• Dupont is the current market leader of the Ti02 market with a 38% market share (capacity of 325,000 tons).
• Dupont is the sole Ti02 producer using theilmenite chloride technology and possesses proprietary technology regarding the licensing of ilmentite chloride process.
• From data in 1970, Dupont was the largest producer in terms of ilmenite chlorideproduction (60.0% of Ti02 chloride production).
• All other Ti02 producers use either sulfate production or high-grade chloride production and would either be affected by the following problems:o 54% increase in price of rutile ore from late 1960s to 1972, making production of high-grade chloride more costly compared to ilmenite chloride production; and
o Imposition ofenvironmental protection legislation for sulfate chloride production leading to increased capital expenditure.
• Imports which were reduced significantly following a devaluation of US dollar andcontinued tariff on Ti02.
• Ti02 is a concentrated market (9 suppliers with 90% of the market and 10% imports). However, the market is concentrated with the 2 largest suppliers, Dupont and NL. The othersuppliers each constitute less than 10% of the market and pose little competitive constraints on Dupont.
• NL, the next largest producer, is unlikely to be a strong competitor to Dupont. NL iscomparatively less profitable, heavily debt-financed (35% debt), and more sensitive to economic fluctuations. NL is also heavily reliant on pigments (20% of total sales and 33.3% of total operating profit)and concentrates on sulfate process (84.3% of its 1970 Ti02 production). Therefore, NL is likely to be adversely affected by recent problems involving sulfate production.
Barriers to entry toilmenite chloride production
• Dupont is the only producer that possesses operational knowledge to make ilmenite chloride production economically viable. Other producers will have to develop such...