Visions - Fall 2007 - 10

Chemicals SCOA Finances New Fluorspar Mine in Mexico Chinese Restrictions Create New Opportunities F luorspar, like many chemicals, is one of those ingredients most people never think about that nevertheless permeates daily life. Fluorspar is a key ingredient in cement, ceramic, and is a catalyst in wood preservative. It is used in the production of fluorine, for toothpaste and water fluorination programs. It is key to aluminum production and steel refinement, and is found in both delicate machinery such as optical equipment and in the burning fires of metal smelters. Fluorspar is also the base ingredient for creating refrigerator coolant gas, and is used in the manufacture of nonstick surfaces. To say fluorspar is a critical building block of domestic infrastructures would not be an exaggeration, yet how many people stop to think about where fluorspar comes from or how it is mined? Combined efforts of SCOA and CMV plan to extract over 100,000 tons of fluorspar, worth nearly $30 million, from the Mexican mine. Fluorspar is a mineral produced predominantly in China, with Mexico, Mongolia, and South Africa well behind China in contribution to the global fluorspar market. In November 2006, China instituted an export tax on fluorspar and the government put quotas on the mineral. Concurrently, the export quantity of fluorspar from China decreased 40% over the last six years, by approximately 465,000 metric tons. China’s booming economy and developing infrastructure require vast reserves of this necessary mineral. Being the market leader of fluorspar, China’s restrictions increased the price of fluorspar and at the same time tightened the global supply. Fluorspar mine closures in Mexico, France, and Italy coupled with production difficulties in South Africa further exacerbated supply problems. In this new market reality, SCOA saw an opportunity. Bringing New Dimension to a Twenty-Year Relationship Koh Akiyama, the Senior Director of SCOA’s Performance Chemicals Unit, called upon the expertise present in a 20-year relationship with SCOA’s Mexican mineral supplier CMV. SCOA approached CMV when news of the Chinese restrictions broke and the world price of fluorspar began to fluctuate. SCOA and CMV agreed upon a new business relationship for the production of fluorspar, a mineral that CMV no longer mined despite the high quality of ore at their mine. New equipment was needed to process the high-quality fluorspar that is expected by today’s top manufacturers. In the first phase of this new relationship, SCOA will finance the CMV fluorspar mine and processing plant and be paid in product. SCOA will then trade the fluorspar. In the first phase, 35,000 tons of fluorspar with a value of approximately $10 million per year is expected to be extracted from the mine. In the second phase of the project, a second plant, named “Los Alisos,” will be opened. The quality of this fluorspar is also very high, and an amount of 70,000 tons, valued at over $20 million per year, is expected from this operation. The new equipment has already arrived at the CMV mine, and production is ready to start up upon agreement. Customers for this fluorspar are mainly large chemical engineering groups in North America, including Honeywell, ALCOA,ALCAN, and DuPont, and Japanese firms like Daiken and Asahi Glass. The Japanese manufacturers ordinarily source their fluorspar from China, but due to Chinese 10 visions Fall 2007

Visions - Fall 2007

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