uncertainty in tin & tantalum mining - sykes & kettle - sep 2014 - china metals week

The Implications of Uncertainty in Tin and Tantalum Mining

for the Future of the Electronics Industry

John P. Sykes Centre for Exploration Targeting (Curtin University & University of Western Australia)

Greenfields Research Ltd

Peter Kettle ITRI Ltd (formerly the International Tin Research Institute)

Contents

What can we learn about the future of tin and tantalum

mining from its past?

Case studies of two mineral commodities showing

significant supply uncertainty and what this means for the

electronics industry:

Tantalum

• Demand

• Current supply

• Potential new supply

• Conclusions

Thoughts on how the electronics industry may consider

uncertainty in tin & tantalum mine supply

Tin

• Demand

• Current supply

• Potential new supply

• Conclusions

Uncertainty in Tin & Tantalum Mining

What can we learn about the future

from the past? Section

1

The past is no indicator of the future?

?

0

10,000

20,000

30,000

40,000

50,000

60,000

1973

1976

1979

1982

1985

1988

1991

1994

1997

2000

2003

2006

2009

2012

Pri

ce

(2

01

2 U

S$

/t)

Tin Prices (US$2012):1973-2012

0

100,000

200,000

300,000

400,000

500,000

600,000

700,000

800,000

900,000

1973

1976

1979

1982

1985

1988

1991

1994

1997

2000

2003

2006

2009

2012

Pri

ce

(2

01

2 U

S$

/t)

Tantalum Prices (US$2012) – 1973-2012

?

The problem with forecasting!

"Scythia has an abundance of soothsayers who foretell the future. They are judged

by results and the losers are loaded on to oxcarts

which are set on fire.“ - Herodotus, 440BC

(NB: This is a paraphrasing by a former colleague at

CRU – John Tomlinson)

The problem with the future

“My interest is in the future because I am

going to spend the rest of my life there”

- Charles F. Kettering

(American engineer, inventor of the electric starter, 1876-1958)


Lessons from the past:

supply, demand and discovery Section

2

Finite world, finite mineral deposits

“Earth rise” from Apollo 11

Image: The Guardian/NASA

Old Geevor tin mine, Cornwall, UK, operated

late 18th century to 1990

Image: Shutterstock

Supply, demand & discovery

…Demand…

…and Discovery

Supply…

The history of civilisation to some extent is the history of finding,

exploiting and using mineral resources.

…in a globalised world


TANTALUM

Images: Shutterstock & Images of the Elements


Tantalum demand shock from

capacitor industry Section

3

Demand: consumer electronics

Source: Tantalum-Niobium International Study Centre (TIC)


Tantalum supply could not respond

to the demand shock Section

4

Tin slag decline, rise of Aussie mines

0

200

400

600

800

1000

1200

1400

1600

Annual mined tantalum production (tonnes)

OtherAfrica

CentralAfrica

Canada

Brazil

Australia

Source: Tantalum-Niobium International Study Centre (TIC) Source: United States Geological Survey (USGS)

Rise of Congo & “Conflict Minerals”

0

200

400

600

800

1000

1200

1400

1600

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

Annual mined tantalum production (tonnes)

Other Africa

Central Africa

Canada

Brazil

Australia

Source: United States Geological Survey (USGS) Image: Shutterstock


Leading to a tantalum price spike

due conflict minerals legislation Section

5

Conflict legislation price spike

0.00

20.00

40.00

60.00

80.00

100.00

120.00

140.00

200

6

200

6

200

7

200

8

200

9

200

9

201

0

201

1

201

2

201

2

201

3

Metal Pages Tantalite basis 30% Ta2O5 (EU) $/lb Ta2O5

Closure of

Wodgina

mine

Passage of

Dodd-Frank

Act

Global Financial

Crisis

Source: Pete Souza (Whitehouse Photostream)

Post-spike demand

destruction?


Unclear where future tantalum

supply will come from Section

6

Lots of resources available?

