Tata Plans Titanium Project as Chinese Sponge Production Runs Wild

---

Researched by Industrial Info Resources (Sugar Land). Tata Steel (NYSE:DE:MVX ) (Bombay, India), with plans to set up a titanium oxide plant, has applied to the Tamil Nadu government for a 1,000-acre site and for a mining lease over a 55 square kilometer area. These moves follow prospecting and feasibility studies on the titanium project.

The first phase of the proposed two phase project will need an investment of $600 million and will include the construction of a desalination plant to provide a water supply for the project. In the first phase Tata plans to extract ilmenite and then move on to titanium dioxide processing in the second phase. As soon as approvals are achieved the company will acquire the land and schedule for commercial production within two years.

The longer term target for the project is the extraction of titanium and the company is considering the power input for metal extraction. They are looking at ways to reduce costs and studying global pilot projects to find cheaper technologies for commercially viable titanium production.

The acquisition of Europe’s steel major Corus has opened up access to a supply of metal solutions which have already been applied in major commercial and aerospace projects. The Corus input is expected to assist Tata in titanium production, for which prices have been rising in the past three years. The only current producer of titanium in India is the 300 tons per annum defense sector company PSU Mishra Nigam Ltd (Midhani).

Meanwhile, in China the China Nonferrous Metals Industry Association (CNMIA) has reported concerns about the rapid growth in the titanium sponge smelting industry. Market observers feel that blind expansion will lead to resource waste. Unhealthy competition means pollution and will lead China to become a global low-price sponge supplier.

CNMIA reports that the current titanium sponge production capacity has reached 30,000 tons per annum (tpa). Domestic market demand is 20,000 tpa and is set to increase to 30,000 tpa by 2010. A spokesman said that if all planned facilities commence production, domestic capacity will eventually exceed 100,000 tpa which is equivalent to the current global production. In the last two years construction has either started or is planned to start on 30 new titanium sponge smelters and up to eight have already stated production, adding to the two established producers who in total produce about 15,000 tpa.

Lack of controls on the industry has allowed the hectic production expansion and although China contains proven titanium oxide reserves of 900 million tons an overheated titanium sponge industry will increase demand and result in the depletion of the rich deposits. Against this scenario the state is attempting to encourage imports by setting high titanium content slag import tariffs at zero to protect domestic resources.

Industrial Info Resources (IIR) provides marketing communication services ranging from industrial database solutions to market forecasting, custom analytics, and specialty promotions that support high-level image campaigns.