By Michael Montgomery—Exclusive to Tantalum Investing News
Prices for tantalum have been rising on the back of supply and demand fundamentals. The world needs more of the metal used for capacitors in high tech electronics such as smart phones and computers. The supply of tantalum is being stretched thin, and the reduction and vilification of DRC-mined is not helping supply side scarcity.
As a result prices, which are hard to determine concretely, have risen to approximately $120 per pound and analysts expect prices to climb to $150 in 2011, according to electronics manufacturer TTi. Prices at these levels have created another resource-staking rush in the sector. Companies are actively perusing tantalum/coltan deposits to capitalize on favorable market conditions. The Wodgina mine in Australia has resumed production because the operations can once again return a profit.
The Wodgina and Greenbushes deposits, owned by Global Advanced Metals, formerly Talison Minerals, closed in 2008 because of the economic downturn. The mines were put on care and maintenance, waiting for the right economics to restart operations. At full production the mine is capable of producing 1.4 million pounds of tantalum pentoxide annually, nearly one third of global supply. The company hopes to produce half that amount in the interim, producing 700,000 pounds.
Global Advanced Metals also owns the Greenbushes mine and processing facility. According to the company, the mine at full capacity has the ability to produce about one million pounds of tantalum pentoxide per annum. Recently the company announced that it had “agreed to purchase tantalum pentoxide ore from the Galaxy Lithium mine in Western Australia. Around 200,000 lb over the next five years will be processed at its Greenbushes plant,” reported Andy Blamey, for Platts. Galaxy Resources [ASX:GXY] is mainly a lithium mining company, but does produce tantalum as a byproduct in its operations.
Global tantalum market trends
The scheme to trace minerals from the Congo being implemented by the tin industry group ITRI Ltd. requires funding to meet the March 2011 date set by the US government. iTSCi (The ITRI Tin and Tantalum Supply Chain Initiative) is in need of “at least $31 million over five years to expand the programs,” reported Michael J. Kavanagh, for Bloomberg. Nearly two thirds of the funding will come from the African mining sector, but shortfalls in funding hamper the speed and scope of the implementation.
The European Union may follow the United States lead over the classification and documentation of conflict minerals. The Frank-Dodd financial act, passed last year in the US required companies to disclose the sourcing of metals such as tin, tantalum, tungsten, gold and casserite from the DRC and neighboring countries in order to create a more “conflict free” supply chain. The EU is considering its own version of the bill.
“In December 2010, the European Parliament adopted a resolution calling on the bloc to create an EU law to ensure that imported minerals are traceable as a tool to combat illegal exploitation of conflict minerals in African countries,” reported EurActiv. No timetable for the adoption of a bill is available. However, if the European Union adopts a scheme comparable to the US regulatory statute more companies will be looking to source tantalum from non-African sources.