From mine to specialty products: a discussion on vertical integration
AS a vertically integrated producer of titanium dioxide and inorganic chemicals, Tronox mines and processes titanium ore, zircon as well as other materials, and manufactures TiONA and TiKON titanium dioxide pigment, specialty-grade CristalACTiV titanium dioxide products and high-purity titanium chemicals.
Here, Jean-François Pasquier, Vice President, Specialty Chemicals and Mpho Mothoa, Managing Director, South Africa discuss the linkage between Tronox's mining operations in South Africa and its specialty TiO2 and chemicals business.
What should people know about Tronox’s mining operations and the advantages they provide to the company’s specialty chemicals business?
Jean-François Pasquier:
“For me, the objective is to emphasise the benefits of vertical integration for Tronox's customers and more specifically, what extra value and new value it can offer for our specialty chemicals business.
“Mpho and his team are the best illustration of this. “Because we are able to succeed in the development and execution of our vertical integration strategy, there is no other path we need to look at for a large variety of feedstock for our specialty business.
Mpho Mothoa:
“I always say, if it's not grown, it's mined — so we start with it to create a brighter future. It begins with us in the mine and you guys do the finishing in the plants. It gives us great pleasure to see the final product, once it has gone through all of the production and change.”
What does vertical integration mean for Tronox? Mpho Mothoa:
“I see vertical integration as the foundation of our operating strategy of delivering safe, quality, low-cost, sustainable tons for our customers. It strategically positions us as a group to be resilient and stable, given the cyclical nature of the industry in which we operate.
“From the mining side, a big advantage for us is that we've got a guaranteed off take, as well as the ability to run at a higher throughput. Through vertical integration, we offer a reliable, stable and affordable source of an important input to our TiO2 plants, which is the feedstock that we produce. Another added benefit is that we get zircon and pig iron that comes with it.”
What specific benefits does vertical integration bring to the specialty TiO2 business? Jean-François Pasquier:
“The benefits that vertical integration brings to the TiO2 operations, and more specifically to our specialty business, are the feedstock options. Whether it's ultrafine TiO2, the growing specialty anatase materials, or our titanium chemicals product line like the TiCl4 that we manufacture for the merchant market, it all requires very specific feedstock. The mining activity of Tronox now offers us a larger selection of feedstock than we had previously. When we were less vertically integrated, we had to rely heavily on external feedstock suppliers and not everything was guaranteed in terms of supply.
“So there is a duality. Vertical integration secures access to a larger variety of feedstock from various locations, and helps us in designing new materials. The supply of the specific feedstock we need must also be secure, which is especially true at this particular moment when the TiO2 market and feedstock markets are getting tighter. To expand on what Mpho said, he has a guaranteed customer, and I have a guaranteed supplier – both from a quantitative and a quality point of view. It's a significant step – one that offers us new perspectives for developing new solutions for our customers.”
What are the steps involved in getting feedstock from a sand deposit to the TiO2 plant? Mpho Mothoa:
“At our Namakwa mine, we dig sand out with a shovel, load it on trucks and send it to the processing plants.
“At our KZN operations, we use hydraulic mining. This involves using high-pressure water jets to collapse the sand dunes that have available heavy minerals in them. The resultant slurry is then sent to the processing plants.
“The processing plants are basically similar for both types of mining operation.
“Once the material gets to the processing plant, we then use gravity separating to extract the valuable heavy minerals for further downstream processing.
“The remaining fines are sent to the residual fines storage facility, while the sand tailings are sent back to the mine to fill the void we created when we dug out of the mine. The backfilling is the first step of our mine rehabilitation process.
“The available heavy minerals concentrate is put through further processing steps to produce three separate products: ilmenite (46-47% TiO2), rutile (92-94% TiO2) and zircon. Rutile gets shipped as is, mainly to chloride pigment plants, and some ilmenite goes as is to sulfate plants. Most of the ilmenite is put through a smelting process that uses DC arc furnaces to upgrade the TiO2 content from 46-47% to 88% TiO2 slag.
“The byproduct of this smelting process is high purity pig iron. The high-grade TiO2 slag is then sent to the chloride pigment plants. The high grade slag is used solely for internal consumption, while pig iron and zircon are sold to external customers.
“However, this is not the end of our mining process. Because we are committed to rehabilitating where we have mined, we backfill and plant vegetation so that the environment can go back to its original state — or even better than we found it.”
Is the rehabilitation process specific to Tronox? Mpho Mothoa:
“Planting vegetation is not special to Tronox. It is part of our sustainability efforts.
