FORTUNATE timing has given an unexpected fillip to the low-profile foreign owners of the Tiwest mineral sands joint venture following the completion of a $120 million expansion of its Kwinana refinery.
The expansion, which boosts the refinery’s capacity by almost 50 per cent to 150,000 tonnes of titanium dioxide pigment per annum, was completed in June but was officially opened this week.
The timing of commissioning has enabled the Tiwest partners, South Africa’s Exxaro Resources and US-owned Tronox WA, to make the most of a 35 per cent rise in prices over the last few months as demand from Asia, especially China has accelerated.
Just as fortuitously, the partners were also able to take advantage of easing costs and increased labour availability flowing from the global downturn – benefits not envisioned when the project was sanctioned in early 2008, before the market really turned south.
Nor was the outlook so rosy when the downturn helped push Tronox’s US parent into chapter 11 bankruptcy, meaning Exxaro had to sole-fund the upfront construction cost to get the project completed.
Exxaro Australia Sands managing director Tony Martin said in hindsight, such issues had ultimately had an unexpected benefit for the development in keeping the completion cost to just $20 million more than the original forecast.
“Making the decision when things were not so buoyant ... sort of helped on the cost, compared to what it would have been if the boom had continued,” he said.
At the same time, the increase in output had coincided with a sharp upturn in mineral sands prices – the only negative being the strong appreciation of the Australian dollar, he said.
“But we’re probably still marginally ahead,” Mr Martin said, adding that the outlook for Tiwest’s products was looking the strongest in years on the twin effect of surging demand and global underinvestment in new capacity.
Tronox WA chief Robert Kirton said Tiwest was seen as a plum asset and that the US group expected to remain a long-term investor,
“It’s a world-class plant in the fastest growing market in the world, so why wouldn’t you?” he said.
Not surprisingly then, he said Tronox intended to exercise a two-year option to buy back into the expansion to resume its 50 per cent share of the extra capacity.
The company employs 700 workers.
