A new source of information and networking events dedicated to the global industrial minerals business was launched in January 2015. Topically focused forums for the mineral logistics, oilfield, and foundry markets have been announced for 2015. More will come.

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Ismene Clarke, bilingual former Head of Sales of Industrial Minerals magazine, is responsible for events management, sales, and marketing.

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IMFORMED, which also offers research, consultancy, and training, announces three events so far for 2015:

Mineral Logistics Forum 2015, Rotterdam, 23-24 April 2015

Oilfield Minerals & Markets Forum Houston 2015, 27-29 April 2015

Foundry Minerals & Markets Forum, Essen, 15 June 2015

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We look forward to doing business with you in 2015.

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News of the closure was delivered on 24 November in a letter to Van Buren Mayor Bob Freeman from Chris Coker, president of Oxane Materials; a shocked Freeman was reported as saying “The news was completely unexpected”.

It’s a move that comes as some surprise to the proppants industry, not least in that after a long period under wraps Oxane has been pretty active in raising the company’s profile and promoting its products over the last year or so.

Following a decade of low profile research and development, including more than 20 patents, Oxane emerged above the parapet with a paper describing its Advanced Ceramic Proppants and test results at the SPE Annual Technical Conference and Exhibition in New Orleans, September 2013.

Based on initial research at Rice University, Houston, Oxane’s advanced ceramic proppant essentially comprises a sprayed mixed-metal oxide shell over a hollow sphere, imparting a very strong, smooth, and uniform proppant. While few details of raw materials and processing have been revealed, it is understood that fly ash is one of the coating ingredients.

In March 2014, Oxane launched its third ceramic proppant grade, OxThor™ (complementing OxBall™ and OxSteel™), a stronger, lighter proppant focused on technically demanding deep-water applications.

This development was in response to demand from an impressive array of Oxane investors such as ConocoPhillips, Chevron, BP, and Total, which all have deep-water operations in the Gulf of Mexico.

Gulf of Mexico field tests were under discussion, and in May 2014, Coker was quoted in a RigZone article as expecting Oxane to start producing “reservoir quantities” of OxThor™ at the Van Buren plant in June 2014.

Indeed, at that time, Oxane was apparently experiencing “record production” and was on course for a total production volume from Van Buren of 40m lbs ceramic proppants by the end of 2014.

The plant is staffed by up to 70 employees. By the end of 2013, Oxane was increasing production from 1.8m lbs/month to 4.0m lbs/month, and expected to reach 9m lbs/month by the end of 2014.

Oxane’s objectives were for two production lines at Van Buren to produce a combined total of up to 100m lbs/year ceramic proppant grades.

So why the closure?
To date the company has given no reason as to its decision to close the Van Buren plant.

Formed in 2002 and headquartered in Houston, it is known that the company was funded by private equity. By October 2013, some US$160m had been invested to date by the likes of Chevron, BP, ConocoPhillips, and Total.

In late 2011 the company said it had plans to possibly employ 350 staff by the end of 2013. This employee expansion did not materialise, although it seems production capacity did increase.

According to some industry sources, there had been speculation over the last 12 months that Oxane was having issues, which included high production costs.

Certainly, with the recent drop in oil prices, combined with OPEC’s maintenance of oil production volume expected to keep oil prices low, there is much concern in the proppants industry over near-medium future demand prospects. Will US shale drillers start to go out of business, thus reducing US proppant demand?

The low oil price environment may well start to squeeze out the smaller and less flexible proppant players, especially those with high production and logistics costs, and those in early stages of development in the market.

Perhaps Oxane’s investors considered to pull the plug before it was too late.

But there are two other factors to consider as well: increasing volumes of frac sand use at the expense of ceramic proppants, and increasing competition in the ceramic proppant marketplace.

Shift in proppant application
The last few months have seen a change in proppant utilisation by drillers, in that they are using more frac sand compared to ceramic proppant. This has led to forecasts of increased frac sand demand and decreased sales of ceramic proppant.

According to PacWest Consulting, North American proppant consumption is expected to increase at 23% per annum through 2016, from 80bn lbs in 2013 to 153bn lbs in 2016. Most of this growth is to be accounted for by frac sand, with ceramic proppants growing by just 2%.

In its Q3 2014 results, Carbo Ceramics admitted difficulties with increasing frac sand competition and saw Q3 sales decline some 18% from Q2 and match Q1 levels.

In essence, drillers have discovered that for relatively softer rock formations, such as in the Eagle Ford and Permian shale plays in south USA, pumping more sand than needed into the wellbores typically results in higher initial flow rates.

This technique of increased proppant loading, or rather, overloading, creates short, wide fractures now preferred over traditional long, thin fractures. The benefit of this method is that a multi-layer of proppants is formed, with the outer layers embedded in the soft rock, permitting conductivity through the inner layers of proppant.

