Lomon Billions acquires Panzhihua Ruierxin to ensure ilmenite supply 04-06-2017

China’s TiO2 giant Lomon Billions has announced to purchase 100% stocks of titanium concentrate processor and trader Panzhihua Ruierxin. This move shall ensure sufficient supply for raw materials like ilmenite and further improve production output and costs. Ilmenite is facing tight supply mainly because of production suspensions due to stricter environmental policies.

 

Source: Pixabay


The announcement by Lomon Billions to purchase 100% stocks of Chinese TiO2 manufacturer Panzhihua took place in March 2017. The acquisition will be paid in cash with an amount of about USD27.62 million. The Chinese company will become a wholly-owned subsidiary of Lomon Billions after the process is done.

 

The main purpose behind the acquisition lays in the insurance for sufficient raw materials like ilmenite, which is facing a tight supply currently. The concept is written down in the Titanium Ore Purchase Agreement of both companies, which regulates the purchase of 480,000 tonnes of ilmenite by Lomon Billions in the next three years. In addition to this agreement, Panzhihua Ruierxin will also guarantee the best monthly price for Lomon Billions, orientated on the price for the other customers.

  

China has undergone a reorganisation of its TiO2 and titanium ore industry in recent years. As a result, many mines and concentration plants have been shut down, which has shortened the supply for ilmenite to some extent. The short supply, together with a resulted price rise, is one of the main concerns of TiO2 manufacturers. To ensure the future ilmenite supply is one of the main purposes of the acquisition.

 

Furthermore, the purchase also has another positive side-effect for Lomon Billions, according to market intelligence firm CCM. The company hopes to increase the beneficiation of its products with the purchase. For example, the subsidiary Sichuan Lomon Titanium Industry is currently selling raw materials, unable to process them into more valuable products because of less capacity.

 

The purchase will without any doubt has positive effects on Lomon Billion’s production rate and costs. According to CCM’s research, the current ilmenite self-sufficiency is 60%. After the acquisition of Panzhihua Ruierxin, this rate is likely to increase to over 70%. Moreover, in the agreement between the two companies, the monthly most favourable price is guaranteed for Lomon Billions. Hence, the production costs are likely to decrease by some degree.

 

Finally, also the bargaining power of both companies regarding sulfuric acid, Sulphur, and coal will get improved in the new situation. This will stabilise the supply of raw materials once more, which is crucial in times of stricter environmental policies by China’s government. Especially affected by production reductions and shutdowns of manufacturers is the Sichuan province in China, which also happens to be the area of Lomon Billion’s main TiO2 plants.

 

Panzhihua Ruierxin

The Chinese company is dealing with processing and trade of minerals and chemicals. Especially the processing and selling of titanium concentrate belongs to the core proficiencies of the company. Looking at the financial figures, the revenue in 2016 was stated by USD24.13 million and the net profit in that year reached USD4.07 million.

 

About CCM

CCM is the leading market intelligence provider for China’s agriculture, chemicals, food & ingredients and life science markets.

 

Do you want to find out more about the TiO2 market in China? Try our Newsletters and Industrial Reports or join our professional online platform today and get insights in Reports, Newsletter, and Market Data at one place.

For more trade information of TiO2, including Import and Export analysis as well as Manufacturer to Buyer Tracking, contact our experts in trade analysis to get your answers today.  


Looking for a convenient way to get comprehensive and actual information as well as a platform to discuss with peers about the latest chemicals industry and market trends? Simply subscribe to our YouTube Channel.

Subscribe to our Newsletter

 


Next Press