Excellent post 2ic.
Can I just write a couple of responses.
In regards to the previous supply issues in 2012 and the substitution of Zircon.
Yep, many customers particularly the foundries moved from Zircon to Chromite in 2012 as it was running around the $105/t, but when resources were crunched in 2012 Chromite mines shut also. Coobina (North West WA) was 6% of world production and that never came back online. MinRes even tried to revived it, but it's currently up for sale.
Here is something worth looking at. The only "low" adoption profiled listed is for foundries. Currently the chromite price is $175/t and that's good money, but not amazing. As for the rest, it all has high adoption hurdles and when Zircon itself is a relatively low input cost into tile manufacturing would they really change over now?
Iluka talking about substitution and reaching its limits. (Prices moved up from this point onwards 2016 -).
Kalimantan
Yep swing production will always be there, it's not of good quality and that price always moves around, but the product enters the system. Their total maximum output is 100,000t a year. So they are close to that now.
High Zircon Price - PFS
Definitely an argument to say the $1,822 price is high, particularly as it has not hit that, but you wrote that the price is easing back from $1,600. We've just had chinese new year and pricing is always soft into that period, particularly the spot price. I think you will see reports that pricing is holding up well.
The difference between your view and mine in regards to Zircon supply.
Without bagging other potential projects coming online and everyone getting into a tizz, what if your theory of this supply does not materialise? You have mentioned that both Toliara and Thunderbird will be built. What if Thunderbird does not? Okay, it's about profitability and success brings competition, but what if these projects are a high technical challenge? Would the banks or third parties really back them? Image got through because Murray Zircon gave them their plant for 40% of the project.
Strandline's Coburn has an overall HM grade of 1.2% and Fungoni can't get traction with the Tanzanian government.
Just have my reservations on that front.
Just a side issue regarding current supply.
North Stradbroke comes offline later this year and that's removes roughly, 50,000t of Zircon, 70,000t of Rutile and 150,000t of ilmenite all of quality.
You've also got MZI's Keysbrook that looks to be in serious trouble (currently in a trading halt). The director Nathan Wong (representative of Tricoastal Minerals - one of the biggest zircon producers in China) resigned from the MZI board last week. Keysbrook pumps out 25,000t a year.
Pep
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