This recent practice, using some 4m lbs proppant per well, has boosted demand for frac sand, and with it being far cheaper and more readily available than ceramic proppants, drilling companies have greatly reduced their ceramic proppant demand. High profile converts to this technique include Rosetta Resources, EOG, Pioneer Natural Resources, ConocoPhillips, and Anadarko.

As an example, Rosetta was estimated to save 250-400m lbs/yr of ceramic proppant, or approximately $500,000 per well.

Increasing competition
The other factor which may have influenced the Oxane decision is increased competition in the US ceramic proppants field.

Imerys has been the stand-out US newcomer, bolstered by its acquisition of Pyramax, that has joined the ranks of established ceramic proppant players Carbo Ceramics and Saint-Gobain.

All three companies have recently brought on stream or are bringing on stream significant new capacities in the USA, while Chinese imports of ceramic proppants are still an important factor in the North American market.

In 2013, both Carbo Ceramics and Saint-Gobain launched new ultra-strong ceramic proppant grades, Kryptosphere and Titan, respectively, creating a new upper tier category of ceramic proppants based on high-alumina raw materials.

The retrofit of an existing Carbo Ceramics plant to produce 250m lbs/year of Kryptosphere LD, is on schedule for completion by the end of Q2 2015.

In February 2014, technical ceramics manufacturer CoorsTek Inc. entered the market with a new 5m lbs/month plant in Golden, Colorado producing CeraProp, a strong, lightweight ceramic proppant.

Outside the USA, the long established Brazilian producer, Mineraçáo Curimbaba is also planning an expansion, while emerging new players Hallmark Minerals (I) Pvt. Ltd in India (in which Prime Meridian Resources Corp., Canada recently acquired a 55% stake and plans to increase capacity) and Ecopropp in Australia (also using fly ash as raw material, pilot plant under construction, production expected Q2 2015) are making waves to become new suppliers of ceramic proppants.

So, all in all, challenging times for an emerging ceramic proppant producer, and perhaps these have contributed to the situation at Oxane.

Although it is not all doom and gloom, for there is an important place for ceramic proppants in fracturing operations and new market areas are opening up, as one proppant expert wryly commented to me: “The problem for ceramic proppant developers is that they are competing with dirt.”

Unlike frac sand, there is no large scale commercially developed ceramic proppant plant in Europe. However, Baltic Ceramics in Poland appears to be on course to becoming Europe’s first ceramic proppant producer in 2015. Will anyone else join the race?

Although some limited fracking operations are conducted in the North Sea and elsewhere, there has been little demand for proppants in Europe and thus, unlike in the USA, there is not an established proppant manufacturing sector. Most proppants are therefore imported, especially ceramic proppants.

Every shale gas formation is different and requires a specific hydraulic fracturing stimulation treatment, so proppant volume consumption and selection of proppant type can vary widely.

Some 80-90% of the established US proppant market of 34m tonnes (70bn lbs) consumes hydraulic fracturing grades of silica sand (frac sand), with the more expensive, but superior performance ceramic proppants making up the remainder.

Ceramic proppants are mostly manufactured from suitable grades of bauxite and/or kaolin, and both frac sand and ceramic proppants maybe resin coated to enhance fracturing performance.

At this early stage it is not clear how, or even if, Europe might replicate the US proppant market in terms of either proppant volume or proppant type.

Like the USA, Europe certainly has an abundance of silica sand deposits many of which are commercially developed. There is no doubt that right now most of the leading European silica sand producers will be evaluating their reserves and grades for fracturing grades.

Sibelco Europe says it is already investing heavily in developing new infrastructure to support the European shale gas industry. The world leader in silica sand production (and through Unimin Corp. in the USA), Sibelco is producing frac sand from operations in Belgium, France, Russia, and the UK.

With freight and handling amounting to up to 70% of frac sand’s delivered price, budding European frac sand producers will also be taking note of the significance of creating technically and economically sound logistics systems – a recently evolved industry sector in its own right in the USA now – to get the frac sand to the drill pads.

But what of ceramic proppants?
When it comes to sources of ceramic proppants, Europe may be found wanting. In fact, at present there is known to be just one small producing facility, operated by Imerys in Italy.

In 2008, through its subsidiary Treibacher Schleifmittel SpA, Imerys started a 6-10,000 tpa production unit in Domodossola for a rod-shaped proppant called Propynite, based on bauxite, which served North African consumers. Imerys has since made a strong entrance to the US ceramic proppant market with two new large scale plants in Georgia.

Europe’s next “closest” sources of established ceramic proppant production are two producers in Russia: JSC Borovichi Refractories Plant, at Borovichi, Novgorod, using refractory grade kaolin; and Fores LLC in Ekaterinburg, Sverdlovsk, uniquely producing proppants comprising magnesium silicate, thought to be manufactured from asbestos mining tailings.

