TIDMSVML
RNS Number : 2797E
Sovereign Metals Limited
10 March 2022
SOVEREIGN METALS LIMITED
NEWS RELEASE | 10 MARCH 2022
SOVEREIGN JOINS UK CRITICAL MINERALS ASSOCIATION
TITANIUM METAL MARKETS CONTINUE TO SEE TIGHTENING SUPPLY
-- Sovereign has become a member of the UK's Critical Minerals
Association which works to increase the self-sufficiency of
supply chains for the UK's industrial strategy
-- Discussions with governmental groups are ongoing as Sovereign's
Chairman attended the UK Government's Critical Minerals Strategy
Roundtable
-- Sovereign's Kasiya project in Malawi will produce rutile -
the purest natural source of titanium, and natural graphite
as a by-product - both designated Critical Raw Materials for
the US and the EU
-- Importance of robust supply chains and security of supply for
titanium metal and feedstocks highlighted by recent instability
in Eastern Europe
-- Rutile market fundamentals including current and forecast pricing
remaining very strong
Sovereign Metals Limited (ASX:SVM; AIM:SVML) (the Company or
Sovereign) is pleased to announce that it has become a member of
the UK's Critical Minerals Association (CMA). Sovereign's Kasiya
Rutile Project (Kasiya) is the world's largest undeveloped rutile
deposit, the purest natural form of titanium, as well as containing
a natural graphite by-product. Titanium and natural graphite have
already been identified as Critical Raw Materials by the United
States, the European Union and Australia.
Recent developments in Eastern Europe have highlighted the
importance of robust supply chains and security of supply for
critical raw materials. Sovereign's membership of the CMA is part
of the Company's ambition of supporting sustainable, socially
responsible, and environmentally beneficial supply of natural
rutile and natural graphite. With an urgency to identify new
sources of critical minerals, the CMA's objectives include
increasing the self-sufficiency of supply chains for the UK's
low-carbon, sustainability-driven industrial strategy. To this end,
the CMA will provide a direct line of communication between
Industry and Government.
Last week, Sovereign's Chairman Ben Stoikovich attended the
Critical Minerals Strategy Roundtable held by the UK's Department
for Business, Energy and Industrial Strategy. Sovereign's
attendance follows a number of discussions between the Company and
the UK's Department of International Trade focussing on Sovereign's
potential to supply high purity titanium feedstocks and natural
graphite as critical raw materials required by the UK. .
Sovereign's Chairman Ben Stoikovich commented: "The world's
economies are rightly focusing on developing sustainable and secure
supply chains of raw materials deemed critical based on their
economic, environmental, and social importance. In this regard,
Sovereign's Kasiya project in Malawi is well positioned to
potentially supply two critical raw materials to economies across
the globe over several decades."
ENQUIRIES
Dr Julian Stephens (Perth) Sam Cordin (Perth) Sapan Ghai (London)
Managing Director +61(8) 9322 6322 +44 207 478 3900
+61(8) 9322 6322
Nominated Adviser on AIM
RFC Ambrian
Bhavesh Patel / Andrew Thomson +44 20 3440 6800
Joint Brokers
Berenberg +44 20 3207 7800
Matthew Armitt
Jennifer Lee
Varun Talwar
Optiva Securities +44 20 3137 1902
Daniel Ingrams
Mariela Jaho
Christian Dennis
TITANIUM IS A CRITICAL RAW MATERIAL
natural rutile is the purest natural source of titanium
Natural rutile is the purest, highest grade natural form of
titanium dioxide (TiO(2) ) and is the preferred feedstock in
manufacturing titanium pigment and producing titanium metal.
Titanium pigments are used in paints, coatings, and plastics.
Titanium is also used in specialty applications including welding,
aerospace, and military.
Robust Price Environment
The rutile market fundamentals are robust with current and
forecast pricing remaining very strong. In 2021, the market
rebounded firmly with pigment plant utilisation rates returning to
pre-pandemic levels. Major producers have noted that very strong
demand in the welding market is outstripping supply.
Natural rutile supply is tight with limited new projects coming
online in the short to medium term. Iluka Resources Limited
(Iluka), one of the world's largest producers of rutile announced a
contracted rutile price of US$1,351 per tonne(1) for the quarter
ending 31 December 2021. Per Iluka, pigment price increases
announced for Q1 2022 indicate that prices are now at ten-year
highs, with increases of US$150-280 per tonne being announced(2) .
Price increases vary by region, with European high-grade chloride
pigment pricing now at record levels as producers attempt to cover
increased energy and raw material cost inflation.
Bagged rutile sales into the welding and other non-pigment
sectors have also achieved significantly better pricing, often with
25%+ premiums to bulk rutile pricing(3) .
Consequently, market leading independent consulting and
publishing company, TZ Minerals International (TZMI), expects
bagged rutile sales to fetch US$500-600 per tonne price premiums
over the bulk market in 2022. TZMI understands that some bagged
rutile sales for Q1 of 2022 were agreed at close to US$2,100-2,200
per tonne CIF. TZMI also expects bagged rutile sales to lead
pricing growth because the welding end-use sector has limited
alternatives to rutile feedstock input.
Recent Developments - Titanium Metal Markets
Global production of titanium metals is concentrated across Asia
and Eastern Europe, with China and Russia accounting for around 70%
of global supply(4) . Titanium metal is required for advanced
industries such as electric vehicles, military, and aerospace
applications. Recent developments in Eastern Europe have
highlighted the importance of robust supply chains for critical raw
materials.
