Orlando, FL 7/10/12 (StreetBeat) -- Tronox Limited (NYSE:TROX), a global leader in the titanium products industry, today issued commentary regarding its minerals sands business in response to a recent negative market assessment issued by a competitor that the company feels may be being inaccurately associated with its business operations and market position.
Tom Casey, Tronox chairman and chief executive officer, said: "Yesterday's decline in stock price occurred without the issuance of any company-specific news. We can only presume that Tronox's stock price was impacted by a forecast issued yesterday by another mineral sands producer. While we cannot comment on forecasts of competitors, we believe it is necessary to clarify our views on our mineral sands business, particularly the aspects of it that differentiate us as the world's largest vertically integrated producer of minerals sands and pigments."
Casey continued: "All of our 2012 forecast mineral sands sales other than zircon, where we are seeing sales volume reductions of 25-40 percent, are committed at prices that are above expectations and at volumes that are 4 percent higher than our original 2012 budget. We think that pigment producers, as we acknowledged in our press release June 29, 2012, are seeing somewhat lower demand, and may be switching more of their feedstock requirements from the higher-priced synthetic rutile to lower priced slag because the input cost savings outweigh the reduced production efficiencies in a soft demand market."
Tronox's primary mineral sands operations include:
Synthetic Rutile – With the combination Tronox and Exxaro Minerals Sands, Tronox now uses nearly 100 percent of it synthetic rutile production as feedstock for its pigment operations. This high quality, low-cost ore, sourced from our mineral sands business, enables Tronox to produce pigments at a lower cost relative to pigment producers who purchase synthetic rutile from mineral sands suppliers. We are not as dependent as others on third-party purchases of our synthetic rutile product.
Titanium Slag – Demand for our titanium slag is up as some pigment producers are substituting slag for higher purity, higher cost rutile and synthetic rutile. Despite shortfalls in zircon sales our total mineral sands sales for 2012 is 4 percent higher than our expectation set at the start of the year.
Zircon – Demand for zircon continues to be soft relative to a year ago but is not deteriorating sequentially.
Casey concluded, "We continue to view our stock as significantly undervalued and believe the repurchase of our shares presents a compelling and optimal way to return capital to shareholders. As we said in our most recent press release, we expect to be significant purchasers of our shares for as long as and in amounts that we determine will be value creating for our shareholders. We are committed to repurchasing up to US$150 million of our shares prior to a debt issuance, which we intend to do as soon as practical. Following the debt issuance, we plan to make further decisions regarding the form of additional return of capital to shareholders, including continuing to repurchase our shares at value enhancing prices and/or returning cash in the form of one or more special dividends."
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