Imports of course will play a part in Europe’s proppants market. High quality imports from established US producers such as Carbo Ceramics, Saint Gobain, and Imerys, and from Mineraçáo Curimbaba in Brazil will vie for position with lower priced imports from China, and the latter are already making some connections in Europe for future distribution.

We should expect to see soon, if not already, research and development work in ceramic proppants getting underway from producers of European bauxite and kaolin, and perhaps even specialist manufacturers of high quality, high density alumina balls for grinding and other applications.

There is also likely to be development work in utilising alternative European feedstock raw materials for ceramic proppant manufacture, such as glass waste and fly ash.

Baltic Ceramics on stream in 2015?
One player which is making waves is Baltic Ceramics Investments SA, operating through subsidiary Baltic Ceramics SA. The company was formed in 2011 and made some initial moves to start ceramic proppant production by 2014, but this did not come to fruition.

Baltic Ceramics’ majority owner IndygoTech Minerals SA (49.09%; previously LST Capital SA), has undergone somewhat of a rejuvenation during 2014, and is now aiming to have the ceramic proppant plant in operation at Lubsko, near Zielona Gora, western Poland by the second half of 2015.

Initial phase capacity is scheduled to be 60,000 tpa, rising to 135,000 tpa when in full production. Feedstock for the new plant will come from Baltic Ceramics’ own 4.8m tonne resource of high alumina kaolin close to the plant, as well as possibly using bauxite from Greece, kaolin from the Czech Republic, and fly ash from power stations.

The company has apparently received $11m from the European Union’s structural funds, a further $4m from the Polish Agency for Enterprise Development, and has issued $3.4m in shares to complete its financing.

The location of the plant would appear to be favourable, within a 400km radius of Poland’s shale gas plays, and generally central to Europe.

The company filed patents for its ceramic proppants in September 2014, and during mid-October 2014 focused on testing grades and securing plant equipment and technology.

Baltic Ceramics claims to have already received enquiries from shale gas explorers in Poland, Romania, Ukraine and the UK – not surprising since with little activity elsewhere, the Polish producer could be the only game in town.

It would not be surprising if other organisations with access to suitable raw material feedstock resources in Europe, were considering pursuing similar projects to Baltic Ceramics. Watch this space.

It would seem likely, however, given the potential of shale gas resources across Europe and the drive for cheaper, and where possible, cleaner and efficient exploitation of fossil fuels (ie. natural gas, especially as LNG), that until alternative renewable energy sources can be economically and technically harnessed to meet our growing energy demands, European development of unconventional oil and gas is a question of when, rather than if.

The European Commission appears to concur, and earlier this year issued recommendations to ensure that clear environmental safeguards are in place when using hydraulic fracturing to exploit shale gas reserves.

So it makes complete sense for budding proppant players to start planning ahead. Although at present it appears to be a bit of a waiting game, recent events in Ukraine may spark refocused efforts in European shale gas development.

What is clear from limited exploration work conducted so far, mainly led by Poland and the UK, is that more evaluation is required to ascertain accurate potential reserve data and thus compile appropriate extractive solutions.

Critically for would-be proppant suppliers, this would include calculating the optimum number of fracturing stages, selection, volume consumption, and application of proppants.

The runaway success of the US market is unlikely to be replicated in Europe, at least across the board and on such a grand scale.

Challenges include: the geology of the shale gas and shale oil resources is different, often more complex; unlike Europe, many North American shale gas plays are located in areas of wilderness and low density population, facilitating ease of access, minimal disruption, and limited protests; fiscal, legislative and regulatory environments are very different and not as conducive as in the USA; and crucially, the US has a well-established and well-equipped service industry to administer hydraulic fracturing.

This is not to say that any of the above challenges cannot be overcome, and already steps are being taken, but it is perhaps more likely to come to fruition in patches around Europe, rather than uniformly across the continent.

Game changing geopolitics
As a final general point, it would be naive to ignore the fact that shale gas development is to a large extent governed by geopolitical issues, none more so that in Europe.

So despite where shale gas and oil resources are thought to be concentrated in technically recoverable volumes, the political factor needs to be appreciated, and in all likelihood will make or break shale gas development.

Europe imports about 30% of its natural gas from Russia, of which more than 50% flows through Ukraine. Although always simmering beneath the surface in shale gas exploration on continental Europe, the issue of reliance by some states on gas supplied by Russia has come into the spotlight with this year’s conflict escalation in Ukraine.

Poland and Ukraine, among others, for some time have used the issue of natural gas import reliance on Russia as a driver for developing their own shale gas resources. This trend has now been given added impetus by events in Ukraine, which have already led to reduced Russian gas supply to Poland, and a complete supply halt to Ukraine.

It has got to the point that the EU member states are now stockpiling gas in record quantities as they prepare for the possibility that Russia may turn off gas exports to Europe, as has been threatened.

Potential proppant hot spots
So where are such shale gas development hot spots likely to be in Europe?

