Grass Roots Kaolin Plants -- Can They Be Justified? ? Introduction

Engelhard Corporation is one of the leading producers of kaolin based products in the world, having acquired the assets of Freeport Kaolin company in 1985. Much of the production technology used in the kaolin industry was pioneered by Engelhard and Freeport, including Ultraflotation for improving product brightness, delamination to produce kaolin platelet products, calcination to produce ANSILEX® high opacity titanium dioxide pigment extender and pipeline slurry operations to economically transport kaolin from the mine to beneficiation facilities. Engelhard traces its roots back to 1870 when the Edgar family discovered kaolin behind their property in Bonhamtown, New Jersey. Today the company produces the broadest line of premium coating pigments with extensive sales throughout the world. The international scope of the company's business has led Engelhard to evaluate kaolin deposits throughout the world as possible grass roots production sites. Most kaolin products are used in the paper industry -- the largest volume end-user 80% of the total market -- as filler and coating pigments. Lower volume specialized applications include fillers and reinforcements for plastics and TiO2 extender pigments for paints and coatings.