210 (05.09.19)


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20 CRITICAL TRADE ROUTES

14. Topuito, Mozambique

Retracing the colour white to Africa’s windswept coast

A jet touched down on the tarmac at a mine in Mozambique. Inside was a group of bankers working for Rothschild in London and the Sultan of Oman. In the multi-billion dollar world of industrial pigment, almost every type of white, from toothpaste to tennis court paint, is derived from titanium dioxide, TiO2, the whitest of white powders, made using ilmenite, a grey-black mineral that looks like it has been dug-up on the moon. At stake was a precarious debt deal. Owned by Kenmare Resources, the mine has 8bn tonnes of ilmenite, spewing-out two tonnes per minute. The ground is flooded, then dredged, creating ponds that float like bubbles up and down a 180km-stretch of coast. The ilmenite is pumped through a floating plant to a private jetty, going to buyers around the world. Supplying chemical giant DuPont, the mine’s longest-standing customers are in the US, but every year, a bigger percentage of production goes to China. Used in everything from industrial paint to cosmetics, titanium dioxide underpins so many products that brokers use it is as a leading indicator: prices rise when factories speed-up production. Cyclones have hit shipping, keeping the market “tight”, says Kenmare, but China's imports are falling. Uptake is “very soft”, says rival Iluka; buyers are under “tremendous pressure.” Companies advised by Rothschild are moving in the other direction. Having toured the mine three years ago, Oman's bankers injected $100m. To the south, Rio Tinto is pumping $463m into its own ilmenite mine in South Africa, saying it is an “outstanding business”. Kenmare is upping output and has announced its first dividend. After decades of floods, power outages and debt restructuring, tax is one thing its directors need not worry about. Its operations are structured as a tax-exempt “Industrial Free Zone” and Oman's deal was routed through a chemical trading company in the British Virgin Islands. At the mine, workers kick back after a long shift, palm trees buffeted by wind blowing in off the coast.

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30 days

Shipping ilmenite to buyers in the US takes at least a month, but every year, a bigger chunk of production in the titanium dioxide market goes to China

958,000

Pumping-out 958,000 tonnes last year, Kenmare has 7 to 10 per cent of the global market; its directors are aiming for 1.2m tonnes by 2021

$245m

At current prices the mine generates $200m to $300m, underpinning billions of dollars of pigments and industrial products