Fluorspar (the commercial name for fluorite or CaF2) may just be the most important but least-known industrial mineral. Among other applications, it's most commonly used in manufacturing aluminum, steel, concrete and toothpaste. It's also the precursor ingredient for hydrofluoric acid, which is vital to the manufacture of all fluorocarbons, which are used in refrigerators, air conditioners and propellants.
The global market for fluorspar consumes approximately six million tons a year, to be used in products that generate over $30 billion in annual sales. That being the case, it's a wonder that the mineral is relatively unknown to investors. But like the meteoric rise of rare earth elements in 2010 and the more recent surge in graphite, fluorspar might soon get the attention it deserves.
"The problem with fluorspar is that nobody understands what it is, yet it's a part of everyone's life," says Lindsay Gorrill, President/CEO of Canada Fluorspar Inc., which could become a fluorspar producer within the next two years. "I think one of our biggest issues is in explaining to the market what fluorspar is and where it's used. There is currently no replacement for it in its uses."
Like rare earths and graphite, fluorspar is mostly produced in China, although not in the same proportion compared to other countries. China currently represents approximately 53% of global fluorspar production. China also consumes 52% of global production. To protect its supply, the government has imposed a 15% export tax on the mineral.
As a result, fluorspar prices soared from approximately $130 a ton in 2003 to a current price in the $550-to-$600 range. The price varies depending on the source. Much of the fluorspar used in North America comes from Mexico, where acid-grade fluorspar sells for $550 a ton, compared to Chinese acid-grade fluorspar which sells for $600.
Like the differences between large flake and amorphous graphite, fluorspar comes in two different forms—metallurgical grade and acid grade.
Acid grade is considered most desirable. Consumers include multi-billion-dollar entities like DuPont and Honeywell, which use fluorspar to produce fluorocarbons and fluoropolymers. They rely largely on Mexican supply, despite the fact it requires additional, costly refining to remove traces of arsenic that are unique to the Mexican product. Currently there are only four plants in the world that can complete the arsenic-removal process; DuPont and Honeywell each own one.
Metallurgical grade is also useful in manufacturing, though its applications aren't quite as diverse. Metallurgical grade is often used as a flux in iron, steel and aluminum smelting, as well as in cement making. Though slightly cheaper, metallurgical grade represents approximately 15% of the overall fluorspar market.
Acid grade's greater demand is driven by the global market for hydrofluoric acid, the primary use of the mineral. As much as 45% to 60% of hydrofluoric acid consumption is used to make hydrofluorocarbons (or HFCs) to be used in coolants.
Reports out of China, stemming back to 2010, reveal the country's concern that Chinese reserves might run out over the next three to five years. The EU has already designated fluorspar a critical mineral. The Chinese reports, however, referred only to the country's reserves without considering future exploration or possible increases in reserves.
Unlike rare earths, which are restricted to a handful of locations around the world, fluorspar is abundant globally. It's simple enough to find, although the real challenge lays in finding a deposit of economical size. But, like the meteoric rise in graphite exploration over the last two years, it's possible that investor awareness will encourage fluorspar's pursuit.
The privately owned company Minersa is the world's oldest fluorspar producer and Europe's biggest, with five mines and a concentration plant in northern Spain. New players will likely appear. But two Canadian companies that already offer investors fluorspar exposure are Canada Fluorspar Inc. and Prima Fluorspar Corp.
Canada Fluorspar Inc.
In partnership with France's leading industrial chemicals giant Arkema Inc., Canada Fluorspar proposes to reactivate a fluorspar mine in St. Lawrence, Newfoundland. The result of the pairing is an entity called Newspar, which currently has $65 million in the bank, in addition to a $17-million provincial government loan to build a wharf.
"Even though there are approximately 43 known veins on the property, we have drilled and delineated two veins, Blue Beach North and Tarefare," says Canada Fluorspar's Gorrill. "These two are part of the mining plan and project in Newspar, which has plans for a mine site, mill, tailings pond and wharf."
The property's other 41 veins, each 100% owned by Canada Fluorspar, provide opportunities for future growth. Blue Beach North shows an average grade of approximately 38%, while Tarefare averages 44%. Economically feasible cutoffs tend to be around 30%.
Mining costs have risen, however, since the company released its prefeasibility study in 2011. The project is now being reassessed to examine operating and capital costs.
"We believe that we need to be good corporate citizens and step back before we start construction and analyze exactly what this is going to cost us," says Gorrill. "We don't know yet what those new costs will be, but this will help us to avoid sharing the same fate of other mining companies where they become so over-budget during construction that they start to have capital problems."
Exploration continues, with a focus on the Director and Grebes Nest veins, to determine future potential.
Prima Fluorspar Corp.
Still in its infancy, Prima Fluorspar's story begins with the acquisition of the Liard Fluorspar Property in northern British Columbia. Comprised of 7,500 hectares and 29 mineral claims, the Liard Property comes with historic data—60 drill holes revealing 20 showings, seven of which were major, and a non-NI 43-101 resource of 3.2 million tons, which the company believes has significant potential for expansion. Unlike Canada Fluorspar's deposit, Liard is a potential open pit.
With an IPO tentatively scheduled for November, Prima has been keeping busy. The summer 2012 work program included refurbishing and re-sampling historic trenches, and confirming previous, non-43-101 metallurgy results that produced high-quality acid-grade product of greater than 97% CaF2.