The Economics of Bentonite, 11th edition 2008

World demand for bentonite is growing at around 4%pa, largely driven by its growing use in industrial applications such as foundry sands and iron ore pelletising. The market for bentonite in foundry applications has moved from industrialised regions such as Europe and North America to industrialising regions such as eastern Europe, Latin America, the FSU and, particularly, China and India. Global output of iron castings has increased by 5.1%pa since 2000. Increased demand for steel from the same industrialising countries has put pressure on the supply of iron ore; as supplies of direct shipping ore diminish, a higher proportion of iron ore shipments are in the form of pellets.

Demand for bentonite and fuller's earth in pet litter is largely confined to North America, Europe and Japan. It is a mature market that is largely dependent on consumer marketing and the weather and it is predicted that growth will be limited to 1%pa for the next few years. Demand for bentonite in drilling muds is closely linked to drilling activity, especially in the USA, where this is a major application for the clay. High prices for oil and gas encourage exploration and the concomitant increased use of bentonite.

The extraction, processing and marketing of bentonite and fullers earth are increasingly dominated by a small number of corporate groups after a wave of mergers and acquisitions in recent years. Leading producers such as AMCOL, S&B Industrial Minerals and Sd-Chemie now operate across the world. The USA accounts for around 60% of fuller's earth output and 34% of bentonite production but in recent years output of bentonite in China has been increasing and now accounts for at least 20% of the global total.

New bentonite operations are scheduled to come on stream in Australia, Brazil, India, Morocco, and Turkey to meet growing demand in Asia and Latin America. Because transport costs form a significant part of the final price to customers, markets are typically supplied from local or regional sources of production. Less than 25% of bentonite and fuller's earth production is traded internationally and most of that which is traded is destined to say within the region.