Overall, it was a mixed year for commodities in 2016. Overarching trends included debt reduction by the major public mining companies, adjustment to China's slowing economy, and market reactions to the growing public sentiment against 'business as usual' - the European referendum vote and the presidential election in the USA.

Prices for a number of commodities were at several-year lows as the new year began. But by mid-2016 commentators and companies alike were calling the bottom of the market, and commodity prices appeared to be supporting this: increases were seen in aluminium, alumina, crude steel, iron ore and across a range of minor metals and industrial minerals.

Moving into 2017, stability appears to be the key aim of the major miners. For industrial minerals in particular, the outlook for 2017 is positive - with two major mergers announced in the titanium minerals sector in 2016, this could well be the theme of the coming year.

Titanium feedstocks

The year 2016 ended better than it started for the titanium minerals industry, as during the year demand and prices began to creep upwards. The major end-use for titanium minerals feedstocks, the titanium dioxide (TiO2) pigment industry, started to pick up after four years of decline. Pigment capacity utilisation is rising and market confidence is creeping through the market. Increased consumption in the paint and coatings sector, and a reduction in production levels mean that TiO2 pigment producers seem to have turned the corner. However, whether the price increases are sustained remains to be seen. The sector has a history of short-lived price rises, followed by longer periods of decline.

Having said that, feedstock Inventories have been reduced, particularly of ilmenite, which has brought some relief to the market and prompted restarts and capacity increases. This is due in part to the slump in associated iron ore mining in China; ilmenite is mined as a co-product for use in sulphate-route TiO2 pigment production. The reduction in Chinese mining has led to a slight rise in ilmenite imports, and strengthening of prices.

During the year, industry leader Iluka pressed ahead with its bid for natural rutile producer, Sierra Rutile. Sierra Rutile owns the largest primary rutile deposits in the world, located near the Imperri Hills in Sierra Leone, and produced 126,000t of rutile in 2015 - second only to Iluka in Australia, with 129,000t of production. Iluka is already a leading producer of both natural and synthetic rutile in Australia, while Sierra Rutile is undertaking projects at Gangama, Gbeni and Sembehun that could see it increase its total TiO2 feedstock output to 330,000tpy by 2023 with most of this comprising rutile. The deal, concluded in December, makes Iluka the largest natural rutile producer worldwide by a substantial margin.

Iluka also suspended mining at its Jacinth-Ambrosia mine in South Australia in April 2016, which is expected to remain idled for 18-24 months, but that is dependent on market conditions. However, the company also gave the green light to detailed financial and operational planning for the rutile-rich Balranald and Nepean Mineral Sands projects in New South Wales, Australia. This was after trialling an alternative mining technique which is a lower capital-intensive development option.

In response to the improving markets, Southern Ionics announced that it would ramp up mining activities and increase throughput at its plant in Georgia, USA. Elsewhere towards the end of the year, Sibelco reversed a decision to pause production on Stradbroke Island in Queensland, Australia after demand picked up for both ilmenite and rutile. All mining activities are scheduled to be phased out in the North Stradbroke Island region by 2019, as part of the Queensland government's drive to return to the original intent of the North Stradbroke Island Protection and Sustainability Act 2011.

Consolidation and mergers are characterising the TiO2 pigment industry and 2016 was no exception with the merger of Chinese titanium dioxide pigment giants Henan Billions and Sichuan Lomon. The merger was first announced in May 2015, but has yet to be finally completed in 2016. In late September, Henan Billions confirmed that it had raised US$1.3Bn to fund the acquisition. In the wake of this, it is highly likely that there will be further mergers in China as the industry consolidates further.