Tantalum Resources
Tantalum is a rare metal with blue-gray color. The properties of tantalum are corrosion resistance, relative hardness, high melting point and thermally conductive. It is a major component for electronic capacitors. Therefore, it exists in our smart phones, our computers and other electronic devices. According to Global Advanced Metal (GAM), the supply of tantalum mainly comes from six different sources:
1. Mining operation of minerals containing tantalum.
2. Artisanal and small scale mining of minerals containing tantalum.
3. Synthetic concentrates produced from tin slags and accumulated tin-mining wastes.
4. Material from inventories within the supply chain.
5. Intermediate materials such as tantalum oxide, K-salt and metal.
6. Recycling of consumer and processor scrap and other secondary materials.
This article will mainly focus on the resources come from tantalum mining operations. Tantalum accounts for about 1ppm to 2ppm of the weight of the Earth’s crust. Among all discovered tantalum minerals, eight of them are commonly used in the tantalum industry.
In 2008H1, tantalum concentrate accounted for 72% of the world’s tantalum production (inclusive of all sources of tantalum production), but it reduced to 22% in 2010H2. For example, Marropino Mine in Mozambique, once the second-largest tantalum mine in the world, was closed in 2009 due to world economic recession. The company’s share price decreased as a result of the economic recession, it had not enough investment to maintain the mining operation.
Demand for Tantalum
Tantalum can be used solely or used in the form of an alloy after blending with other metals. Tantalum is used in a diverse range of products according to its physical and chemical properties. According to the British Geological Survey, 24% of tantalum was used in producing conductors in 2010. It is observed that Tantalum is more evenly used among different products in 2010 than in 2004. Larger proportions of tantalum are used in producing tantalum metal, tantalum chemicals and metallurgical grade powder and metal per 2010 data.
The demand for tantalum is affected by its price rather than relying on the demand for its by-product. Bill Millman, Divisional Director of Quality and Technology of AVX Corporation, stated it clearly that capacitor manufacturers’ demand for tantalum is low due to high prices. Therefore, manufacturers would choose alternative materials for capacitor production although tantalum has more efficient properties. Daniel Perisco from Kemet, a worldwide capacitor manufacturer, also opined that the capacitor market is hardly able to absorb a tantalum price over $100/lb.
Supply of Tantalum
Mining companies are estimated to supply 50% of the world’s tantalum. According to U.S. Geological Survey, world production of tantalum kept increasing from 1999 to 2005 and peaked at 4,278,400 pounds per year. From then on, world production of tantalum fluctuated with a decreasing trend. The drop in supply from 2009 to 2010 is due to closure of several large mines as a result of world economic recession. The world production of tantalum in 2011 is 1,769,600 pounds.
World tantalum production 1999 - 2011
Apart from world economic conditions, political conditions of tantalum supplying countries could also affect tantalum supply. Some ore mines of tantalum are located in developing countries such as Mozambique, Rwanda, Congo or other African countries. As there is continuous political unrest in Africa, this region is rather politically unstable. Political instability affects economic activities which include mining operations. Moreover, mining companies, such as EMDSC of Ethiopia, are state-owned. This makes the tantalum mining activities highly affected by the government policies. The tantalum price increased from 2008 to 2009 as backlash against conflict tantalum and political instability in the Middle East and Africa kept away buyers from new resources in this region.
The major mineral resources of tantalum in the world are located in Australia, Brazil, Canada, Mozambique and Rwanda. Among these countries, Brazil is the leading producer of tantalum in 2011. It produces around 23% of the world’s tantalum. Mozambique and Rwanda produce 15% and 14% respectively. Australia ranked fourth and its production accounted for 10% of world’s tantalum production.
The mined tantalum resources are usually measured by the weight of tantalum pentoxide (Ta2O5) contained in the ore. It is estimated that around 40% (129,274 tonnes of Ta2O5)) of the worlds tantalum resources are located at Brazil. Australia comes second and has around 21% of the world’s tantalum resources.
Tantalum Price
Tantalum is commonly traded in three forms including tantalum ore and concentrate, tantalum oxides and salts, and capacitor-grade tantalum powder. The price of tantalum is neither stable nor public because the metal is not openly traded in the market and the trading price is determined by individual suppliers and buyers. Moreover, the price is related to the demand of the metal and end-products. For example, H.C. Starck, a processor of tantalum, claimed that its profit growth in 2011 is highly attributed to its tantalum and niobium division as a result of great demand for these two metals from the electronics industry. The price of mined tantalum can fluctuate to a great extent:
Ram Resources: The price of Ta2O5 in December 2010 ranged from US$80-$90/lb
Roskill: The price of Ta2O5 in mid 2009 was about US$35/lb
tantaluminvestingnews.com:
1. In January 2008, the price for tantalite basis 30% Ta2O5 was $45-47/lb. On Nov.1, 2011, the price range was $120-130/lb.
2. The price of Ta2O5 in the first few months of 2012 stayed in the range of US$95-$105/lb
Conflict-Free Tantalum
Although the price and demand for tantalum is highly unpredictable, it is worth looking into an issue that might affect the tantalum market in the future. Conflict-free tantalum is a topic that has evolved in recent years. Conflict-free mineral means mineral products that are obtained in a legal and ethical way. For example, the mineral should be obtained without forced labour or child labour which might be commonly seen in Africa. There were initiatives in recent years to ensure a conflict-free supply chain.
In the tantalum industry, an initiative called “Solutions for Hope” was launched in July 2011. This initiative is jointly organized by AVX, a leading manufacturer of tantalum capacitors, and Motorola Solutions. AVX supplies tantalum capacitors to Motorola Solutions for the production of communications equipment. AVX sourced its tantalum raw material from the Democratic Republic of Congo (DRC). In this initiative, AVX should comply with Section 1502 of the US Dodd-Frank Act when they sourced tantalum from DRC. Section 1502 requires that companies publicly traded in the U.S. should ensure its purchase of minerals should not support illegally armed groups in the DRC.
Conflict-free is an irreversible trend in the tantalum industry. Eleven processors have joined the Conflict-Free Smelter (CFS) Program; including Cabot Supermetals, Exotech Inc., Gannon & Scott, HC Starck and Mitsui Mining & Smelting.
Impact caused by conflict-free tantalum:
1. Increased cost: The Securities and Exchange Commission (SEC) of USA proposed that companies which import tantalum from DRC or similar countries should take measures to make sure the supply chain is not related to conflict. However, the US Chamber of Commerce pointed out that the total compliance cost is estimated to be large. Therefore, the measures are not beneficial to investors.
2. Unbalanced market: While western companies stop seeking tantalum from conflict resources, some companies, especially companies from China, still buy tantalum from such sources. Companies that do not comply with the conflict-free advocacy gain competitive advantage in the market as their products can be less expensive than products using conflict-free materials. The price of tantalum from the conflict zone could be priced much lower than normal price of conflict-free tantalum.