On the critical list - fluorspar

Materials World magazine
3 Nov 2010
Purple fluorspar in core

Fluorspar is a vital commodity. Michael Forrest talks to Pat Cheetham, Executive Chairman of Tertiary Minerals, in Macclesfield, UK, about the firm’s bid to reduce Europe’s dependence on Chinese exports.

Fluorspar can be an attractive stone, for example, the famous Blue John from Derbyshire, UK, but its main use is as a feedstock for the metallurgical and chemical industries. Over 50% is absorbed by hydrofluoric acid production, 24% into iron and steel making, 17% in aluminium production in the form of AlF3, and the remaining eight per cent by a variety of other uses. Therefore, although the global mined tonnages are small in relation to iron ore (2,300Mt) or aluminium (36.9Mt), fluorspar is essential in processing these ores to obtain metal.

Global consumption is just over five million tonnes per annum with three-fifths coming from China. As with a number of other domestic mineral commodities, China is turning from a net exporter to a domestic consumer to feed its ever-expanding industrial base. This, in turn, provides goods to the rest of the world and, increasingly important, to its internal market. China now only exports 15% of its production, leading to supply fears in the rest of the world.

The European Commission identifies fluorspar as one of the 14 critical raw materials essential to European industry and estimates future supply shortages. Europe is second to China in fluorspar demand.

Scandinavian solution

Fluorine is not a rare element in the earth’s crust. It is about 10 times less rarer than copper but averages do not tell the whole story. High-grade fluorspar is required for most applications. Its chemical formula is CaF2 and, where this concentration in the mineral is above 97%, it is sold as acidspar, in the range 85-95% it is sold as ceramic grade, and 60-85% as metallurgical grade or metspar.

Fluorspar, like most minerals, is not uniformly distributed in the earth. In Scandinavia, there is an abundance of coarse-grained alkali granites that have elevated fluorine concentrations, emplaced during the Svecofennian orogenic event around 1,900 million years ago. Early ocean crust subduction created an island arc with widespread granite magmatism and mineralisation, with associated felsic calc-alkaline volcanics and massive sulphide deposits. These are prevalent in mid northern Sweden, and especially the Skelleftea belt.

Active in this region is Tertiary Minerals, an AIM-listed company based in Macclesfield, UK. It has been working on the Storuman fluorspar deposit located WNW of Skelleftea and close to the town of Storuman. Discovered by a prospector and investigated by the Swedish Gränges Group in the 1970s, the deposit was largely neglected when this group of companies was taken over by the Electrolux group in 1980. This was not before 39 drill holes had delineated that mineralisation is present at shallow depths over an area of two kilometres by 1.2km, in horizons 3-10m thick, and the company had made a non-compliant (JORC and NI 43-101 had not be devised at that time) resource of 15.6Mt grading 12.2% CaF2.

‘The decision to explore and develop the Storuman fluorspar deposit represented a new direction for Tertiary,’ says Executive Chairman Pat Cheetham. He had developed gold mines in Western Australia and is progressing a giant rare earth-tantalum-niobium deposit in Saudi Arabia.

‘The demand in Europe for fluorspar made a strong business case, while the fair and transparent mining code and strong infrastructure in the region were added incentives.’

The deposit is unusual as it is a replacement type where the fluorspar is hosted in two layers of sandstone that lie above a granite basement. The strata are sub-horizontal and the mineralisation is open along strike and down dip, capped by moraine and an alum shale up to 33m thick. The upper layer, mainly quartzite, is around 10m thick with a lower arkose of similar dimension separated by a 1.2m transition zone.

‘We employed consultants Scott Wilson to revisit the 1970s drilling programme (and 10 new holes by Tertiary in the same area). The result was a tonnage grade estimate of a combined 29.8Mt grading 11.7% CaF2 for both horizons, which, in terms of contained fluorspar, nearly doubled the previous estimate.’ declares Cheetham. The tonnage and grade range is estimated using an inverse distance squared block model at a cut-off grade of eight per cent CaF2, with support from lithological data from both the Tertiary and Gränges drill holes and fluorite grade data from just the Tertiary holes.

Cheetham says, ‘This July we received a positive scoping study from our consultants based on generating US$616m in revenue over an 18-year mine life at US$46m in initial capital costs. Net pre-tax operating cash flow of US$17m per annum is predicted in the first five years of production with a 2.8 year payback of capital, including pre-production strip, and further feasibility costs.

‘[The estimates are] based on mining one million tonnes of ore from an open pit, followed by three-stage crushing and milling, with two regrind stages in combination with rougher and cleaner flotation columns. Our scoping study indicates production of 103,000t/y of fluorspar following an 82% recovery rate and 70% of the production as 97.5% CaF2. Although the product is finer grained than is normally supplied to the market, no resistance emerged in talks with potential customers.’

A US$357/t CIF Rotterdam price has been used, equivalent to US$287/t FOB China, which reflects the published prices in June 2010 (the average price in 2009 was US$419/t). Scott Wilson has also indicated that the deposit may have increased resources and consequently extended mine life to 23 years in their calculations based on the same production rate. It retains capital expenditure at US$46m and payback in under three years, although it does increase cash generation over the mine’s life to US$787m.

‘There is no doubt that the demand for this speciality mineral is growing, whilst supply has a number of concerns,’ notes Cheetham. Notwithstanding the Chinese curtailment of exports, demand has been growing at 3.3% per annum during the period 2002 to 2008, while today demand is moving towards pre-recession levels.

There has also been a move among users in the consuming countries to opt for acidspar independent of use, as grades are really an artifact based on use. For example, some USA steel makers are using ceramic grade or even acid-grade rather than the lower metallurgical (fluorspar keeps slag fluid), while some welding rod (where it is a flux) manufacturers are also using acid grade,’ states Cheetham.

‘Having a good deposit is not the only criterion for a successful operation. Getting to market is equally important,’ he notes. The deposit is located adjacent to a sealed highway and only 25km from the regional town of Storuman, which is connected by rail to the city and port of Umeå on the Gulf of Bothnia. The sealed highway continues in the opposite direction to the port town of Mo i Rana in Norway. There are also sealed highway routes to the major regional ports of Umeå and Skellefteå. Each of these three named ports is roughly 250km from the project site.


Further information

Patrick Cheetham, Executive Chairman, TERTIARY MINERALS PLC, Sunrise House, Hulley Road, Macclesfield SK10 2LP, UK. Email: info@tertiaryminerals.com