Tronox Posts Q1 Earnings, Shows Strength in Mineral Sands Business

Tronox Inc. (NYSE:TROX) has released its first quarter earnings, missing earnings and revenue expectations due to a price decline in titanium dioxide and production volume. Out of the figures it released, its mineral sands revenues, however, stood out and climbed by as much as 17 percent, sources said on Monday.

According to a statement from the company, the chemical company’s adjusted EBITDA was US$64 million [$80.8 million] based on a revenue of US$385 million. This reflects an 8 percent decline from last year's figures of US$418 million.

The company's pigment revenue also dipped by 15 percent to US$246 million from US$291 million last year. That's because sales volumes dropped by 4 percent and selling prices were 13 percent down, "partially offset by favourable mix," the release noted.

Tronox's mineral sands business was up, on the other hand, registering a 17 percent increase to US$208 million from US$178 million. The figures are owed to the fact that sales volume jumped by as much as 20 percent and selling prices were down by 2 percent.

These upbeat data, nevertheless, did not prevent market intelligence firm Zacks to name the company as one of its bears yesterday. "Challenging global market conditions are not expected to improve in the short term, with inventories rising, and production staying at current levels. The combination of these issues has made Tronox the Zacks Bear of the Day," Zacks said in its report on Nasdaq.com.

The company, which runs operations in Australia, South Africa, the United States and the Netherlands, will be granting a quarterly dividend of US$0.25 per share to its shareholders on or before June 1, 2015.

A report on Industrial Metals revealed that price raises in pigments market haven't penetrated the mineral sands market yet. "Efforts by suppliers of titanium dioxide ( TiO2) to raise list prices for the pigment are not trickling down to producers of mineral sands feedstocks," the report said. It added that TiO2 price values could increase by US$50 per tonne for deliveries.

White Mountain Titanium Corporation (OTCQB:WMTM), a U.S. company operating a project in Santiago, Chile, noted on its website that high grade titanium dioxide feedstock prices "have held up well in recent years," and that consumption in North America alone is "4 kilogram per capita, as compared to 3.3 kilogram per capita and 0.5 kilogram per capita in Western Europe and China respectively."

White Mountain's Cerro Blanco project in the Atacama region in Santiago is expected to produce 112 million tonnes of rutile. The asset is seen to have an annual output of 80,000 that could increase to over 130,000 tons of rutile during the project's fourth year. Pure titanium dioxide is sourced from the mineral rutile. It is primarily used in the paints and pigments industry, which is worth US$12 billion.

Contact the writer: a.lu@ibtimes.com.au