasing its Kasiya asset. The summit also assisted in various downstream consumers of TiO2 comprehending the long lifecycle of a TiO2 operation.

“What was interesting was that one of the speakers talked about the upstream supply chain, where the ultimate raw material comes from, and I think it was news to a lot of the down-stream players that actually, mined titanium dioxide, rutile or ilmenite mines take something like 15 years from exploration to production. They almost thought you could turn the tap on, this stuff will flow and it will always be available. It was useful for us to let people know that (a), there hasn't been a rutile discovery as big as ours in the last 50 years, and (b) it actually takes 15 years for an average company to get to production.”

The company plans on publishing a preliminary feasibility study in mid-2023, with a bankable feasibility study following thereafter. Sovereign Metals aims to be in production in 2026 at its Kasiya rutile project.

To find out more, go to the Sovereign Metals website