Tronox Reports Progress on KZN Sands Fairbreeze Mine Project in South Africa

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Researched by Industrial Info Resources (Sugar Land, Texas)--Titanium dioxide (TiO2) pigment and mineral sands producer Tronox's (NYSE:TROX) (Stamford, Connecticut) long-delayed KZN Sands Fairbreeze mining project in South Africa is progressing, according to company executives, with plans to begin operations in late 2015.

Industrial Info is tracking six active Tronox projects worth $478.9 million, including the $345 million Fairbreeze mine.

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Tronox Chief Executive Officer Tom Casey gave an update on the grassroot project during the company's recent earnings conference call with investment analysts.

Casey said the project has received all necessary government permits and authorizations. The Fairbreeze Mine, located at KwaZulu-Natal on the east coast of South Africa, will supply feedstock to the company's slag furnaces near the mine site. It is expected to begin operations by the end of 2015, and to be fully operational by 2016. The KZN site is expected to produce 220,000 tons per year of titanium slag.

The mine also is expected to produce 30,000 tons per year of rutile (a TiO2 feedstock), 60,000 tons per year of zircon, and 121,000 tons per year of pig iron, according to the company.

The project includes a $250 million first phase, of which $80 million will have been spent this year; and a $115 million second phase in 2018-19, which includes an expanded minerals separation plant, Casey said.

The project has had its share of challenges, primarily due to the regulatory and permitting climate in the region, according to the company. Addressing the TiO2 World Summit last month in Montreal, Quebec, Tronox Vice President Jean-Francois Turgeon said bureaucracy, legal appeals, and politics delayed the launch of the project by more than two years.

Tronox reported a third-quarter net loss of $90 million, compared with a loss of $40 million in the same quarter last year. Adjusted third-quarter earnings before interest, taxes, depreciation and amortization (EBITDA) increased to $100 million from $92 million in the prior year quarter. Revenue for the quarter totaled $429 million, compared with $491 million in third-quarter 2013.

Casey noted the company has withdrawn from the external chloride process (CP) titanium slag market due to insufficient pricing. However, the company is currently benefitting from low feedstock costs, he said.

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