35%

58%

3% 3% 1%

USGS Reserves Estimate (>150,000 tonnes)

Australia Brazil Canada

Ethiopia Other

41%

21%

10%

10% 9%

7% 2%

TIC Estimated "Likely Resources" (%)

South America Australia

Russia & Middle East China & SE Asia

Central Africa Other Africa

North America

But many uneconomic & inaccessible

but ACCESSIBLE

RESOURCES

DISCOVERED

ECONOMIC but

INACCESSIBLE

UNDISCOVERED

INACCESSIBLE but

ECONOMIC

DISCOVERED

ACCESSIBLE but

UNECONOMIC

UNDISCOVERED

UNECONOMIC but

ACCESSIBLE

GEOLOGICAL CERTAINTY

EC

ON

OM

IC F

EA

SIB

ILIT

Y

DISCOVERED

ACCESSIBLE

and ECONOMIC

(Behind)

DISCOVERED but

INACCESSIBLE

UNECONOMIC

UNDISCOVERED

INACCESSIBLE and

UNECONOMIC

UNDISCOVERED

but ACCESSIBLE

ECONOMIC

Source: Sykes & Trench (2014)

Congolese

resources?

Australian &

Canadian

resources? By-product

tantalum?

New

discoveries?


Conclusion: Future of the tantalum

industry is uncertain Section

7

Tantalum: A highly uncertain future

Tantalum is an opaque market, subject to price spikes

Tantalum received a demand surge from the electronics industry

Supply has struggled to react to this demand shock

Congolese conflict tantalum replaced Australian & Canadian supply

Conflict Minerals legislation has restricted Congolese tantalum supply

Much of tantalum resource inventory is uneconomic or ‘inaccessible’

Demand destruction will continue unless new supply developed:

• Conflict free Congolese tantalum, integrated with consumers?

• Resurgence of Australian & Canadian supply, with processing improvements?

• Price insensitive, low cost by-product niobium production?

• Other mine projects in North Africa, Russia, China?

• New ‘world class’ tantalum deposit discoveries?

Future of tantalum supply highly uncertain

Electronics industry should be aware of tantalum supply risk


TIN

Images: Shutterstock & Images of the Elements


Tin demand driven by electronic

solder industry & China Section

8

Tin solders not tin cans

2012: solder is ~50% of demand 1970s: tinplate is ~40% of demand

Source: ITRI Tin Industry Review 2014

China dominates solder demand

Tinplate: 54,600t (16%)

Chemicals: 53,300t (16%)

Brass/Bronze: 18,200t (5%)

Glass: 7,000t (2%)

Others: 35,200t (10%)

China: 98,500t (29% of tin &

58% of solder)

ROW: 72,800t (21% of tin &

42% of solder)

Solder: 171,300t (50%)

Tin Consumption (2012): 339,500 tonnes


Due to lead to tin solder substitution

Data: ITRI & IPC

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

2002 2003 2004 2005 2006 2007 2008 2009 2010 2011

Lead-free solder Lead solder

Lead-free solder as a % of global shipments

Conversion to tin

solder drove tin

prices


Mine supply problems: artisanal

Asia, conflict Congo, closing Peru Section

9

Weak supply now the price driver

250.0

275.0

300.0

325.0

350.0

375.0

2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013

Tin Supply-Demand Growth (Kt)

Refined Supply Mine Supply Refined Demand


Demand strength

driving prices

Supply weakness

driving prices

Alluvial and artisanal important

Images: Greenfields Research

Artisanal mining occurs in short cycles

Global tin production (Kt)

0.0

50.0

100.0

150.0

200.0

250.0

300.0

350.0

1970

1974

1978

1982

1986

1990

1994

1998

2002

2006

2010

Other

Africa

CIS/USSR

Australia

Bolivia

Brazil

Peru

Thailand

Malaysia

Indonesia

China

Index of alluvial mining booms

0.0

100.0

200.0

300.0

400.0

500.0

600.0

Ye

ar

1

Ye

ar

3

Ye

ar

5

Ye

ar

7

Ye

ar

9

Ye

ar

11

Ye

ar

13

Ye

ar

15

Ye

ar

17

Ye

ar

19

Year

21

Year

23

Ye

ar

25

Ye

ar

27

Ye

ar

29

Malaysia 1958-1987 Thailand 1962-1991

Brazil 1977-2006 Indonesia 1992-20112

Indonesia 2012-2017???

