Chinese
leading TiO2 giant Lomon Billions is increasing international investments by
signing a MoU with Brazils’s MSE, the owner of a huge titanium ore mining
company. As the global TiO2 market is prospering, Lomon Billions is ensuring
sufficient supply for further expansion and strengthening its international
role.
According
to market intelligence firm CCM, the largest TiO2 enterprise in China, and
fourth largest producer in the world, Lomon Billions Group, has announced
recently to strengthen its cooperation with Brazil’s Mineracao Santa Elina
Group (MSE). The deal is about a large titanium ore mining enterprise operating
in Brazil and Uruguay and owned by MSE. According to the deal, which is drafted
in a Memorandum of Understanding.
As
the MoU is just the draft of the basic deal for the two companies, the further
process will include the financial development of the mining company by Lomon
Billions, which in return allows the TiO2 enterprise to buy the mined titanium
ore at a lower price than the market. This provides the company with a huge
advantage and the highly needed independence from world market supply and
fluctuating prices.
The
titanium ore resources of the company are estimated to succeed 1.5 billion tonnes,
according to CCM’s research. This amount of raw materials enables Lomon
Billions to acquire sufficient supply for the titanium containing products at
least for the coming 20 years.
Lomon
Billions is able to achieve two major goals with the deal ahead, strengthening
its position in the world market as an international player for TiO2. On the
one hand, the cooperation will allow having sufficient supply of titanium ore
for future expansion plans, on the other hand, the international partnership is
demonstrated Lomon Billions engagement in the global competition.
As
the company is heading towards an aggressive expansion strategy, ensuring the
supply of raw materials is vital for the production lines. Especially the
chloride process of Tio2 is going to be expanded enormously in 2017 and 2018.
Supported by national policies, chloride process TiO2 is going to be a vital
part of the production variety for Lomon Billions, for which Chinese
domestic titanium ore is not suitable. Hence, exported titanium ore
is the only source for the enterprise, and to be independent of world market
instabilities, the investment into MSE offers a great opportunity for ensuring
a steady supply to beneficial conditions.
As
the market leader in domestic TiO2 enterprises in China, Lomon Billions is now
heading towards global competitors to get some share in the steadily growing
global TiO2 market. After revealing a huge financial success in the first half
of 2017, the company is counting on foreign officials to guide the way for
success in the international market.
According
to the financial statement of Lomon Billions for the first half year in 2017,
the company has achieved an increase in net profit of USD191 million to USD206
million. This development represents a growth of about 1,800% compared to the
same fiscal period of 2016. Previous estimations had predicted the net profit
at an average of USD170 million. Hence, the enterprise exceeded expectations
significantly and strengthens its place as one of the world largest TiO2
manufacturer and supplier.
According
to market intelligence firm CCM, the reason for the surprisingly high
performance can be found in the high price of TiO2 in this period as well as
financial statement consolidations the enterprise handled with its
subsidiaries.
What’s
more, industry insiders expect further consolidation in the European TiO2 and
ink market, where one of the major drivers would be the expansions by Chinese
operators. There has been speculation among the analysts, that Lomon Billions
wants a stronger presence in Europe, a major consumption region of TiO2. Europe
held the second largest share of the TiO2 market in 2015, accounting for over
25% of the global volume share and will witness growth on account of rising
need for cosmetic products in Germany, Italy, France and UK. Increasing
disposable income along with growing consumption of paints & coatings particularly in the automotive and construction industry will augment growth in
Asia Pacific. Furthermore, surging use of cosmetic products in Latin America
and the Middle East will increase consumption of titanium dioxide over the next
decade.
Further acquisitions
China’s
TiO2 giant Lomon Billions has announced earlier to purchase 100% stocks of
titanium concentrate processor and trader Panzhihua Ruierxin. This move shall
ensure sufficient supply for raw materials like ilmenite and further improve
production output and costs.
The
main purpose behind the acquisition lays in the insurance for sufficient raw
materials like ilmenite, which is facing a tight supply currently. The concept
is written down in the Titanium Ore Purchase Agreement of both companies, which
regulates the purchase of 480,000 tonnes of ilmenite by Lomon Billions in the
next three years. In addition to this agreement, Panzhihua Ruierxin will also
guarantee the best monthly price for Lomon Billions, orientated on the price
for the other customers.
About CCM
CCM
is the leading market intelligence provider for China’s agriculture, chemicals,
food & ingredients and life science markets.
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