In our latest installment of our Strategic Metals series, we look at titanium metal, the exceptional metal key to the aerospace industry.
- How titanium lives up to its namesake
- Why titanium metal was so hard hit in 2009
- Investing in titanium’s ‘holy grail’
Not many strategic metals have more than four industry associations devoted to it. But titanium does:
- French Titanium Association
- International Titanium Association
- Japan Titanium Society
- Interstate Association Titan
- Titanium Information Group
But perhaps this isn't too surprising for the fourth-most abundant metallic element and ninth-most abundant element in the Earth's crust, or for a metal with such a multiplicity of uses.
On the other hand, it is a little curious, since only 5 percent of all mined and synthetic titanium minerals are actually used to make titanium metal, with the remaining 95 percent used to manufacture titanium dioxide (TiO2).
In this article, we will look only at titanium metal, leaving the subject of titanium dioxide to a future piece.
So, what is it with titanium that makes it so special?
The Metal Of The Gods
It seems particularly appropriate that titanium (before it was so named) should originally have been discovered by a man of God—Reverend William Gregor—in Cornwall, England, back in 1790. It wasn't until five years later, however, that the metal was actually named titanium, after the Titans, by the German chemist Martin Heinrich Klaproth.
One hundred years later, in 1910, American chemist Matthew A. Hunter succeeded in obtaining titanium metal from one of its ores; consequently, he had the first industrial process to extract the metal named after him.
That the metal should be named after the Titans is particularly apt, to a degree that would probably have astounded Professor Klaproth.
Amongst other characteristics, titanium can boast of its:
- Lightness: Its low density means that it weighs only around 56 percent as much as steel.
Data Source: The Engineering ToolBox
- Strength-to-Weight Ratio: Titanium is the highest of any of today's structured metals.
Note: ksi = kilo-pounds per square inch (1 ksi = 1,000 psi)
Source: International Titanium Association (ITA)
- Flexibility: With its low modulus of elasticity (14.9 x 106 psi), about half that of steel, titanium is not only extraordinarily flexible, but it also springs back very strongly after it has been stressed, e.g., when acting as a spring.
Moduli Of Elasticity Of Various Metals
Source: The Engineering ToolBox
- Resistance to Corrosion and Erosion: Titanium is exceptionally resistant to both corrosion and erosion. In the former instance, its naturally forming oxide film protects it against a variety of agents: alkaline media, chlorine and other halides, gases, inorganic salt solutions, organic acids and chemicals, oxidizing mineral acids and water—in all its guises. (It also protects against microbiologically influenced corrosion.) In the case of erosion, titanium's oxide film provides it with strong resistance to anything from abrasion to cavitation and erosion—particularly at high-flow velocities.
- High Thermal Conductivity: Titanium conducts heat extremely efficiently.
- Low Coefficient of Expansion: Titanium's low coefficient of expansion makes it much easier to use in combination with ceramics, composites and glass than most other metals.
By any measure, this is quite an exceptional combination of characteristics for one single metal. But as an oxide, too, titanium possesses some very special characteristics; hence the fact that some 95 percent of the titanium mined is turned into TiO2. For starters, titanium dioxide makes the brightest of the white pigments. In addition, TiO2 has not only an extremely high refractive index, but as a powder, it is also a highly effective opacifier, so it is used in everything from paints and paper to plastics, pills, inks and more.
Titanium occurs naturally and most commonly in two forms: as ilmenite, or titanium iron oxide (Fe TiO2), and as rutile, or titanium oxide (TiO); their primary sources are mineral sands. (See Zirconium: Not Just Bling.) It is from these two minerals that titanium, in whatever form it's eventually used, is nearly always extracted.
Mineral Sand Deposits Around The World
(For a larger view of the above graphic, please click on the image.)
Source: Pincock Perspectives (Issue #66 - May 2005)
Ilmenite is found mainly in Australia, Canada, Finland, South Africa and the U.S.
*Primarily used to produce titaniferous slag
Rutile, too, is commonly found in Australia and South Africa, but also India, Sri Lanka and Sierra Leone.
*U.S. rutile production included in that for ilmenite above
Ilmenite currently accounts for more than 90 percent of global titanium mineral supply. In order to offer up the titanium it contains, however, ilmenite is nearly always "upgraded" to either synthetic rutile or titanium slag, which are then used in tandem with naturally occurring rutile for the production of titanium.
A Mine Site
From Mineral To Metal...
...by way of sponge. The most common first step in the production of titanium metal is to produce titanium sponge, so called because its texture is like that of a natural sea sponge.
This is most usually achieved by chlorinating rutile. Titanium tetrachloride (TiCl4) is produced by combining the rutile ore, coke and chlorine. Then, in what's called the Kroll process, this TiCl4 is reduced in an inert atmosphere using magnesium, producing magnesium chloride and titanium sponge. (Historically the Hunter process was used to produce titanium sponge, but now nearly all commercially produced sponge is obtained using the Kroll process.)