“Before we start digging, we look at what kind of grasses and forestry are there, and then remove the vegetation, putting aside the top soil before we begin mining. Once mining is complete,
we put back the tailings and bring the topsoil back, and then start planting similar seeds so that the land returns to its native vegetation state.
“We do this to ethically return the natural environment to what was there before us. It's all about sustainable mining. Most of the mining companies in our line of business are doing rehabilitation; it's a condition of our license to operate – what we have disturbed, we must rehabilitate.”
How does a large range of feedstock options benefit the development of specialty tio2 products?
Jean-François Pasquier:
In terms of what we require from the final product of ultrafine TiO2, we are looking for very critical feedstock properties, so we have to have very critical characteristics. We require specific feedstock or mix of feedstocks to achieve the level of impurities or the accurate chemical content we need, but also we need that to be extremely consistent due to the specialty nature of our products at Thann. The consistency is equally important to us as the initial properties.
“With Tronox's vertical integration advantage, we now have a better opportunity to get to what we need to and to do it consistently to the satisfaction of our customers. This is a highly significant improvement in the last two years since Tronox acquired Cristal's TiO2 operations.”
How does Tronox demonstrate its commitment to sustainability at its mining operations?
Mpho Mothoa:
“Sustainability is key to our operations — it is what gives us a license to operate and the privilege to operate. I look at the privilege to operate as what we get from our host communities when they accept us. Therefore, we have to ensure that they do not experience any negative impact from our operations, and that they are positively affected through things like the sustainable employment opportunities we create.
“They also get procurement opportunities to supply goods and services that we need for our operations, with first priority going to locals.
“The only place where we go externally out of our host communities is for specialised skills that we don't have locally. The same approach applies to our procurement of goods and services.
“It's also the same when it comes to sustainable infrastructure projects, like building new schools in host communities and supporting schools in STEM subjects (science, technology engineering and maths).
“These are a few examples of the things we do in a sustainable way for our privilege to operate.
“On the license to operate side of things, from when we start to clear the area for mining and then throughout the production value chain, heritage management, environmental management and social impact are the boxes we tick along the way.
“Environmental and social impacts are monitored and reported on a daily and monthly basis. Any deviation is immediately reported internally, and if necessary, also to the regulatory authorities in line with our mining license conditions.
“Sustainability, environmental and social responsibilities are ingrained in how we do business. In short, our commitment to sustainability is driven by our desire to go beyond compliance and set new benchmarks in everything that we do it with regards to environmental and social responses.”
How does this approach to sustainability impact the specialty chemical side of the business?
Jean-François Pasquier:
“We are part of a big chain. What Mpho was explaining about sustainability — environmental sustainability as well as the commitment to communities — we also do in specialty chemicals.
“A large amount of what we sell and produce goes to help with the environment. As an illustration, for the improvement of air quality - whether to avoid or convert some pollutants before they go into the atmosphere, or into products that can literally clean the air for us, we pride ourselves in manufacturing materials out of the feedstock we get from the operations led by Mpho. We design and manufacture products to go further into a better life for people - and we've been doing that for 40 years now.
“So, while all of our operations have an impact on people and the environment, we are minimising and mitigating this impact by offering improvements in various aspects. I feel passionate about it. I would not be very comfortable using feedstock, our most critical raw material, that has not been mined or produced in a sustainable or socially acceptable manner.
“Vertical integration enables us to control this because I personally know Mpho. I visited the mines, the upgrading and manufacturing facilities, and met with people in the community, so I'm very comfortable with what I saw. We are not buying from someone we don't know; we buying from a friend, from the company. This gives me great confidence and trust in what we are buying to manufacture our products, and I can personally stand in front of our customers to claim that differentiation.
“Tronox offers specialty products that improve quality of life, and that are produced at a sustainable and responsible location with raw materials supplied from sustainable and responsible mines and processing plants.”
Mpho Mothoa:
“With those advantages of vertical integration, the added benefit of having a guaranteed customer comes with huge responsibility. When I talk to my team about this, especially when we're looking at our product quality, I say to them: ‘You know, it's like you're selling to a family member, so you want to keep them in mind. You want to get it right first time, at the right quality and delivered at the right time, because any slip up in that process affects all of us immediately.'
“So if Jean-François doesn't have the product because I wasn't able to get it to him on time, it hits him in the pocket, which hits me in the pocket. This huge responsibility is basically the starting point of our vertical integration strategy. We are up to the challenge of ensuring we safely make the right product, at the right quality, the first time - and keep it that way.”