Pigment, Filler Markets Heat Up

Outside Europe and North America there are still good opportunities within the free-sheet (woodfree) paper segment. Papermakers have also become more adept at extending TiO2 with other fillers. This trend is particularly important in North America, a region that still consumes large volumes of titanium dioxide in papermaking. In retaliation, titanium dioxide producers are introducing more efficient grades of TiO2.

Kaolin clays continue to decline as a percentage of extender and filler mineral consumption in paper, and calcium carbonate percentages are still growing. TiO2 is also slowly declining. Talc made a major breakthrough in Europe in rotogravure paper a couple of years ago.

Although there are growth opportunities for talc in rotogravure papers in North America, use in 1999 was still minor, and the growth prospects are somewhat uncertain. The benefits of talc can be documented, but the current perception within the North American paper industry is that the hassle of installing tanks and adjusting coating or filling formulations to achieve a performance improvement which is still perceived as relatively minor is proving to be a difficult sell. The increased presence in North America of European paper companies which have extensive experience with talc in coating applications is seen as providing a much needed impetus that may tip the scales towards talc.

MORE CONSOLIDATION. Consolidation and globalization are already well developed among the suppliers of filler and coating pigments. Still, in the mid-1980s most players had a regional presence. For example, Omya, Talc de Luzenac, and English China Clays (ECC) were strong in Europe, while such companies as Specialty Minerals Inc. (Pfizer at that time), Dry Branch Kaolin, and Huber primarily focused on North America. Since then, Omya, ECC, and Talc de Luzenac have all aggressively pursued acquisitions in North America, while SMI and Huber expanded activities in Western Europe. Now, all players are pursuing opportunities in Asia and South America.

A major change in the supply situation for kaolin took place in early 1999 when Imetal, the parent company of Dry Branch Kaolin, acquired ECC for British Sterling 756 million. For this deal to be accepted by the authorities, the group (which was later renamed to Imerys) had to dispose of some assets. At the end of 1999, Imerys swapped the former ECC kaolin operations in Sandersville and Wrens, Ga., for the remaining 60% interest Huber had in a PCC joint venture.

Also during 1999, German-based kaolin producer AKW sold its participation in the Brazilian Rio Capim operation as well as Euroclay, a sales and marketing organization for kaolin to the European paper industry, to Dry Branch Kaolin. Imerys emerged as the global leader in kaolin, operating mines in North America, Brazil, and Europe. In addition, the group also has a strong position in GCC and operates a number of PCC plants in North America. The competition within the kaolin industry is quite fierce, as Imerys competes with North American suppliers Engelhard, Huber, and Thiele, as well as emerging Brazilian suppliers Cadam and PPSA. Brazil has become a force in global kaolin supply, particularly for high brightness grades.

Several new PCC satellite plants were either started up or significantly expanded during 1999. SMI expanded its operations in Finland and Portugal and started up greenfield operations in the U.S. and China. New satellite plants are also under construction in Japan and Brazil. In Europe, merchant plants dedicated to the paper industry were brought onstream by Huber and Omya.

Globally, SMI is still the leading PCC supplier to the paper industry. But Huber, following its acquisition of Faxe Kalk in 1998, obtained a particularly strong position in Europe. Omya, the global leader in GCC, continued for a long time to heavily promote GCC but in recent years also started offering PCC.

Within the GCC arena, there are only two global competitors, Omya and Imerys, facing competition from a limited number of regional suppliers. Also, the talc market has become very concentrated, with Omya (through Mondo Minerals) and Talc de Luzenac accounting for most of the supply to the paper industry. Talc de Luzenac is making pro-gress on a new greenfield talc mine and processing operation in Alanen, Sotkamo, Finland.

Several of the leading mineral suppliers are also broadening the range of products for the paper industry. This was illustrated earlier this year when Huber unsuccessfully tried to acquire the precipitated silica and precipitated silicates business from Akzo. This deal would primarily have strengthened Huber 's position in rubber reinforcing fillers but additionally would have boosted its presence in the paper industry.

While in the mid-1980s most leading mineral suppliers only supplied one mineral, an increasing number of suppliers are now offering complementary pigments. Imerys and Omya were already mentioned as offering several pigments to the paper industry. Huber also has a strong position in a number of minerals for the paper industry, including kaolin, GCC, PCC, and precipitated silicas and silicates. From being suppliers of one unique coating or filler pigment, several of the global players have become suppliers of multiple pigments able to supply the paper mill with the best combination of filler and coating pigments.

MARK DE DECKER is project manager, Kline Europe S.A. His email address is Mark.dedecker@kline-europe.com