Obviously there is some truth, some supposition and some...

Obviously there is some truth, some supposition and some subjective view in forecasting.

The truth is; a European slush fund has proposed funding Eramet up to 26M euro to build a pilot plant and prove hydrogen substitution for coal reductant in the slagging process (https://kalkinemedia.com/au/australian-shares/post-transformational-2019-mrg-metals-enters-2020-on-a-positive-note) Similar plans to replace coal with biochar in their manganese process, carbon taxes and subsidies doing their job incentivising investment in lower carbon production processes. Not sure where you got "100's miliions" capex from, and the hydrogen produced from ultra-cheap Norwegian hydro power will be ultra cheap even accounting for significant energy loss cracking water into hydrogen on site at the Tyssendal plant.

Also true that some Ti-slag producers without access to cheap renewable electricity will not be able to lower carbon taxes will take a margin reduction equal to the carbon tax (assuming there is no 'developing world' carbon tax allowances). The logical superstition is companies like Eramet will invest in reducing CO2 where the cost (capex D&A + opex) is less than just wearing the carbon tax and trucking on. I assumed US$75/t carbon, you quote some European forecasts E75-10o over the next 10 years... who knows, a lot of moving parts with a carbon tax, inflation, global trade etc. We both agree that carbon taxes increase the cost for some producers between very little (Eramet) to a maximum of the embedded carbon at some 'rational' future carbon tax rate.

Not sure how Minviro accounted for the pig-iron co-product from Ti-Slag but cynically I doubt it was fairly treated given one eye on their paying client's requirements. Agree, Syn-rutile which is already high cost by comparison will be hit hardest with carbon taxes. Iulka is virtually the only syn-rutile producer and a price taker in the high-TiO2 feed market. Iluka will suffer margin compression with carbon taxes (from a very profitable starting position as you point out) and keep selling SR until the price falls below their min margin requirements.

I think we are in agreement carbon taxes will add various extra costs to upgraded TiO2-feed depending on what economic carbon mitigating inputs are available across the sector. Rutile is the beneficiary against upgraded feed somewhere between a little and maximum of the embedded carbon tax. You mention RIO iron-ore business, that 65% magnetite should replace 60% haematite ore for 'best in class' but that misrepresents what the carbon tax is trying to achieve. World cannot afford to replace production with the 'best in class' alternative because the economic cost, inflation and supply shortage would be crippling. The idea is clearly those changes which are economic within a modest carbon tax be deployed, thus reducing CO2 emissions, and those that can't won't. Changes will be sensibly made through technology, innovation and capex availability driven by economic rationalism. As it should be, incentivise the market to do it's thing...

That brings me to the elephant in the room, the fundamental driver of TiO2 feed prices, which is supply and demand. I'm sure TZMI have included the existing carbon tax in their price forecasts, though not exactly how much of course. Below is a TZMI sourced price chart which I have roughly extended from 2018 to now based on reality, and extended based on TZMI forecasts from SVM Scoping Study Dec'21 and SFX BFS Mar'22. Also added in your rutile price forecast from your much upvoted recent post https://hotcopper.com.au/posts/60239068/single.


History proves rutile is joined at the hip with upgraded TiO2 feed with a variable premium related to rutile specific supply-demand imbalances I'm sure. The price of upgraded TiO2 feed is determined by input costs including carbon taxes, but mostly and ultimately the availability and price of ilmenite feed. Fortunately for Ti-Slag producers, ilmenite feed while tight right now due to supply disruptions and global spike in demand via inventory re-stocking and over-stimulus, looks like exploding higher by mid-to late 20's. Even if long-term 50% TiO2 sulphate ilmenite rises from ~$200/t to $250/t input cost to Ti-Slag producers only rises <$100/t Ti-Slag. If there is an over-supply in ilmenite feed, the Ilm price will be below $200/t not above it. The price of ilm feed to Ti-Slag (or direct to sulphate route pigment which accounts for approx 50% global pigment production) sets the limit of rutile pricing (+ a certain % of carbon tax as discussed).

Rutile will be substituted out of pigment production if prices stay too high for too long. Similar reason I am suspicious of $300/t price premium for 'bagged rutile' into the welding market over bulk rutile, that premium (less higher bagging and transport costs) will likely be arbitraged away. IMO, the future price of rutile can be better forecast from a bottom up TiO2 feed industry analysis of existing production reduction from lower grade/clsoures against new mines or expansions of existing operations. Lots of balls in the air here, I am keeping a close eye on where they land and what supply impact they will have on the market. A market dominated by the big 3 (Tronnox, Iluka, RIO) who do not willingly give up market share, but which are going to be pressured by number of large expansions and new players...

Kenmare completed a 175kt TiO2 unit expansion in Mozambique last year, STA will complete 90kt TiO2 unit Coburn this year, SFX is close to developing Thunderbird, which stage 1 adds 300,000t of Ti-Slag to the market and another 200,000t by Stage 2 later this decade via new Ti-Slag plant built by their JV partner. So many moving pieces, so many aspiration new miners, fascinating to watch unfold.