A number of EU countries are in the process of granting or have granted concessions and/or prospection/exploration licences for shale gas plays over the past three years, these are: Denmark, Germany, Hungary, Netherlands, Poland, Portugal, Romania, Spain, Sweden and the UK.

However, only Denmark, Germany, Poland, Romania, Sweden and the UK have seen any actual activity, albeit limited (initial prospecting/exploration), and Germany now has a moratorium on fracking in place.

Poland, the UK, and Romania appear to be leading the pack with shale gas development and government support. However, they maybe followed by others in the near future.

If one follows the threat of a potential cut-off from Russian gas, the countries most affected, and thus requiring an alternative gas supply will be Finland (100% reliant), the Baltic states (Estonia, Latvia, Lithuania, all 100%), Poland (79.8%), Czech Republic (99.5%), Slovakia (100%), Romania (86.1%), Ukraine (100%), Austria (71%), Bulgaria (100%), and Turkey (58%).

Of these countries, Bulgaria and the Czech Republic have unconventional resources but still have bans on hydraulic fracturing in place, although the Czech ban was to be reviewed in 2014. How the situation with Russian gas supply may influence this remains to be seen.

In Austria, there is identified potential for large shale gas reserves in Lower Austria which could meet Austria’s energy demand for 30 years. Austria is home to energy giant OMV AG, which in 2012 abandoned its plans to drill shale gas resources in the country. This decision may now be revisited.

Ukraine was looking to be a clear hot spot with both Chevron and Shell signing deals with Kiev in 2013 to develop unconventional gas in the country. The most prospective areas for coal bed methane production are in eastern Ukraine, while shale gas is being explored in the Lubin basin, which extends from western Ukraine into Poland, as well as in the east of the country.

Shell has since postponed its activities in Ukraine for two years owing to the country’s future uncertainty. For now, any activity here is surely on hold until calm prevails – but it should not be ruled out for the future.

Romania’s shale gas reserves are the third highest in the EU according to the US Energy Information Administration’s (EIA) estimates, although these were recently re-estimated down. In early 2013, Romania reversed its earlier freeze on fracking, and the government supports the development of shale gas and has signed a deal with Chevron. In mid-2014, the company completed shale gas exploration in the Silistea-Pungesti perimeter in eastern Romania.

However, although Chevron has yet to complete its assessment of Romania’s shale gas potential, early November saw Prime Minister Victor Ponta announce “it looks like we don’t have shale gas” – somewhat placing a dampener on proppant market prospects in the country.

Turkey is looking to be quite attractive, with Royal Dutch Shell Plc, TransAtlantic Petroleum Ltd, and Valeura Energy Inc. among explorers initiating plans to drill shale resources hosting 4.6 tcm of gas and 94 bn bbl of oil, according to the EIA.

The country has two main benefits attractive to development: much of the land with potential unconventional deposits is sparsely populated, thereby incurring little opposition to drilling operations; and Turkey’s new petroleum law, passed in 2013, removed territorial restrictions on exploration and opened the country for international companies, further enhanced by a more attractive fiscal system.

Poland, long considered Europe’s leading beacon for shale gas development, has suffered a recent setback in confidence from the energy majors. Eni, Exxon Mobil, Marathon Oil and Talisman Energy have withdrawn from Poland after an initial burst of interest, citing a range of reasons, including the regulatory environment and complex geology. Chevron and ConocoPhillips, however, have remained in Poland.

Nevertheless, the Polish government is supporting shale gas development and plans to invest $17bn by 2020 in the shale gas sector and has reviewed its fiscal framework to attract investors.

The total number of shale gas wells drilled in 2014 was expected to increase to about 80, compared with 13 in 2013, and 64 had been drilled by mid-2014.

According to Maciej Grabowski, Poland’s environment minister, in a statement earlier this year, the country needs at least 200 wells to test its shale gas potential. Indeed, Grabowski was expecting Poland’s first commercial shale gas well to come on stream later this year. This might be a little optimistic, while 2015 at the earliest could be more realistic.

In August 2014, 3 Legs Resources, partnered by ConocoPhillips, successfully completed a 25-stage hydraulic fracture stimulation at its Lublewo LEP-1ST1H well, the final operation of its 2013/14 drilling programme.

The stimulation was across a 1,469 metre lateral section using cross-linked gel fluid and consuming in total 7.7m lbs of proppant (310,000 lbs/stage). For this well 3 Legs selected a “high quality white sand” at 30/50 mesh size.

However, on 17 September, 3 Legs reported that oil and gas flow rates were of sub-commercial levels and a decision was made to withdraw from its Baltic Basin concessions, and the company exited Poland altogether in November.

In contrast, Dublin-based San Leon Energy is forging ahead with drilling activity in Poland. The company’s Lewino-1G2 test well in northern Poland has sustained gas production rates of 45,000-60,000 standard cubic feet per day. Based upon these results San Leon plans to spud its first horizontal well and multi-stage frac at Lewino in the near future.