?

?

?


Major Peruvian mine due to close

0.0

5.0

10.0

15.0

20.0

25.0

30.0

35.0

40.0

45.0

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

20

18

Annual Production from San Rafael (Kt tin)

Due for

closure

Source: ITRI & Greenfields Research New Tin Supply 2014

Conflict tin from the Congo

https://www.itri

.co.uk/index.ph

p?option=com

_zoo&view=fro

ntpage&Itemid

=60

Data: ITRI/Greenfields Research

0.0

2.0

4.0

6.0

8.0

10.0

12.0

14.0

16.0

Annual Production from Africa (Kt tin)

End of

Congolese

Civil War

Dodd-Frank

legislation

iTSCI

Scheme


https://www.itri.co.uk/index.php?option=com_zoo&view=frontpage&Itemid=60








Where will future tin mine supply

come from? Section

10

Project pipeline struggling

0 10 20 30

Early exploration

Advanced exploration

Scoping

Pre-feasibility

Feasibility

Permitting

Financing

Construction

Commissioning

No. Projects

Tin projects at different stages

0

2

4

6

8

10

12

Tin Mine ProjectPipeline

Construction

Financing

Feasibility

Pre-feasibility,Permitting &Final Resource

Exploration &Scoping


Many projects technically challenged

0.01

0.02

0.03

0.06

0.13

0.25

0.50

1.00

2.00

4.00

8.00

100,000 1,000,000 10,000,000 100,000,000 1,000,000,000

Sn

Gra

de

(%

)

Ore (tonnes)

Grade-tonnage curves for tin mines & projects

Source: ITRI Tin Industry Review 2014; ITRI & Greenfields Research New Tin Supply 2014

NB: Size of bubble reflects relative amount of

contained tin in the resource (not all resources are

CRIRSCO compliant)

Mine Projects

Operating Mines

Increasingly reliant on by-products

Copper

Australia, China,

Germany,

Kazakhstan, Peru,

UK

Silver

Australia,

Canada,

China,

Kazakhstan,

USA

Lead

China

Zinc

Australia,

Bolivia,

Canada,

China,

Germany,

UK, USA

Antimony

China

Indium

Australia,

Canada, China,

Germany

Gallium

China,

Germany

Tungsten

Australia, Canada,

Egypt, Kazakhstan,

Mongolia,

Myanmar, Portugal,

Russia, Spain, UK,

USA

Tantalum

Australia,

Burundi,

Congo, Egypt,

Kazakhstan,

Rwanda

Niobium

Brazil,

Burundi,

Nigeria

Iron Ore

Australia,

Kazakhstan

Molybdenum

Canada Titanium

Kazakhstan,

Malaysia

Zirconium

Brazil

Potential Future World Tin Mine By-Products


mages: Shutterstock, www.csksg.com, www.tradekorea.com, www.cdves.com, American Elements, Wikipedia, www.made-in-china.com;

www.images-of-elements.com

Lithium

Czech Rep. Aggregates

Malaysia

http://www.csksg.com/

http://www.tradekorea.com/

http://www.cdves.com/

http://www.made-in-china.com/





http://www.images-of-elements.com/





Tailings technology challenge

0

5,000

10,000

15,000

20,000

25,000

30,000

35,000

40,000Potential new tin tailings capacity (t/y)


Very few recent major tin discoveries

1955 1965 1975 1985 1995 2005 2015

Early

Exploration

Advanced

Exploration

Scoping

Pre-Feasibility

Feasibility

Permitting

Financing

Commissioning

Construction

Post-ITC

Discovery

Gap

Recent

Discovery

Gap

Discoveries

still under

development:

• Pre-1800: 4

• Pre-1900: 11

• Pre-1955: 15

Low Political Risk

Moderate Political Risk

Very High Political Risk

High Political Risk


NB: Size of bubble reflects relative amount of

contained tin in the resource (not all resources are

CRIRSCO compliant)

