Sierra Rutile Talk With Japan Was in Past, Not Ongoing

  • Japan had wanted to secure supply of titanium dioxide
  • Sierra Rutile to boost production of rutile by about 30%

Sierra Rutile Ltd. held talks in the past with the Japanese government that included it taking a stake in the company to secure supply of titanium dioxide, the material used in the aerospace industry. The talks were broad and are not ongoing.

“As a method of securing that future supply we did have preliminary discussions with the Japanese government,” Chief Executive Officer John Sisay said in an interview on Oct. 28. “One of the options on the table is possibly buying into the company.”

The company’s shares have plunged 63 percent since it rejected a takeover in April 2014, more than the 38 percent decline in the Bloomberg World Mining Index of 81 miners. Sierra Rutile has cut costs in the past year at its mines in Sierra Leone and plans to boost production of rutile, the ore that contains titanium dioxide, by 30 percent this year, Sisay said. Titanium dioxide is used mostly to create lightweight and durable parts for airplanes and as finishes for products in the chemical industry.

Production of rutile will rise to as much as 130,000 metric tons this year from about 100,000 last year, Sisay said. Sierra Rutile produces about 15 percent of the world’s supply. Sierra Leone is the world’s largest miner of rutile followed by Australia and South Africa.

The shares have dropped 17 percent this year. Sierra Rutile was unchanged at 20.75 pence on Friday.

The price of rutile has probably bottomed out and will begin to rise by the end of next year, Sisay said. Rutile currently sells at about $800 a ton, he said.

“If the prices drop much further it’s actually quite unhealthy for the industry because a lot of companies that do not have as low operating cost as we do will actually go bankrupt,” he said. “We hope that they would stabilize where they are currently and progressively move up towards the end of next year.”

(Corrects price of rutile in sixth paragraph.)
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