VSMPO-Avisma mulling alternative carnallite sources if Uralkali supply disrupted
MOSCOW. Nov 20 (Interfax) - Russian titanium producer VSMPO-Avisma , which buys carnallite from Uralkali , is considering alternative sources for supplies of the raw material if production shuts down at the potash giant's mine in Solikamsk due to flooding.
Carnallite ore is used in production of magnesium and industrial salts. VSMPO-Avisma uses magnesium to produce titanium sponge at its plant in Berezniki, which is then used to produce titanium ingots and semi-manufactures at the company's plant in Sverdlovsk Region.
Uralkali produced 315,000 tonnes of carnallite ore at its SKRU-1 mine in 2013. This mine, according to some sources, is connected by a partition to Uralkali's Solikamsk-1 mine, which was shut down earlier this week due to flooding.
VSMPO-Avisma's share price dropped 4.5% on Wednesday on the news of the unexpected resource risk. VSMPO-Avisma head Mikhail Voyevodin said that the company is studying the market in the event that supplies of raw material from Uralkali will have to be replaced.
"Several years ago we purchased carnallite in Israel that fully meets our requirements. Additional sources of it are now being studied. A meeting on the selection of new suppliers has been scheduled for next Tuesday," business daily Vedomosti quoted Voyevodin as saying.
VSMPO-Avisma's reserves will be sufficient for three to six months, depending on the production program. In addition to carnallite, the company uses magnesium chloride in production of titanium sponge (about 20% of requirements in carnallite equivalent), which it imports from China.
VSMPO-Avisma could completely switch to magnesium chloride, which would increase production costs for titanium sponge by less than 5%, the paper reported Voyevodin as saying.