Here’s Why ASX Mineral Sands Stocks Are Gaining Momentum & Our Top 3 Picks

Mineral sands are naturally occurring materials that are made up of heavy minerals like zircon, ilmenite, rutile, and more. These minerals are usually found in sand deposits along the riverbeds, coastlines, and even under sea beds. Mineral sands are formed over a natural process that spans millions of years. These processes include erosion and weathering to form crystals. When rocks containing these minerals break down (due to severe atmospheric conditions), these minerals are carried by the flow of river water and are eventually deposited along the coastlines. Over time, the lighter materials wash away, leaving behind concentrated areas of heavy minerals. These are the mineral sand deposits that we extract today.

These valuable resources, which include zirconium (ceramics and electronics), titanium oxide (essentially in the form of rutile and ilmenite, also that is used in paints and coatings) are widely used in industries ranging from ceramics and paints to electronics and aerospace. As global demand for these minerals rises, certain ASX-listed mineral sands companies are gaining gradual momentum. They offer lucrative investment opportunities to investors looking to expand their portfolio and know more about the mineral sands stocks.

Why Mineral Stocks Are on the Rise

The need for mineral sand is increasing at a global level due to several key factors.

• Rising industrial demand – Mineral sands are critical to the production of ceramics, paints, electronics, and other high-tech products. When the need for these minerals rises in these specific sectors, then it is unavoidable to see an industrial-level demand for these minerals.
• Scarcity of the minerals and supply chain – Often hindrances in supply chain management of these minerals have made it harder to obtain these minerals. This will ultimately drive up the price. For example, titanium dioxide prices have seen a sharp increase in recent years due to tighter supply and higher demand.
• Environmental concerns – Mineral sands are becoming more valuable now than ever because the world is looking towards a possible shift to greener technologies at a massive rate. Titanium, derived from rutile and ilmenite, is used in lightweight and high-strength applications in industries like aerospace and electric vehicles (EVs).
• Energy efficient – Mineral sands are considered to be energy efficient because the industries are working towards reducing their carbon footprint and these mineral sands stand as a top choice because of their ability to produce less carbon compounds.

Factors That Drive Market Trends for Mineral Sands

The market trends of the mineral sand stocks are highly influenced by various factors.

Increase in Construction and Manufacturing

With every country on the globe working towards urbanization and industrialization, it has created a huge impact on the need for raw materials. Mineral sands are essential in the construction and manufacturing of machinery. Countries like China, India and are particularly focused on developing large infrastructural projects in the upcoming years. This is expected to drive the demand for mineral sands significantly.

Electric Vehicles and Aerospace

As electric vehicles have time and again proved that they are efficient replacements for traditional fuel-based vehicles, the demand for titanium as a primary component in EVs has risen. As it is lightweight and its a reasonable strength-to-weight ratio, it is a fundamental material in the production of aircraft. Titanium also offers better fuel efficiency and longer battery life in EVs.

Mineral Processing

New advancements in mineral separation and refining techniques have made it easier to extract these valuable resources while minimizing environmental impacts.

Top 3 ASX Mineral Sands Stocks to Look Out for

It is established that mineral sands are gaining traction, here are the top two ASX-listed companies that are capitalizing on this trend.

Iluka Resources (ASX: ILU)

As one of the largest producers of zircon and titanium dioxide products on the ASX, this company is a significant player in the mineral sands space. The company operates globally with the majority of its production expanded in Australia, South Africa, and the U.S. Iluka Resources have shown a total of $1238 million as their mineral sands revenue for FY23.

As their annual reports state, they have a positive net cash flow of $225 million as of December 2023. The company’s Balranald Project in New South Wales is set to play a crucial role in boosting production capacity. They are well-positioned to gain from the demand for ceramics and construction industries, particularly in China and India. Their mineral sands EBITDA margin stands at a stable 47% during FY23.

Diatreme Resources (ASX: DRX)

An Australian mining company with a primary focus on the exploration and development of mineral sands. One of its key projects is the Galalar Silica Project in North Queensland, which is positioned to become a significant supplier of high-quality silica for various industries. Their total revenue accounted for the financial year of 2023 was around $14.3 million and their total net profit after tax was stated at around $10.3 million for FY23. They show significant potential in the mineral sand mining sector because of their stable performance throughout the years.

Astron Corporation (ASX: ATR)

A key player in the Australian mining sector with access to high-quality mineral sand deposits. Astron Corporation Ltd is a unique option within the sand and mineral sands sector, known for its focus on zircon, titanium dioxide, and rare earth production. The company primarily operates in Australia and Africa, targeting industries that demand these minerals for manufacturing electronics, ceramics, and other high-tech applications. With a consistent performance of 26.47% through 2024 and a massive 239.47% in the past five years. An important fact to note here is their Phase 1 operations in 2023, their post net present value was assessed at $852 million and it jumped to a whopping $2.2 billion in the next phase. It is currently a profitable stock to watch out for.

Conclusion

The rising demand for mineral sands at a global level has made these companies well-positioned to capitalize on these trends. Driven by global infrastructure expansion and technological advancements, mineral sands will remain a key commodity for investors to watch. For those looking to capitalize on these trends, the mineral sands sector presents a compelling opportunity. With high demand, limited supply, and increasing technological reliance on these materials, ASX mineral sands stocks are poised for significant growth in the coming years.

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