Stable industry growth expected

Roskill forecasts that world demand for bentonite and fullers earth will rise by an average of 2.2%py from 20Mt in 2007 to 22.4Mt in 2012. Growth will be led by the foundry sand sector (5%py), filtering and decolourising of edible oils, industrial oils, solvents and chemicals (5%py) and iron ore pelletising (3%py). The main geographical areas of growth will be in Asia, notably China, and South America where demand will be driven by the requirements of the iron ore pelletising and foundry sands markets.

The main regional markets for bentonite are North America (7.5Mt), Asia (5.6Mt) and Europe (5Mt), although there are significant variations in the pattern of consumption within each of these regions. These variations depend partly on the types of locally occurring bentonite, and also on the degree of industrialisation. In industrialising economies, applications in the iron and steel industries are one of the main demand drivers, whereas in mature economies, consumer applications, such as pet litter, predominate. Sodium bentonite is the most desirable form because of its higher swelling capability than the more common calcium form. Production of sodium bentonite is highest in the USA, however, and is therefore the most commonly traded type.

Demand increase in end use markets

The pet litter market is the largest end-use for bentonite and allied clays, such as sepiolite, consuming 4.5Mt in 2007. The market is heavily concentrated in Europe (1.7Mt) and North America (2.5Mt). This is a mature market and is unlikely to grow at more than 1%py to 2012, when it is forecast to reach 4.7Mt.

Foundry sands consumed an estimated 4.4Mt of bentonite in 2007 and demand is forecast to reach 5.6Mt by 2012, an average rate of growth of almost 5%py. Growth in demand is expected to be concentrated in China. Chinas share of global ferrous foundries production rose from 27% in 1999 to 50% in 2006 and is expected to rise further in the future. Other countries where demand for bentonite in this application is expected to be high are India and Russia.

Growth in demand for bentonite in iron ore pelletising is largely due to the rapid growth in Chinese consumption of iron ore. By 2012, an additional 45.3Mtpy of iron ore pelletising capacity is scheduled to be opened, though the actual total may be even higher as not all projects had announced completion dates by mid-2008. Most of this increase in capacity will be in Australia, Brazil, China, India, Russia and Sweden.

Demand for bentonite in drilling muds is forecast to rise by around 2%py to 2012, when it will reach 2Mtpy, compared to 1.8Mt in 2007. Consumption is closely linked to drilling activity, which in turn is linked to oil and gas prices. High prices encourage exploration and greater use of bentonite and other minerals in drilling fluids. Bentonite use in this application is concentrated in the USA, where consumption totalled around 1Mt in 2007. Competition from alternatives, however, is expected to reduce demand for bentonite in drilling muds in the longer term.

Use of bentonite in civil engineering is rising in line with construction activity, especially in China. By 2012, a forecast 1.9Mtpy of bentonite will be used in this application compared to 1.6Mt in 2007. Bentonite is used in foundation engineering, diaphragm wall construction, grouting, lubrication, sealing ponds and irrigation ditches, and for tunnelling. Sodium bentonite is the main form used and soil sealants are the largest market.

Outside of these five major end-uses, some of the highest growth rates are expected to be seen in specialised markets. Chief amongst those is the edible oils industry, most notably the palm oil industry, where production rose to a record 37.3Mt in 2006, an average rise of 8.2%py since 1997. A high proportion of edible oils are sold unrefined, particularly in Asia, and there is significant potential for increased use of bleaching earths in that region.

Marketed dominated by small corporate groups

Production of bentonite and fullers earth is dominated by a small number of corporate groups, most of which are integrated into downstream activities.

AMCOL of the USA is the worlds largest producer of bentonite with a capacity of over 2Mtpy. AMCOL owns or has interests in mining and processing operations throughout the world. The latest acquisition is a 25% holding in Bentonit of Russia acquired in 2008. Other important US producers are Oil-Dri, Black Hills Bentonite (0.7Mtpy), Bentonite Performance Minerals (0.68Mtpy), M-I Drilling Fluids (0.6Mtpy) and Wyo-Ben (0.35Mtpy). Output from most of these companies is used in the parent companies downstream operations, such as drilling muds and cat litter production.

In Europe, S&B Industrial Minerals of Greece and Süd-Chemie of Germany are the main producers. Both companies have a capacity of over 1Mtpy. S&B has mining and processing operations in a number of European countries, a US processing business and a new operation in Morocco. Süd-Chemie has operations around the world including Europe, China, North and South America. Sepiolsa and Tolsa of Spain are important producers of fullers earth and have a large presence in the Senegalese attapulgite industry. Tolsa also has mining and processing interests in Argentina, Morocco and the UK.

At least 0.8Mtpy of additional bentonite capacity is planned to be opened by 2009 with further capacity expected to come on-stream by 2012. This will be located in Australia, Azerbaijan, Brazil, India, Morocco, Turkey and Russia. In addition, new capacity will almost certainly be opened in China. The global bentonite industry should be able to raise output to meet forecast growth in demand over the next five years, although supplies of sodium bentonite may become tighter in the short term.