Dangers ahead as China blindly expands titanium sponge smelting capacity - CNMIA official

Dangers ahead as China blindly expands titanium sponge smelting capacity - CNMIA official

Experts are becoming increasingly concerned over the rapid growth in investment in China's titanium sponge smelting industry over recent years, as blind expansion will lead to resource waste, unhealthy competition and pollution, and cause China to become a global low-price titanium sponge supplier, a China Nonferrous Metals Industry Association official told Interfax on May 14.

"The domestic titanium sponge industry is in something of a mess at present," CNMIA titanium, zirconium and hafnium branch official, Ma Yunfeng, said.

Titanium sponge prices on the international market have increased from RMB 50,000 ($6,516) to RMB 300,000 ($39,094) per ton since 2004, causing a nationwide boom in titanium sponge facility construction. In 2004, Zunyi Titanium Co. Ltd. and Fushun Titanium Corporation were the only two titanium sponge smelters in China. In the last two years, construction has either started or is planned to start on 30 new titanium sponge smelters, of which seven or eight have already commenced production.

"China's current titanium sponge production capacity has reached 30,000 tons per annum. Domestic demand is 20,000 tons per annum and will increase to 30,000 tons by 2010. If all planned facilities commence production, domestic capacity will eventually exceed 100,000 tons, which is the current global titanium sponge consumption," Ma said.

According to Ma, Zunyi Titanium Co. Ltd. and Fushun Titanium Corporation still remain the two largest titanium sponge smelters in China, with an output of approximately 10,000 tons and less than 5,000 tons respectively per annum.

The actual price for domestic titanium sponge is between RMB 90,000 ($11,728) and RMB 95,000 ($12,380). China's significantly lower prices compared to those on the international market at present will attract many foreign purchasers.

Ma attributes the blind titanium sponge production expansion to a lack of centralized control. At present, the industry has no state-level access standards or production licenses, with most titanium sponge projects being approved and given priority by local governments, who intend to accelerate local economic growth without regard to the overall development of the industry.

"We hope the state will take measures to regulate the titanium sponge industry," Ma said.

An overheated titanium sponge industry will increase the demand for titanium ore and although China contains one of the largest titanium reserves in the world with proven titanium dioxide reserves of 900 million tons, the competition for resources will result in the severe depletion of rich deposits.

"The state has attempted to encourage imports by setting high-titanium content slag import tariffs at zero in order to protect domestic titanium resources," Ma added.

[source: Interfax China Metals, 18 May 2007]