Fluorine is an element that cannot be avoided in the development of semiconductors, 5G, military industry, and aerospace, which is the only mineral resource in the industry that can provide a large amount of fluorine. Having high-grade fluorite resources equals the opportunity to revalue its value. However, fluorite is a non-renewable resource. Many countries have established and implemented a relatively complete strategic mineral resource reserve system and system. To protect fluorite resources and achieve sustainable development, China has also listed fluorite minerals as strategic resources and has successively issued a series of regulations to strengthen management. In the future, more countries will implement a fluorite strategic mineral resource reserve system. It is expected that the global fluorite will face tight supply in the future, and the market price can be expected to rise.
National Strategic Resource Reserves, The Scarcity of High-Quality Fluorite Mines Is Highlighted
The non-renewability of fluorite, as well as its wide range of uses and importance, make it a scarce mineral resource in the world. Countries around the world, especially developed countries, have adopted strong safeguards for fluorite resources. For example, the US government lists fluorite as a strategic material and implements a policy of protective mining and import-oriented. To ensure the national economic security, national defense security, and the development needs of strategic emerging industries, China has included fluorite in the strategic mineral catalog in the "National Mineral Resources Planning (2016-2020)" as key objects of mineral resources to control and manage.
As of the end of 2019, the world's total reserves of fluorspar were 310 million tons, mainly distributed in Mexico, China, South Africa, Mongolia, and Spain, among which, Mexico, China, and South Africa are the countries with the richest fluorite reserves in the world. In 2019, Mexico's fluorite resource reserves accounted for 68 million tons, accounting for 21.94% of the world's total reserves. The reserves of fluorite in China and South Africa are 42 million tons and 41 million tons, respectively, accounting for 13.6% and 13.2% of the total global reserves, ranking second and third in the world. However, the United States, the European Union, Japan, South Korea, and India have almost few fluorite reserves, forming structural scarcity.
Although China's fluorite resources are rich in reserves, fluorite mines are mainly associated fluorite mines that are difficult to mine and have poor economic efficiency, exceeding 50% of the total, and high-grade rich ore accounts for less than 10% of the total. At the same time, China's fluorite mines have insufficient investment in geological exploration work, which has led to a small number of high-level reserves with a higher degree of exploration.
The Growth Rate of Fluorite Consumption Is Faster Than the Growth Rate of Production, And the Supply Exceeds Demand
From 2010 to 2019, global fluorspar production generally showed a U- shape. In 2011, global fluorspar production reached 9.08 million tons, an increase of 29.7% year-on-year, which was the peak of fluorspar production in recent years; 2011-2018, global fluorspar production The output of fluorite has fluctuated and declined; in 2019, the global production of fluorite has increased, from 5.8 million tons in 2018 to 7 million tons, a year-on-year increase of 20.69%.
From 2010 to 2018, global fluorite consumption showed a trend of volatility and decline. In 2011, global fluorite consumption reached 9.73 million tons, which was the peak of global fluorite consumption in the past few years. By 2016, under the situation of weak demand and overcapacity in the fluorite industry, global fluorite consumption dropped to 578 10,000 tons, a year-on-year decrease of 16.83%. By 2019, global fluorspar consumption reached a record high, reaching 13.04 million tons. The new fluorspar consumption was mainly contributed by Pakistan.
China's Fluorite Production Capacity Shrinks, Causing Industry Supply Gap Bigger
In 2019, China's fluorspar production accounted for 57.14% of the global fluorspar production, which has an important position in the world. According to customs statistics, China's fluorite exports grew rapidly from 2009 to 2011, from less than 270,000 tons to 720,000 tons, with a compound annual growth rate of 63.3%. However, due to the disappearance of the domestic demographic dividend, the reduction of trade prices, and the pressure on environmental protection, the export volume of fluorspar continued to decline from 2012 to 2018. In 2018, the export volume fell to 404,000 tons, a decline of nearly 20% compared with 2015. China's fluorspar has changed from a net exporter to a net importer.
In particular, with the smooth introduction and strict implementation of the "Fluorite Industry Standard Conditions" in 2019, the environment of the fluorite industry has improved, in which it has moved towards centralized, large-scale, and standardized operations. The integration of fluorite resources and the increase in industry concentration have become inevitable trends, the country strengthens its control over the fluorite industry. It is expected that the supply of the domestic fluorite industry is about to shrink further in the future, and the output will continue to decline.
The downstream application of fluorite is very extensive, and fluorine chemical is its largest application, accounting for about 52%. And fluorite is used in traditional metallurgical industries such as the steel industry and electrolytic aluminum, accounting for 20% and 15% of total demand respectively. Besides, it is also used in the building materials industry, accounting for about 10% of the demand for fluorite. Some other emerging material fields account for 3% of total fluorite demand. The growth rate of downstream demand will exceed the growth rate of fluorite supply. China, which plays an important role in the global fluorite trade, has implemented a policy of restricting fluorite exports in recent years.
With the rise of emerging fields, the global fluorite consumer market is expected to hit another peak. However, as some domestic production capacity has eliminated, the supply of fluorite has been reduced and fluorite prices are expected to increase. Of course, in the current complex international environment, correct strategic deployment provides directional guarantees, in which natural resources with strategic significance have also become the capital of the game between countries.
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