Many uneconomic & inaccessible?

but ACCESSIBLE

RESOURCES

DISCOVERED

ECONOMIC but

INACCESSIBLE

UNDISCOVERED

INACCESSIBLE but

ECONOMIC

DISCOVERED

ACCESSIBLE but

UNECONOMIC

UNDISCOVERED

UNECONOMIC but

ACCESSIBLE

GEOLOGICAL CERTAINTY

EC

ON

OM

IC F

EA

SIB

ILIT

Y

DISCOVERED

ACCESSIBLE

and ECONOMIC

(Behind)

DISCOVERED but

INACCESSIBLE

UNECONOMIC

UNDISCOVERED

INACCESSIBLE and

UNECONOMIC

UNDISCOVERED

but ACCESSIBLE

ECONOMIC

Source: Sykes & Trench (2014)

High country risk

resources?

Low grade

projects?

Tailings

projects?

By-product

projects?

New

discoveries?


Conclusion: Future of the tin

industry is uncertain Section

11

Tin: A highly uncertain future

Tin is a relatively small market, subject to volatility

Tin received a demand surge from the electronics industry

Supply has struggled to react to this demand shock

Indonesian alluvial and artisanal mine supply is depleting

The major San Rafael tin mine in Peru is ageing

Conflict Minerals legislation has restricted Congolese tin supply

Much of remaining tin resource inventory is uneconomic or ‘inaccessible’

Demand destruction may occur unless new supply developed:

• Conflict free Congolese tin, integrated with consumers?

• New hard rock supply in politically stable countries, e.g. Australia?

• Price insensitive, low cost by-product production?

• Development of tin tailings technology?

• New ‘world class’ tin deposit discoveries?

Future of tin supply highly uncertain

Electronics industry should be aware of potential tin supply risk


Dealing with uncertainty in tin &

tantalum mine supply Section

12

Scenarios, not predictions

Known

Known

Unknown

Unknown

Unknown

Known

Known

Unknown

Opening

new search

space

Rising costs

& falling

production

Non-conflict

minerals

By-product

mining

Current project

pipeline

Resurgence of

current supply

Higher Costs

Tim

efr

am

e

Current supply

Opening new

search space

Non-conflict

minerals

Current project

pipeline

By-product

mining

No change

Some potential scenarios…

No change scenario Current supply with rising costs & falling

production

Illegal conflict tin resurgent

Demand destruction & shrinking industry

Poor industry cannot invest in new

supply exacerbating problem

Marginal new supply scenario Current supply with rising costs & falling

production

Development of marginal, high risk, high

cost projects & by-product reliant costs

Gradual demand destruction slowly

corrodes industry

Poor industry cannot invest in new

supply exacerbating problem

Un-conflicted minerals scenario Current supply

Resurgent legal, transparent tin secured

from the Congo

Growing industry with low cost producers &

low prices

Little scope for new projects

Fresh discoveries scenario Current supply

Exploration focus leads to high quality,

world class tin discoveries.

Growing industry with low cost producers &

low prices

New

Su

pp

ly

Cu

rren

t S

up

ply

Shrinking industry Growing industry

THANK YOU

For more information:

ITRI Ltd: www.itri.co.uk

Greenfields Research: www.greenfieldsresearch.com

Centre for Exploration Targeting: www.cet.edu.au

Contact information:

Peter Kettle: [email protected]

John P. Sykes: [email protected]

http://www.itri.co.uk/

http://www.greenfieldsresearch.com/

http://www.cet.edu.au/

mailto:[email protected]


Learn more about TIN

Two new reports available:

ITRI Tin Industry Review 2014

ITRI & Greenfields Research New Tin

Supply 2014

More information:

https://www.itri.co.uk/images/ITRI_Industr

y_Review_2014_Flyer__pics.pdf

Contact information:

Peter Kettle

[email protected]

John Sykes

[email protected]

https://www.itri.co.uk/images/ITRI_Industry_Review_2014_Flyer__pics.pdf





uncertainty in tin & tantalum mining - sykes & kettle - sep 2014 - china metals week

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