M.

Rifki Widya Hariadi (PAMA)

ASrMP Batch 1 - 2015

E.I. du Pont de Nemours and Co. : Titanium Dioxide

E.I. du Pont de Nemours and Co. is a 17 th largest manufacturing corporation in the US
in 1971 with reported earnings of $357 million on sales of $4.4 billion which
diversified its product as manufacturers of fibers, plastics, industrial chemicals and
other specialty chemical products. Du Pont organized in to 10 industrial departments
of which pigment department was the second smallest department with sales of
approximately $180 million in 1971 and was responsible for Titanium Dioxide (TiO 2)
TiO2 is a white chemical agent used in the manufacturing of paints, paper, synthetic
fibers, plastics, ink and synthetic rubber. Acts as a whitening and opacifying agent
and has no commercially satisfactory substitute.
Between 1970 and 1971, a sudden shortage of rutile ore is occurring made the price
rose from AUD 65 per ton in 1960 to AUD 110 per ton in 1972. The economics of
high-chloride technology were altered radically. While it happening sulfate process
plant were force to make a major expenditures to comply with newly enacted
environmental protection legislation in the same period.
TiO2 is produced from either ilmenite, rutile ortitanium slag. Titanium pigment is
extracted by using either sulphuric acid (sulphate process) orchlorine (chloride
route). The sulphate process employs simpler technology than the chloride route and
can use lower grade, cheaper ores. However, it generally has higher production costs
and with acid treatment is more expensive to build than a chloride plant. But the
latter may require the construction of a chlor alkali unit.
Excess demand created capacity expansion opportunities for TiO2 producers. The
competitors had two alternative for expansion: upgrading marginally profitable
sulfate and rutile chloride plants or building ilmenite chloride plants. This alternative
require large scale facilities and extensive experience to be made economically
viable. The risk is rising up while competitors might simultaneously chose to add
capacity and flood market even though competitors only assumed risk of technical
failure, delayed startup are usual.
The strength of du Pont compared to others are easy access to ilmenite ore,
possessed operational knowledge of ilmenite chloride process making production
economically viable, exorbitant price hike in rutile ore had negligible impact on Du
Pont, other players were forced either to shut down or move to chloride ilmenite
process due to the transition in TiO2 market. So in my opinions in the matter of
leading, what supposed du Pont do are:
1. Expansion of capacity was premature and designed to exclude competitors from
expansion.
2. The expansion was designed to capture all the projected growth in demand,
foreclosing any opportunities for competitors.
3. Exploitation of its cost Easy access to ilmenite ore advantage to keep prices low
so competitors couldnt expand.

M. Rifki Widya Hariadi (PAMA)

ASrMP Batch 1 - 2015

But will the business sustain? If accepted the TiO2 growth strategy will make Du Pont
come up with massive capital expenditure program that reach half billion USD by
1985. But the economic is growing (at the moment), the rise of infrastructure
business, and the need of quality papers made the need of titanium dioxide might
sustain. So if Du Pont managed to lead the market, it will seize the moment.s