Lewino-1G2 underwent a vertical fracturing programme comprising three fracture stages, the last of which was refined to provide higher proppant concentrations, of 4lbs/gal, using a 30/50 mesh ceramic proppant. This was the first fracture treatment in Poland to use ceramic proppants. The next phase will be a 1,500 metre horizontal multi-stage fracture.

Elsewhere, San Leon has concessions in central Poland. During Q4 2014, new drilling is to commence at the Rawicz field development and fracking operations at the Siekierki Project’s Poznan East and North wells. Earlier this year San Leon signed a letter of intent with Baker Hughes to conduct fracturing in these wells.

San Leon’s Rogity-1 well (Braniewo concession) has recovered oil from shales as well as tight Cambrian sands, and a horizontal multi-stage fracking operation is scheduled for Q2 2015.
San Leon also has plans for fracturing operations during 2015 at its Torzym and Karpaty Area projects in central Poland.

Finally, the UK can also be considered a potential hot spot for proppant demand. Unconventional resources targets include the Bowland-Hodder unit across north England, the Midland Valley, Scotland, and the Weald in southern England.

There has been much activity surrounding political moves and legislation encouraging shale gas development, but little operational activity to date.

This may be set to change with a number of key players jostling for position to exploit auctioned UK oilfield licences. These include IGas, GDF Suez, Total, Cuadrilla Resources, Ineos, Dart Energy, Egdon, Celtique Energie, Eden Energy, and Centrica.

IGas, the UK’s largest shale gas explorer, is planning to drill its third exploratory well in north-west England in November as well as bidding for more exploration licences.

The group has an ambitious exploration plan for the Liverpool-Manchester area of north-west England which envisages the development of 30 shale gas production sites, each site comprising 10 vertical production wells each with 4 horizontal laterals (ie. 40 laterals per production site).

On 4 November 2014, IGas announced an increase in its UK shale gas project estimates to now range between 34 tcf and 263 tcf, with 147 tcf deemed the “most likely”.

In June 2014, Cuadrilla started the planning application process for up to four shale gas exploration wells at each of its proposed sites at Roseacre Wood and Preston New Road, both in Lancashire, north-west England.

Although early days, the likelihood of significant proppant demand in Europe for drilling programmes to exploit unconventional oil and gas resources is edging closer.

Poland and the UK are clearly leading the pack, with Romania, Turkey, and the Baltic states following behind. Next year will be a crucial one in order to assess the feedback from the planned drilling programmes in Poland and the UK, and could possibly herald the start of Europe’s proppant market.

Ceramic proppants are mainly derived from specific grades of bauxite and/or kaolin, and in one case, magnesium silicate.

Sources of such raw materials are not abundant and heightened demand for proppants, mainly in North America, has stimulated research and development in alternative raw materials.

Basalt, alumina-bearing clays, glass, nanocomposites, advanced ceramics, and fly ash have all been researched for ceramic proppant manufacture although very few projects have come to commercial fruition.

The advantages of using fly ash is that it is relatively inexpensive, is available in large volumes, and benefits the environment by being a recycled waste product from coal-fired power stations.

As a proppant material, fly ash is very lightweight and has the ability to withstand high pressures in deep wells.

The news of the Ecopropp pilot plant is significant, because only the USA is known to have a commercially developed plant for ceramic proppant production based on alternative raw materials, and which include fly ash.

Ecopropp evolves
Ecopropp Pty Ltd has commenced development of a pilot plant at its project site in Clontarf, near Brisbane, in Queensland, for the manufacture of its unique fly ash-based proppant product for use in hydraulic fracturing (fracking).

Initial production capacity is expected to be 250kg/hour. Plant equipment has been ordered from manufacturers in Shanghai and Zhengzhou, China, which had been inspected by Ecopropp and pilot plant designers, Bulk Process Equipment of Baltimore, USA. Delivery was expected by October.

Other critical technical components, such as granulation equipment and sophisticated burners, are to be provided by German, US, and Australian manufacturers, scheduled to be delivered in November.

Ecopropp has filed for patents on its proppants which have also been certified to meet or exceed both the American Petroleum Institute standards and the ISO standards.

Ecopropp was acquired by Perth-based oil and gas technology company Coretrack Ltd in May 2014.

Following successful scale-up and down-hole testing, Ecopropp and Coretrack intend to sell technology licenses to third parties to build proppant manufacturing plants using their own funding resources, preferably in close proximity to coal fired power stations and oil and gas resources.

Ecopropp/Coretrack hope to derive additional revenue from ongoing royalty payments for every pound of product produced. The company anticipates that the US market will initially be the major target market.

Long term development
Development of alternative raw materials for ceramic proppant manufacture is not a quick fix, is not cheap, and the use of fly ash is not a first.

Oxane Materials, of Houston, has spent the last 20 years developing its “nano-structured” ceramic proppant products, and only started introducing them to the market as recently as 2010.

