Member Highlights – Tronox Acquires Titanium Dioxide Business of Saudi firm Cristal
In April 2019, U.S.-Saudi Business Council (USSBC) Platinum member Tronox, a global mining and inorganic chemicals company, acquired the titanium dioxide (TiO2) business of Saudi joint-stock company National Titanium Dioxide Company Limited (Cristal). Cristal operates eight manufacturing plants in seven countries on five continents and employs approximately 4,100 people worldwide.
In addition to acquiring Cristal, Tronox has an option to acquire a 90% stake in a titanium smelter in the southwestern city of Jazan which has the capacity to supply up to 500 kilotons-per-annum of TiO2 slag and 220 kilotons of high purity pig iron. The Jazan smelter is currently owned by the Advanced Metal Industries Cluster Company Limited (AMIC), which is 79% owned by Tasnee (a listed Saudi joint-stock company) and 20% by Gulf Investment Corporation (GIC).
Dr. Willem van Niekerk, Senior Vice President, Technology and Saudi Arabia at Tronox, spoke to the USSBC regarding the $2.2 billion acquisition of Cristal, the company’s objectives for the Saudi market, its contribution to Vision 2030, and presented opportunities for Saudi businesses to partner with Tronox:
Recently, Tronox acquired the titanium dioxide (TiO2) business of Saudi joint-stock company National Titanium Dioxide Company Limited (Cristal) becoming the world’s “largest vertically integrated titanium dioxide producer.”
- What led Tronox to invest in Saudi joint-stock company Cristal and what potential does it see for its business in Saudi Arabia?
Under the leadership of Dr. Talal Al-Shair, Cristal became one of the world’s most technologically sophisticated manufacturers of titanium dioxide. It operated in not only Saudi Arabia but around the world – Brazil, Australia, the United Kingdom, France, and China – and in virtually every market segment of the titanium dioxide industry. The merger of Cristal and Tronox created the world’s leading, vertically integrated TiO2 company with unparalleled geographic scope as well as expertise in mining titanium ore, upgrading it to feedstock and manufacturing a full range of TiO2 pigment and high value titanium chemicals.
- Where do you see your commitment in Saudi Arabia benefitting the country?
Tronox is committed to increasing the global competitiveness of the Yanbu pigment manufacturing plant as a major exporter of TiO2 to Asia, the Middle East, and Europe. Yanbu was the world’s most cost competitive TiO2 manufacturer about 10 years ago. It has since given up its leading position, and it is Tronox’s intention to get Yanbu back on top. Under Tronox’s ownership, cost competitiveness will go hand in glove with the highest safety standards and product quality. Tronox is also fully committed to supporting the advancement of Saudi society through talent development and deployment of the Saudization program. Tronox has long helped to develop and promote Saudi youth and communities by creating direct employment opportunities and emphasizing training for career growth among its employee population. We have achieved record levels of Saudization, reaching up to 54% percent in our Yanbu plant in all specialties, be it Operation, Maintenance, Research and Technology, Technical Services, Engineering, or Project Development. We are very proud of our platinum Saudization position.
We are also committed to providing high quality TiO2 for the production of paints, plastics, and other products, which use TiO2, in Saudi Arabia with this locally produced, essential raw material. In addition, Yanbu is producing and supplying MGT (Metal Grade TiCl4) to the ATTM Titanium metal sponge facility located next to the Yanbu pigment plant. Titanium sponge is a precursor material in the manufacture of titanium metal. The ATTM facility is a world-class titanium sponge facility jointly owned by Advanced Metal Industries Cluster Company Limited (AMIC) and Japan’s leading producer of titanium metal, Toho Titanium Metal, Ltd., that is still in the process of ramping to full capacity.
In addition, Tronox is working with AMIC to commission a titanium smelter located in The Jazan City for Primary and Downstream Industries, which will enable Yanbu to be largely self-sufficient in feedstock raw materials. Through these initiatives, Tronox will be contributing to the creation and maintenance of hundreds of high paying, manufacturing jobs in the chemical and metallurgical industries. Assuming the Jazan smelter achieves certain operational criteria, Tronox will acquire a 90% ownership interest in the smelter.
- How do your operations in the Kingdom fit into Tronox’s growth and global strategy?
The Yanbu, and once commissioned Jazan, operations are central to Tronox’s strategy to be the world’s leading vertically integrated manufacturer of TiO2. Tronox is working hard to lower manufacturing costs at Yanbu so that pigment produced in the Kingdom can compete with Chinese chloride TiO2 that is currently being sold in Asia and throughout the Middle East. A strategic plan has been recently developed to transform the Yanbu plant into the most efficient and profitable TiO2 manufacturing facility by implementing Tronox best practices and making technology advancements. Tronox is committed to competing the transformation of Yanbu within the next five years.
- How easy was it for Tronox to complete the steps involved in investing in a Saudi company?
In the two years that Tronox has operated in Saudi Arabia, we have noticed further improvement in the governmental agencies that support and interact with our businesses. One example is the evolution of the former Saudi Arabian General Investment Authority (‘SAGIA’) into the new Ministry of Investment or ’MISA’ as it has become known. Tronox feels that the new MISA is developing into a true business partner able to support Tronox’s growth and development in the Kingdom. The steps undertaken by MISA and other key ministries to help companies like Tronox during the COVID pandemic demonstrates their commitment to the success of our operations there.
In addition, the RCJY (Royal Commission of Jubail and Yanbu) is an extremely valuable strategic business partner for Tronox, assisting us to ensure that the Yanbu operation achieves its status as a world-class operation and that the Jazan smelter is successfully commissioned.
- What are some of the opportunities for Saudi businesses to partner with Tronox?
Our current operations at Yanbu and planned future operations at Jazan will create many opportunities for Saudi businesses. Chemical and smelting operations require significant support services, everything from sophisticated testing equipment to maintenance and construction to catering and uniform cleaning. In addition, both operations generate noteworthy co-products: caustic soda and hydrochloric acid at Yanbu and pig iron at Jazan. These co-products create opportunities for Saudi businesses that can help market and sell co-products, both within Saudi and for the export markets as well.