A small part of the solution to WAK's problem is to produce K99F, if WAK can, but the extra processing cost and the increased waste percentage may occasion K99F to have a low margin of profit, because Brazilian and USA secondary kaolin deposits have a competitive edge, and suppliers from there will determine the price.
The nub of the problem is unique to the continuous-filament fibreglass subsector, because the substantial issue is to minimise thread (filament) snapping. Fine-grained hydrous undelaminated kaolin used in subsectors of the paint history do not have a filament-breaking problem, and hence can be less demanding in respect to the residual specified in the particle-size distribution specifications. This is the market to which management would like fine-grained product to go. In Andrew Sorenson's words, "The requirement for fibreglass particle size centres mainly on the fraction of material that is retained on a test sieve and typically needs to be less that 1% retained, known as residue testing."
WAK's K99 plant was built to a K99F product for fibreglass that allowed the test sieve to be agitated when measuring residual specified as required to be less than 1%. To get that result without agitating the sieve, as is now specified, is the problem - it halves the output and increases the kaolin discarded.
In my view, the substantial resolution of the problem is for WAK to expand its market for K99 product that it can easily produce at a good profit, and let the astoundingly high purity of the kaolin achieve a premium price. That market would be one that specifies high levels of glossiness and whiteness. Mattte (non-glossy) finishes suit calcined kaolin, and non-white end products can be made from lower grade kaolin.
Managements' plan is substantially to do that, which includes supplying bog-standard K99 product as input to offshored beneficiation performed by partners. This offshored beneficiation would include delamination, and the inclusion of additives to produce so-called engineered kaolin. Distributors can do this to specification, because buyers prefer to buy a solution, not individual inputs to it.
The April 2024 Presentation covers much of the foregoing well under the caption, Offtake Partners, so I have cut and pasted what follows:
- Stanco International Corp – In August 2023 WAK signed an expanded offtake agreement with Stanco. The original 2020 agreement had supply totalling 338,000 tonnes over 6 years, however the new agreement aims to bolster that by targeting additional strategic markets within the Asia-Pacific region.
- Ceramic Market Partner – WAK is currently negotiating an MOU with a major kaolin supplier based on China. This MOU, if executed, will target volume in the Chinese ceramics market with a dominant domestic supplier.
- Paper Market Partner –Without the requirement for additional capital, WAK is seeking to enter the paper market in China with premium grade, fine particle size kaolin via a Chinese company who can modify the product to suit Paper market specifications. Initial trials have been completed and paper market customer product evaluations will follow.
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