In March 2022, Reuters noted that the potential for disruptions
to Russian titanium metal supplies has thrown a spotlight on the
metal, particularly for the aerospace industry. Russia's
VSMPO-AVISMA Corporation (VSMPO-AVISMA), the world's largest
titanium metal producer, supplies 25% of global titanium metal, in
particular for high-end aerospace applications. According to
Reuters, Airbus relies on Russia for half its titanium needs, while
a U.S. industry source said VSMPO-AVISMA provided a third of
Boeing's requirements.(5)
Per London based broker, SP Angel Corporate Finance LLP: "The
invasion of Ukraine is likely to redraw the map on titanium supply
... the sanctioning of metal and concentrates by the west should
lead to consumers seeking new western suppliers." (6)
Natural Rutile Uses and Supply
Pigment
Titanium dioxide is a bright white substance used primarily as a
vivid colourant in a wide array of common products. Prized for its
ultra-white colour, ability to scatter light and UV-resistance,
TiO2 is a popular ingredient, appearing in hundreds of everyday
products, bringing significant benefits to economies and overall
quality of life. Its high refractive index means that, as a
pigment, it is able to scatter visible light. This results in an
opaque colour and creates a bright, reflective quality when applied
to a surface or incorporated into a product.
In the EU and UK, applications for TiO(2) include paints,
plastics, paper, pharmaceuticals, sunscreen and food.
As a white pigment, TiO(2) is one of the most important raw
materials for paints and coatings. The DIY market for TiO(2)
-containing paints is EUR3.5 billion alone7. Until laws changed in
the 1920s, most commercial paint manufacturers used highly toxic
white lead as a whitener. TiO(2) is now one of the most common
pigments in global use and is the basis for most paint colours. It
is also found in coatings and plastics. These uses of titanium
dioxide account for more than 50% of its global usage.
Titanium Metal
Titanium metal is an essential component in the aerospace,
military, medical and construction sectors with strong growth
coming from the high-performance, clean-tech, and technology
industries. Titanium metal's combination of corrosion resistance,
excellent weight-to-strength ratio, and very high melting point is
not found with other metals.
Welding
Natural rutile is one of the most important constituents of
welding flux, responsible primarily for slag forming properties.
There are very limited alternative raw materials to replace rutile
in welding applications.
A Genuinely Scarce Commodity
The global titanium feedstock market supply is currently over
7.7Mt of titanium dioxide with the majority of this been consumed
by the pigment industry. Natural rutile's high purity (95% TiO(2) )
classifies it as a high-grade titanium feedstock yet only accounted
for 0.5Mt of total supply in 2020.(8)
Natural rutile is a genuinely scarce commodity with no other
large rutile dominant deposits having been discovered in the last
half century.
Supply of natural rutile from current sources is in decline as
several operations' reserves are depleting concurrently with
declining ore grades. These include Iluka's Sierra Rutile and Base
Resources' Kwale operations in Kenya. Additionally, there are
limited new deposits forecast to come online, and hence supply of
natural rutile is likely to remain in structural deficit.
About Sovereign Metals
Sovereign Metals Limited (ASX:SVM & AIM:SVML) is an ASX and
AIM-listed company focused on the exploration and development of
its Kasiya rutile project in Malawi.
Kasiya is a strategic and globally significant natural rutile
deposit with substantial additional resource growth expected.
Kasiya's Mineral Resource Estimate is 605Mt at 0.98% rutile (0.7%
cut-off, indicated + inferred).
Natural rutile is the purest, highest-grade natural form of
TiO(2) and is the preferred feedstock in manufacturing titanium
pigment and producing titanium metal.
The Company completed an initial Scoping Study in December 2021
which confirms Kasiya as a globally significant natural rutile
project. It is the largest undeveloped rutile deposit in the world
and therefore is highly strategic in a market characterised by
extreme supply deficit. The initial Scoping Study developed the
concept for a multi-decade mine providing a stable supply of a
highly sought-after rutile (TiO(2) ) and graphite whilst
contributing significantly to the economy of Malawi.
Sources
1. Iluka Resources Limited - Quarterly Report period ended 31 December 2021
2. Iluka Resources Limited - 2021 Full Year Results Presentation
3. TZMI
4. U.S. Geological Survey (USGS)
5. Reuters:
https://www.reuters.com/business/importance-russian-titanium-global-industry-2022-03-01/
6. SP Angel contribution to Proactive Investors' "Todays Market View" dated 25 February 2022
7. Titanium Dioxide Manufacturers Association
8. TZMI
Forward Looking Statement
This release may include forward-looking statements, which may
be identified by words such as "expects", "anticipates",
"believes", "projects", "plans", and similar expressions. These
forward-looking statements are based on Sovereign's expectations
and beliefs concerning future events. Forward looking statements
are necessarily subject to risks, uncertainties and other factors,
many of which are outside the control of Sovereign, which could
cause actual results to differ materially from such statements.
There can be no assurance that forward-looking statements will
prove to be correct. Sovereign makes no undertaking to subsequently
update or revise the forward-looking statements made in this
release, to reflect the circumstances or events after the date of
that release.
Competent Persons Statement
The information in this announcement that relates to the Mineral
Resource Estimate is extracted from the announcement dated 16
December 2021. The announcement is available to view on
www.sovereignmetals.com.au. Sovereign confirms that a) it is not
aware of any new information or data that materially affects the
information included in the announcement; b) all material
assumptions included in the announcement continue to apply and have
not materially changed; and c) the form and context in which the
relevant Competent Persons' findings are presented in this report
have not been materially changed from the announcement.
To view this announcement in full, including all illustrations
and figures, please refer to www.sovereignmetals.com.au .
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