PPG Industries (NYSE:PPG) announced today that it has entered into a technical collaboration agreement with Montreal-based Argex Mining Inc. (TSX-V:RGX) (FSE:ASV) (OTCBB:ARGEF) to utilize PPG’s existing technology and know-how relating to the manufacture of titanium dioxide (TiO2) pigment for paints and coatings applications. The TiO2 is intended to be compatible with various end-use applications for PPG and would be produced by Argex. Terms were not disclosed. “PPG and Argex plan to combine efforts with the goal of developing a titanium dioxide product that can meet conventional standards for interior and exterior paint applications,” said Charles F. Kahle II, PPG chief technology officer and vice president, research and development, coatings. “This strategic initiative offers PPG the opportunity to leverage our expertise and secure an enhanced supply of this critical raw material. Volatile pricing for titanium dioxide continues to be an important issue for the company.” Roy Bonnell, Argex president and chief executive officer, said, “PPG’s decision to collaborate closely with Argex as both a technical and commercial partner is a further validation of our process and the suitability of the Argex TiO2 pigment for commercial use. PPG’s involvement will assist Argex greatly in our stated goal to advance rapidly to production.” The agreement provides for the negotiation of a purchase and supply agreement between Argex and PPG based on the successful development of the treatment technologies. Both companies have agreed to certain terms of mutual exclusivity during the negotiation period. PPG previously manufactured titanium dioxide using the chloride process at its Natrium, W.Va., chemicals plant and sold titanium dioxide pigment for coatings and other end-use applications. Titanium dioxide is a raw material widely used in the paint and coatings industry as pigment for its hiding, durability and whiteness characteristics. About Argex Mining Inc. Argex Mining Inc. has recently transitioned from a mining exploration company to a near-term producer of commodities that the world needs: titanium dioxide, iron and vanadium pentoxide. With a primary goal of advancing rapidly towards production, Argex has adopted a simple and low risk strategy for the scale-up of its proprietary process that allows it to produce high purity TiO2 directly from its 100% owned deposit. Additionally, the Company owns 100% of the Mouchalagane property, which is a large Labrador Trough iron ore property that represents further potential upside for the Argex shareholders.
Jefferies analysts note that recent construction spending data indicates a cycle rotation away from construction-exposed names and toward industrial- and durable goods-levered firms could be playing out.