Not only is it a long process to develop a high performance ceramic proppant, it costs as well. Financing for Oxane’s development has included US$160m invested by the likes of Chevron, BP, ConocoPhillips, and Total.

The manufacturing process at Oxane’s Van Buren, Arkansas plant is highly proprietary, involving spray coating a hollow spherical core with a “highly engineered layer of mixed metal oxide”.

However, Oxane has revealed that fly ash, mixed with metal oxides, is used in the coating of the proppant.

Oxane’s proppants are described as having an “elegant multi-scale microstructure” exhibiting uniform size, high sphericity, and a smooth surface. They have the main advantages of being very strong but relatively lightweight when compared to other high strength ceramic proppants.

Production at Van Buren was expected to reach to 9m lbs/month by the end of 2014 (from 1.8m lbs/month in 2013).

Asia-Pacific proppant market to emerge
Just how long it will take Ecopropp to go from pilot plant to commercial scale production remains to be seen.

Right now, the US market is witnessing a massive boost to its ceramic proppant capacity from the likes of Carbo Ceramics, Imerys, Oxane, and earlier from Saint-Gobain. Other newcomers, as well as continuing Chinese imports, are also crowding the US ceramic proppant space.

But Ecopropp’s timing could be just right closer to home.

Australian development of unconventional oil and gas is just getting underway. There are considerable resources of coal bed methane, tight gas, and shale gas which will all require hydraulic fracturing should they be developed.

The ultimate driver is the aim of Australia to become the world’s second largest liquefied natural gas (LNG) producer and exporter after Qatar – the large gas supply for the raft Australian LNG projects needs to come from somewhere.

Of crucial importance will be a domestic proppant supply sector. Right now there is just one frac sand producer and no ceramic proppant producers in Australia.

Although further evaluation work on unconventional resource extraction is required for accurate market demand assessments (eg. the depth and pressure of target formations will dictate use of frac sand or ceramic proppants), surely this is an opportunity if ever there was one for budding proppant players.

China will rightly see Australia as an excellent potential export market for its expanding ceramic proppant industry as its supply focus is already switching from North America to domestic and other regions.

But can the Australians steal a march on the Chinese by developing their own proppant sources in time?

Indeed, a high quality Australian source could feasibly supply the potential proppant markets in South East Asia, China, India, and the Middle East.

Also be aware that fly ash is not the only proppant raw material in Australia, there are plenty of deposits of bauxite, kaolin, and of course, silica sand. Watch this space.

Some 600,000 tonnes of barytes are claimed to be hosted by tailings ponds near Buchans, central Newfoundland, created from a former base metal mining operation.

Timing is all, with recent finds suggesting potentially huge oil and gas offshore fields in the region and anticipation of rising barytes demand for increased drilling programmes in the near future.

With all other North American barytes sources located too distant from this oilfield market, barytes requirements have been met by imports from Morocco. Could this be about to change?

After three years of planning, BMS intends to re-open the plant of the former processing operation and dredge the tailings ponds which reportedly contain 30% barytes, anticipating a 15-year lifetime operation.

Once environmental approval is received from the provincial government, operations are expected to start in the spring of 2015.

Seasonal dredging
BMS is hopeful of progressing with the operation with the knowledge that environmental approval for similar activities at Buchans has been granted twice previously, and that no new infrastructure is required, other than upgrading of certain equipment.

The total combined barytes resource estimates from the two main tailing ponds and Red Indian Lake Delta are 4,067,225 tonnes.

BMS envisages a seasonal dredging operation operating May-October removing 50,000 tonnes of tailings to yield 10,000 tonnes of barytes. The density of the in-situ tailings are roughly 3.20 tonnes/m3.

Upon completion of the start-up work, the operation will commence to produce up to 120 tpd barytes concentrate of flotation product to API specifications. The sulphides production will be roughly 5 tonnes per day.

During seasonal production sufficient barytes product will be stockpiled as filter cake to ensure customer demand can be met until the following May.

On closure of the flotation plant in October of the year, production will continue (drying and grinding as required) using the stockpiled filter cake.

Stop-start history
The source of barytes at Buchans is a by-product of base metal mining by ASARCO at Red Indian Lake, Newfoundland. From 1928-1984 ASARCO produced about 16m tons of lead, zinc, copper, silver, and gold.

From 1928 to 1965, the mill tailings from this operation flowed down Buchans River into Red
Indian Lake, and mostly settled on the area known as the Buchans River Delta. In 1965, the first of two tailings ponds was constructed.

By-product barytes was sold to the regional oil and gas drilling industry. But in the mid-1980s exploration drilling offshore was discontinued and demand ceased.

Since then, the reprocessing of barytes from the ASARCO tailings has had a chequered history.

In 1998, United Bolero Development Corp. withdrew from plans to reactivate the plant having identified some 1.5m. tonnes of recoverable material in two tailings ponds with an average grade of 30% barytes.

