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Tronox repositions itself as world's largest titanium dioxide player

The acquisition of the titanium dioxide, or TiO2, business of private chemical and mining company Cristal will make NYSE-listed Tronox Ltd. the largest TiO2 pigment producer in the world.

"If you add Tronox's current capacity and Cristal's current capacity, the entity created becomes the largest of the TiO2 pigment producers with about 17.3% of total world capacity," ARTIKOL (UK) Managing Director Reg Adams told attendees at a recent industry event in Perth, Australia.

The US$1.67 billion deal, which is the largest deal in the mineral sands space in the past decade, will also position Tronox as the second-largest TiO2 feedstock producer in the world.

Tronox is one of only a few vertically integrated players in the TiO2 industry.

"There hasn't been much vertical integration within this industry," Adams said. "After the impending merger between Tronox and Cristal, they will be a very big vertically integrated player within the industry."

Tronox General Manager Australia Russell Austin said Tronox will be the largest producer of TiO2 pigment and the only vertically integrated producer in the world extending into other territories like Brazil, France, the U.K., the Middle East and China.

The combined company will operate 11 titanium dioxide pigment plants in eight countries, with a total capacity of 1.3 million tonnes per annum, and will have titanium feedstock operations in three countries, with a total capacity of 1.5 million tonnes per annum.

World TiO2 pigment capacity at the end of 2016 was about 7.7 million tonnes per annum.

Following the merger, the top five players in the TiO2 pigment market will be Tronox, followed by U.S.-based The Chemours Co. with a 17% share of global production, the U.K.'s Huntsman Corp. with a 10.2% share, China's Lomon Billions, which will account for 8.2%, and U.S.-based Kronos Worldwide, Inc., accounting for 7.2%.

The identities of the major players in the TiO2 pigment industry have changed quite a bit over the past 12 years.

The only company that remains the same and in the top five is Kronos. DuPont spun off its "performance chemicals" business into NYSE-listed Chemours in mid-2015 and Huntsman is following a similar path with the demerger of its pigment and additives business into Venator Materials Corp. in the second quarter of this year.

Tronox emerged from the spinoff of Kerr-McGee's chemical division in 2005 and Millennium Inorganic Chemicals was acquired by Cristal in May 2007.

Meanwhile, two of China's largest TiO2 producers, Henan Billions Chemicals Co. Ltd. and Sichuan Lomon Titanium Co. Ltd., merged in October 2016, which repositioned the combined company, now known as Lomon Billions, as the fourth largest player globally.

The usage of TiO2 is extremely widespread, with more than 170 countries each spending more than US$10,000 per annum on TiO2 pigment.

TiO2 pigment is largely used in paint, which in 2016 accounted for 56% of consumption, and plastics, which accounted for 25.6%.

Demand for TiO2, which is currently a market worth more than US$15 billion, is expected to grow to 8.8 million tonnes by 2025 from about 5.9 million tonnes in 2015.

China currently accounts for 34% of global demand and is forecast to account for 41% in 2025. Europe accounts for 19.5% of demand and North America accounts for 15.9%.