The titanium sponge can then be melted, and remelted, a number of times (and in various different ways), either with or without alloying elements (which include aluminum, molybdenum, tin, vanadium and zirconium), to make various titanium alloys or pure forms of the metals itself.
Titanium Production Process
(For a larger view of the above graphic, please click on the image.)
Main Uses Of Titanium Metal
Particularly in the U.S., one of the largest consumers of titanium metal is the aerospace industry, both commercial and defense. The U.S. Geological Survey (USGS) estimates that in 2009, some 76 percent of the metal was used in "aerospace applications." Of the remaining 24 percent, use was made of it in "armor, chemical processing, marine, medical, power generation and sporting goods." In fact, it was only after 1965 that titanium started to be used anywhere other than in the aerospace industry, and over the past 50 years, both the commercial aerospace and defense industries have increased their use of titanium dramatically.
Approximate U.S. Titanium Mill Products Shipments
A comparison of the amounts of titanium used in Boeing's commercial aircraft throws considerable light on how important titanium is just to this one manufacturer. The picture is most likely very similar for Airbus in Europe.
Titanium Usage On Boeing Aircraft
Source: ITA from Boeing Commercial Aircraft Group
In addition to those uses listed by the USGS, other significant applications of titanium include:
- Architecture and construction
- Chlor-alkali processing
- Consumer goods (spectacle frames, watches, cameras, jewelry)
- Downhole oil & gas
- Flue gas desulphurization
- Food and pharmaceutical
- High technology (sputter targets, electromagnets, computers, optical systems)
- Metal matrix composites
- Metal recovery and finishing
- Nuclear waste storage
- Petroleum processing
- Pulp and paper
- Titanium aluminides
Market Drivers And The Prospects For Titanium Metal
Since the aerospace industry is a prime consumer of titanium, how it fares inevitably affects how the metal does. Understandably, the last couple of years haven't been easy for either.
As the USGS states it: "Delays in aircraft construction and the global economic slowdown in 2009 resulted in a significant drop in titanium sponge metal production, lower prices, and delayed capacity expansion."
Even China, the world's largest titanium sponge producer, felt the pain in 2009. Back at the end of 2008, in its review of that year and the prospects for 2009, Asian Metal could not have put it more bluntly: "It is predicted that there will be no great rebound in 2009" in the Chinese export market. And of the domestic market, Asian Metal wrote: "Chinese titanium sponge production is far greater than demand, and the domestic situation remains grim in 2009."
But it would be a mistake to think that demand from the aerospace industry is the only major driver of titanium metal prices. There are other significant drivers on both the supply and demand sides, not least industrial demand for the metal, which is as significant a driver as demand from the commercial aerospace industry.
Figures from a 2008 report on titanium by the Australian Bureau of Agricultural and Resource Economics gave the breakout of titanium mill product use in 2005 as: industry (49 percent of global consumption), commercial aerospace (31 percent), military (10 percent, of which 7 percent was military aerospace), consumer (8 percent) and medical (2 percent). Some four years later, demand for titanium from the steel and industrial equipment industries, as well as demand for its use in military armor, still remains extremely important.
The same report accounts for global consumption of such products in 2005: North America (30 percent), the European Union (24 percent), China (15 percent) and Japan (12 percent). While these last figures are useful indications, consumption in China has risen significantly in the last five years.
On the supply side, capacity (and capacity expansion) has been, and still is, a major driver.
Within the aerospace industry, demand for titanium depends on at least three major factors: commercial aircraft order levels, the increase in the use of titanium in such aircraft—not only as a percentage of all materials used, but also in terms of absolute weight used; and, finally, its use in military aircraft.
Thus the future for titanium metal is subject to at least the following three significant influences: its continuing and increased use in aircraft (both commercial and military), the titanium supply situation, and its continuing consumption in the steel and other industries—particularly in China.
Opportunities In Titanium Metal
For those sanguine not only about the continuing and increased use of titanium in aircraft (not least because of the marked improvements in fuel efficiency its use can help provide), but also about China's continuing consumption of titanium, there are a number of ways of participating in the titanium metal market. Setting aside owning the physical metal itself, these range from the production of titanium mineral concentrates all the way to production of the metal itself.
Interestingly, however, unlike with a number of other strategic/minor metals, the universe of investment opportunities is surprisingly circumscribed—not because private titanium-related companies outnumber public ones, but simply because so very few companies exist in this space.
Titanium Mineral Concentrates
In the U.S., the two main producers of titanium mineral concentrates are Iluka Resources, Inc., a subsidiary of Australia's Iluka Resources Limited (ASX: ILU) and E. I. du Pont de Nemours and Company (DuPont) (NYSE: DD).