In 2001, Buchans Barite Co. Ltd was awarded a three year contract to supply a toll grinding
facility in Musquduboit, Nova Scotia on behalf of M-I LLC (now MI-SWACO), however, this also did not come to fruition.

Prior to BMS, the most recent episode of barytes processing at Buchans was by Atlantic Barite Ltd, a subsidiary of Pennecon, which operated from 2006 through to 2009.

Atlantic Barite produced a trial product batch in 2005, and then commenced commercial production in early 2006 with a 25,000 tpa plant. Various annual tonnages were produced, ranging from 500-2,500 tonnes (2005 to 2008), and finally, some 7,000 tonnes in 2009, the last year of operation.

Following vital repair work to tailings dam walls, Atlantic Barite decided to exit the business in 2010.

Market promise
With significant deposits of crude oil, Newfoundland and Labrador is currently producing almost 200,000 barrels of oil per day from its four offshore oil projects – Hibernia, Terra Nova, White Rose and North Amethyst.

Newfoundland and Labrador’s fifth offshore oil development, Hebron, is expected to begin production by 2017.

Barytes demand for drilling is currently being met by imports of Moroccan barytes. However, increased demand is expected from new drilling programmes as a result of recent finds in the region.

In August 2013, Statoil Canada announced its Bay du Nord discovery, located approximately 500km north-east of St John’s, with the first exploration well indicating 300-600m barrels of recoverable oil.

The discovery is one of three in the highly prospective Flemish Pass, which requires deepwater drilling in 1,100 metres of water.

The Buchans barytes source is 530km by highway to St John’s, the centre for offshore oil services and the region’s major port.

US capacity rises
News of the proposed Buchans revival comes at a time when the US barytes supply market is witnessing a major hike in overall processing capacity.

This is mainly owing to both favourable market demand and also more acceptance and subsequent consumption of 4.0 and 4.1 SG barytes from domestic and overseas sources.

Baroid has just completed a major upgrade of its Dunphy, Nevada barytes plant adding two 85-in. Williams Crusher Mill Systems, capable of producing 50 short tph.

The expansion is thought to have doubled Dunphy’s existing capacity, estimated at 180,000 short tpa, and thus probably represents the world’s largest barytes processing plant.

Baroid is also planning to expand the area of its Rossi barytes mine, feeding Dunphy, from its current 768 acres to 908 acres.

Elsewhere, Excalibar Minerals also doubled capacity at its Corpus Christi, Texas plant in early 2014, while Baker Hughes is understood to be planning expansions at Corpus Christi, Texas, and Battle Mountain, Nevada.

Commissioning of Superior Weighting Product LLC’s new US$18m barytes plant in Corpus Christi is expected to take place during the final quarter 2014. The facility is scheduled to handle a minimum annual volume of 50,000 short tons of barytes and proppants.

Of course, these US barytes processing plants are mostly serving the Gulf of Mexico and continental US markets, since their location prohibits economically feasible supply to offshore north-east Canada.

Indeed, for the same logistical reasons, Canada’s existing limited barytes sources can only serve the drilling markets of western Canada. Thus Buchans is in prime position for Canada’s Atlantic offshore market.

Canada’s major barytes plant is at Lethbridge, Alberta, acquired in April 2014, along with Nevada barytes prospects, from Heemskirk Consolidated Ltd by Marquis Alliance Energy Group Inc., a division of Secure Energy. The plant, now operated by Secure Minerals, imports barytes ore from Nevada for western Canadian consumers.

Elsewhere in Canada, there is smaller scale production of 4.1 SG barytes by Fireside Minerals Inc. from its facility at Watson Lake, Yukon, British Columbia, serving western Canada and Alaska.

With Glencore’s established might in copper, zinc/lead, nickel, ferroalloys, alumina/aluminium, iron ore, and coal, it is easy to see the attraction and synergies with Rio’s iron ore, copper, bauxite, aluminium, gold, and coal.

But where could industrial minerals feature in such a mammoth mineral portfolio? Indeed, can they co-exist in such a mining group, since the trend in recent years has been very much one way or the other?

Metal miners have a core focus
In general, most mining concerns today are focused on either metallic minerals or industrial minerals (non-metallic minerals).

There was a time, up to the end of the 1980s, when large mining companies and conglomerates held portfolios dominated with metals, but these also included a sprinkling of not insignificant industrial mineral assets, eg. Anglo American, Billiton, CVRD, Gencor, Phelps Dodge, and of course, Rio Tinto.

Also, from time to time, metal mining companies would express an interest and even dip into the world of industrial minerals. However, many choosing this path got burned as they failed to appreciate or get to grips with the very different market fundamentals of industrial minerals (some would consider this issue still persists today).

Since then, as these large companies have evolved, the trend was for most of these industrial mineral assets to be divested, to either more relevant industrial mineral product groups (particularly with regard to construction materials) or to private investors pursuing specific industrial mineral markets.

