Baryte prices get a boost as oil searches pick up pace globally

Baryte prices get a boost as oil searches pick up pace globally

Aworldwide spurt in oil exploration activities, including 10-15% growth in India, has resulted in the steady price increase of barytes— high-density minerals used in deep sea oil drilling.

International prices of barytes, commonly known as “drilling mud", have escalated 30% in the past two years to reach $50 (Rs2,060) a tonne.

Demand is predicted to stay strong in the next few years as the search for oil expands against its global price high of $75 a barrel this week.

India exports more than half its production of baryte ore. Strong demand from the US and West Asian markets, and growing oil hunts by government-owned and private players, such as the Oil and Natural Gas Corp. Ltd and Reliance Industries Ltd, have prompted state mining enterprise Andhra Pradesh Mineral Development Corp. (APMDC) to plan three joint venture firms to enrich low-grade ore for exports.

IBC Ltd, along with two other mining companies—Gimpex Ltd and Trimex International Ltd—will invest between Rs30-40 crore each to set up plants in separate joint ventures to refine low quality ore for use in paints and other industries. About 90% of barytes are used for oil exploration worldwide.

APMDC will give access to low-grade ore in exchange for 11% equity in each company. There are nearly two million tonnes (mt) of these deposits at the Mangampeta mine in the state, said V.D. Rajagopal, its managing director.

“Firm prices and strong demand from companies will keep the momentum of demand of barytes promising," said K. Rajamohan Reddy, managing director of IBC Ltd, which exports between 200,000 and 300,000 tonnes annually.

India has a reserve of 70mt of barytes, with a majority under the monopoly of APMDC, which controls the world’s largest single deposit source in the state’s Kadapa district. The corporation mined about 780,000 tonnes last year.

India’s total baryte production is about one million tonnes a year, half of what China produces. But mining players say mineral taxes, together with inconsistent supply from the Andhra company, results in higher costs and creates artificial demand. At present, India does not import barytes, but production ebbs during the monsoons when mine pits get flooded and work comes to a temporary standstill.

According to an ONGC official involved with drilling operations, the company faced a huge crunch of the mineral three years ago and had to resort to imports and use substitutes such as calcium chloride. ONGC requires more than 100,000 tonnes of baryte a year. The substance, a so-called inert mineral for its chemically nonreactive properties, is used in creating counterpressure while drilling.

This shortage, said Pradeep Koneru, executive director of mining and export company Trimex International Ltd, can be tackled by topping up production volume and bringing in long-term players to undertake efficient mining.