Kenmare Resources - Re: KMR Stream Log - Even in a situation where...

Even in a situation where there is zero demand growth per annum the titanium ore market should remain under-supplied globally, at least through 2014, Hassan Ahmed, head of research at Alembic Global Advisors, wrote in a company note. As a result, mining companies such as Australian-based firms Rio Tinto and Iluka are greatly inflating the costs of ilmenite and rutile, which contain up to 63% and 95% of TiO2, respectively. Iluka raised rutile prices by 70-75% from July 1, 2011 - to a weighted average of $1,340/tonne (€1,021/tonne) - compared with the first half of the year, and recently announced another 80-85% hike on top of that, effective January 1, 2012. In response to these concerns, several TiO2 producers are backward-integrating to secure raw-material supplies in an attempt to stem future cost hikes. "Mining companies are being much more aggressive in terms of prices," said Luis Rebollar, managing director of Titanium Technologies Europe, Middle East and Africa at US-based DuPont. "We are working to secure supply as the price of ores will escalate ­dramatically."