The metal miners have focused their efforts on metals as a core business. A relatively recent exception to this was the recognition of the importance of fertiliser minerals by the big guns, notably Vale and BHP in 2010, and investments in this sector were duly made (although BHP failed in its bid to buy Potash Corp. of Saskatchewan – but perhaps we haven’t seen the end of that).

The industrial minerals world
The industrial minerals mining sector is broadly divided into two main categories of businesses: industrial mineral miners, and captive industrial mineral miners, ie. operations owned by large scale industrial mineral consumers.

The industrial mineral miners are characterised by a few large multinational groups, a few more medium size players, and then a plethora of small companies – the majority of which, including some of the larger players, are privately owned. They all focus on industrial minerals only.

The captive industrial minerals mining sector includes companies which are large scale consumers of certain industrial minerals essential to their manufactured end products, eg. the majors in fertiliser, aggregates, cement, chemicals, refractories, glass, and, oilfield services.

A third, smaller category is producers of minerals which are mostly used for their metallic value, but also have a non-metallic market application, eg. bauxite and chromite miners.

Rio Tinto the exception
Rio Tinto has always been the exception to the above trends of mining company focus. Over the years, the group has maintained both metal and industrial mineral operations, and until relatively recently, was highly active in industrial minerals exploration.

Although dominated by metals, the Rio Tinto industrial mineral businesses – alumina, titanium minerals and zircon, talc, and borates – have tended to be world leaders in their field. And the nature of industrial minerals markets – slow, but long term consistent demand growth – often meant these assets helped bolster company results when the higher volatility of metals markets had a negative effect.

So industrial minerals were not exactly taken lightly by Rio Tinto. But then, they never seemed to have as much attention as the metals either.

For much of its time, Rio Tinto had never quite been able to structure its industrial mineral assets in one division. Also, the position of CEO of the industrial minerals division seemed, at least from the outside, to be a temporary one filled by senior management passing through to other parts of the group.

As it turned out, in 2008 Rio Tinto decided to divest its talc and borates assets – a majority chunk of its industrial minerals assets. The talc business eventually went to Imerys in 2011, but then Rio decided to hold on to its borates operations, perhaps also attracted by its Serbian borates prospect turning out to host a significant lithium resource – at the time, a hot item for investors.

This was followed in 2012 by divestment of the speciality aluminas (industrial minerals) business of Alcan, and Rio Tinto exited vermiculite mining by selling its stake in Palabora Mining.

Today, Rio Tinto’s industrial minerals assets are in one place within its Diamonds & Minerals Division, and include just titanium minerals and zircon, borates, and salt (68% owned).

The future for industrial minerals in supergroups
In the fall out from the “non-deal” between Rio Tinto and Glencore, media speculation has considered that Glencore will turn to other possible targets and Rio Tinto may pursue a “defensive” deal with another mining giant – or there could be a revisit to this merger next year.

Rio Tinto may well be simply awaiting the right time and buyer to finish what it started in 2008 and jettison the remainder of its industrial minerals assets, and focus on its metals mining and production.

For most of the big miners, industrial minerals are considered as too specialised or small scale, and take too long to make a decent return on investment. So in all likelihood, most industrial minerals will not sit well in such organisations.

However, fertiliser minerals, are in the big volume, relatively uncomplicated industrial mineral commodity category. They are also shipped in worldwide trades.

Most other industrial minerals are either moderate volumes of slightly more specialised minerals for varied markets (this includes borates, mineral sands), or much smaller volumes of very market specialised, high value minerals (eg. high grade fillers, rare earths).

Thus fertiliser minerals have been the natural “in” for such mining giants getting into industrial minerals in recent times, eg. Vale and BHP.

So the question must be asked whether Glencore, with its established business in agricultural products, might, or should be, turning its eye on major miners of fertiliser minerals such as potash and phosphate to complement and integrate its agribusiness? In this respect, such industrial minerals will hold a position in such a mega-merger.

But are we missing something here? Could Glencore buck the trend with industrial minerals, and in a way that was beyond Rio Tinto?

After all, Glencore is not just another traditional big miner, it has its origins as a well-established trader and marketer of commodities.

In a recent interview by Bloomberg, Royal Nickel president and Chief Executive Officer Mark Selby was not surprised by Glencore taking an interest in Rio Tinto, noting that there were very few Tier 1 assets available and it was the right time to make such acquisitions.

Interestingly, Selby also said: “Rio Tinto’s smaller businesses in diamonds and industrial minerals are dominant in certain sectors, and Glencore’s marketing and trading arms would love to have access to those positions and generate value.”

Perhaps Glencore’s focus is not as metal-plated as we think, and despite its traditional strength in metal commodities, which it clearly wishes to expand, the company is not blind to the market potential industrial minerals can deliver if correctly handled.