TiO2 giant Lomon Billions invests heavily in mining companies 04-20-2018

China’s TiO2 giant Lomon Billions is on a shopping spree for mining companies in order to secure its supply of ilmenite and be self-sufficient.



 


On April 3, 2018, Lomon Billions announced its approval for investing almost USD50 million of its self-owned funds in Lomon Mining, whose shares were previously all owned by the former's subsidiary Sichuan Lomon. Upon completion of this transaction, Lomon Mining's registered capital will more than double. 


Lomon Billions noted that this investment will increase Lomon Mining's registered capital to reduce its debt/asset ratio, fund its purchase of additional shares in subsidiaries, and facilitate its technological improvement or capacity expansion. Afterwards, Lomon Mining's beneficiation will improve and business will develop better. At the same time, the company's profitability will increase, which is in line with its own development strategy and long-term plan. 


In 2016–2017, Henan Billions acquired Sichuan Lomon and Panzhihua Ruierxin Industry and Trading to have an ilmenite production capacity of about 750,000 t/a. More recently, in March 2018, it announced a plan to buy 100% of shares in Anning Tietai. This acquisition will increase Henan Billions' ilmenite capacity significantly, make it the largest ilmenite producer at home and ensure it to be 100% self-sufficient in ilmenite for the manufacture of sulphate process TiO2. 


Anning Tietei produces around 480,000 tons of ilmenite and 2.3 metric tons of iron ore concentrate a year. The acquisition is intended to enable Lomon Billions to produce sufficient ilmenite from the combination of Anning and its existing ilmenite operations in Panzhihua to satisfy essentially all its sulfate pigment feedstock requirements. 


In accordance with standard practice for companies listed on the Shenzhen Stock Exchange, Lomon Billions has requested suspension of its shares to help avoid stock price anomalies. The suspension is expected to last for about 1 month. 


In this context, Lomon Billions' intended purchase of shares in Panzhihua Lomon via Lomon Mining is aimed at integrating titanium ore resources in Panzhihua City and reinforcing its power of discourse in the negotiations with upstream suppliers. Under the background that ilmenite is a relatively expensive raw material for TiO2 and more than 30% of ilmenite consumed in China is imported from other countries, the continuously high price of ilmenite will support the global TiO2 price to go up. By contrast, a low operating rate in the TiO2 industry and distributors' stock-up during this period did not contribute a lot to the price rise of TiO2. This explains why Lomon Billions intends to buy shares in a mining company. 


Investments in foreign mining companies

Lomon Billions announced earlier to strengthen its cooperation with Brazil’s Mineracao Santa Elina Group (MSE). The deal is about a large titanium ore mining enterprise operating in Brazil and Uruguay and owned by MSE. 


As the MoU is just the draft of the basic deal for the two companies, the further process will include the financial development of the mining company by Lomon Billions, which in return allows the TiO2 enterprise to buy the mined titanium ore at a lower price than the market. This provides the company with a huge advantage and the highly needed independence from world market supply and fluctuating prices.  


The titanium ore resources of the company are estimated to succeed 1.5 billion tonnes, according to CCM’s research. This amount of raw materials enables Lomon Billions to acquire sufficient supply for the titanium-containing products at least for the coming 20 years.  


Lomon Billions is able to achieve two major goals with the deal ahead, strengthening its position in the world market as an international player for TiO2. On the one hand, the cooperation will allow having sufficient supply of titanium ore for future expansion plans, on the other hand, the international partnership is demonstrated Lomon Billions engagement in the global competition.  


As the company is heading towards an aggressive expansion strategy, ensuring the supply of raw materials is vital for the production lines. Especially the chloride process of Tio2 is going to be expanded enormously in 2018. Supported by national policies, chloride process TiO2 is going to be a vital part of the production variety for Lomon Billions, for which Chinese domestic titanium ore is not suitable. Hence, exported titanium ore is the only source for the enterprise, and to be independent of world market instabilities, the investment into MSE offers a great opportunity for ensuring a steady supply to beneficial conditions.  


About the article

The information for this article comes from CCM, China’s leading market intelligence provider for the fields of agriculture, chemicals, food and feed. 

 

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