As silica sand rapidly gains recognition as a commodity on the move, VRX Silica (ASX: VRX) is preparing to capitalise on the situation.
Although largely a forgotten commodity until now, today the silica sand market is growing with demand from Asia rapidly expanding (and prices along with that).
Glass making is silica sand’s most popular use; all types of glass require it – as do foundries, kitchen taps, ceramics, paint and coatings, metallurgy, chemicals production, oil and gas recovery, water filtration and sand for construction.
There is silica sand in your mobile phone and silicon chips. And in lithium-ion batteries.
It’s also used in photovoltaic cells, and in concrete (it has been calculated that 1km of highway needs 30,000t of silica sand)
Meanwhile, Australia is well placed to supply the fastest growing market, led by China, India and Vietnam.
Asia Pacific takes near half global supply
The Asia Pacific region accounts for 47% of global demand for silica sand — and Asia is running out of domestic supplies.
One recent estimate predicts the international sand and aggregate market could grow from US$4.5 billion (A$5.8 billion) in 2017 to US$60 billion (A$77 billion) in 2030.
Apart from exhaustion of resources, future developments in the Asia Pacific have been restricted by environmental restrictions on dredging.
Australia poised to fill supply gap
Australia, by contrast (as with so many mineral commodities), is well placed to fill the gap.
The company has three projects in Western Australia: Arrowsmith North, Arrowsmith Central and Muchea, that have a confirmed mine life of 25 years — and the potential to being in production for about 100 years.
At present the projects have a combined 1.056 billion tonnes in resources at grades between 99.6% and 99.9% silicon dioxide (or silica), with low iron impurities.
All three projects are located between Geraldton and Perth.
Silica sand is a bulk commodity and one of the most mined commodities in the world.
Its secret is the existent of angular particles.
These can interlock and provide much greater strength for products like concrete, which require the basic silica supply.
Asian governments clamp down on domestic mining
Silica sand is a little similar to iron ore in terms of having several grades, although with silica sand having one type suitable for concrete, another necessary for making flat glass, a higher grade for specialty glass and yet another step up for the quality needed for silicon chips.
Silica sand also has a high melting point, is chemically inert (making it non-reactive).
In October 2017, VRX, then called Ventnor Resources and having shed its copper project in Western Australia, announced the acquisition of Arrowsmith (Muchea was to follow in early 2018).
The company said it had identified the potential for significant silica sand sales in the Asia Pacific.
It added that supply deficits were due to Asian regional governments acknowledging sand as a strategic resource and putting pressure on illegal mining of that resource.
Earlier mining activities such as river dredging had caused environmental damage.
The company noted that a big growth sector in Asia was energy-saving double glazing and for applications in the fast-expanding auto industries of China and India.
VRX clears Native Title, heritage on way to mining lease
VRX’s Arrowsmith project has a very positive infrastructure advantage — it is traversed by the Eneabba-Geraldton rail line, completed in 1972 to carry minerals sands and which provides direct access to the Geraldton port.
In its most recent quarterly report, VRX said it had cleared Native Title for its Arrowsmith projects ahead of the granting of a mining lease.
In November the company completed an Aboriginal heritage survey at Arrowsmith, which found no isolated artifacts, resulting in no onerous heritage recommendations being made.
Silica sand samples were sent to more potential new customers as VRX continued to engage with offtake partners in the Philippines, Thailand, Malaysia, South Korea and Japan, most of them glass makers and foundries.