Other major producers around the world, in addition to Iluka and DuPont, include:
|JNB: EXX||Exxaro Resources Limited|
|NYSE: RTP||Rio Tinto Group|
|NYSE: BHP||BHP Billiton|
|Private||Bemax Resources Limited|
*Owned 50/50 between Tronox Western Australia Pty Ltd and subsidiaries of Exxaro Australia Sands Pty Ltd
There are also a number of other, smaller, producers operating in such places as Mozambique (for example Kenmare Resources PLC (LON: KMR) at its Moma mine) and Vietnam. Indeed, in December last year, the fifth mining company to be listed on the Hanoi Stock Exchange was Sai Gon-Quy Nhon Mining Co with a titanium slag plant in the central province of Binh Dinh.
Titanium Sponge Producers
While titanium mineral concentrates are to be found in a number of different regions around the globe, currently there are only six countries that actually produce titanium sponge from those concentrates.
Note: These figures exclude statistics for U.S. sponge production.
In these countries, and the U.S., among the main producers were:
|Private||Fushun Jinming Titanium Industry Co. Ltd.||China|
|Private||Luoyang Sunrui Wanji Titanium Co. Ltd||China|
|Private||Zunyi Titanium Co Ltd||China|
|TYO: 5726||Osaka Titanium Technologies Co. Ltd.||Japan|
|TYO: 5727||Toho Titanium Co. Ltd.||Japan|
|KAS: UTMKP||Ust-Kamenogorsk Titanium and Magnesium Plant JSC||Kazakhstan|
|Private||Zaporozhye Titanium and Magnesium Combine||Ukraine|
|NYSE: ATI||Allegheny Technologies Incorporated (ATI)||USA|
|NYSE: RTI||RTI International Metals, Inc.||USA|
|NYSE: TIE||Titanium Metals Corporation||USA|
Titanium Metal Producers
Of the sponge producers, Russia's VSMPO-AVISMA (VSMPO) is also the world's largest producer of high-quality aerospace titanium. In the U.S., the main high-quality aerospace titanium producer is TIMET (Titanium Metals Corporation). In the industrial sector, the market, in addition to being served by TIMET, is also served by the Japanese ingot producers RTI International Metals, Inc. and UNITI - a joint venture between VSMPO and ATI.
In the U.S., there are three further, very much smaller (in terms of weight), titanium ingot producers: Alcoa Howmet, a subsidiary of Alcoa (NYSE: AA); AlloyWorks, LLC, a private company out of Salisbury, N.C.; and Perryman Company, another private concern, out of Houston, Pa.
The Question Of Cost
Anybody looking at the figures for titanium sponge production can only be surprised at just how small they are for such an obviously important metal. In a recent paper, the RAND Corporation noted that: "The titanium market is very small - only one ten-thousandth the size of the steel market." Why?
The answer: Cost. Titanium is very expensive to produce. As RAND puts it: "Titanium is expensive to refine, process, and fabricate. In terms of processing cost per cubic inch, titanium is five times more expensive than aluminum to refine and more than ten times as expensive as aluminum to forge into ingots and to fabricate into finished products ... Fabrication is the most costly processing stage, followed by sponge production."
Apart from simple capital requirements, another major factor involved is energy consumption. It takes a great deal of energy to produce titanium, not only in the initial processing from ore to sponge, but thereafter from sponge to ingot. For some aerospace applications, the sponge may need to be melted and remelted three times before the correct purity is achieved.
Source: The RAND Corporation
The situation remains as true today as it did back in September 2005 when then president of TIMET, J. Landis Martin, said in a presentation: "We must continue to chase the Holy Grail—that is, a method of producing sponge that is less expensive than the Kroll Process, which dates back to the 1950s."
The search for a process cheaper than the Kroll process is deemed so important (particularly in relation to titanium's use in military aircraft, armor, etc.) that even the likes of DARPA (Defense Advanced Research Projects Agency) is offering funding to develop cheaper processes.
According to a 2007 report from London-based consultant Roskill, at that time, there were at least 29 continuing R&D projects looking at new titanium production processes. Such projects were spread across the globe and included work continuing in Australia, Canada, Germany, Italy, Japan, South Africa, the U.K. and the U.S.
Since no one yet has announced that it has discovered the Holy Grail, it is very difficult to know just how far along on the quest any particular project actually is. But for the investor who may be seeking another angle, and a different way, of obtaining exposure to titanium, keeping an eye on what is going on in this space may prove particularly interesting—especially if there were ever a way of getting a slice (through, perhaps, participation in the associated intellectual property or the developing entities) of any modern-day substitutes for the Kroll and Hunter processes.
On the other hand, if a cheaper way of producing titanium sponge is developed, it is a pretty sure-fire thing that use of the metal will increase significantly.
The RAND Corporation (RAND)
U.S. Geological Survey (USGS)
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