Tantalum Shortage looms
Tantalum market uncertainty as serious shortages loom
Thewestern world could be facing a severe shortage of tantalum over thenext few years according to a recent study from Roskill InformationServices in the UK.
Author: Lawrence Williams
Posted: Wednesday , 23 Sep 2009
https://www.mineweb.com/mineweb/view/mineweb/en/page72102?oid=89687&sn=Detail
LONDON -
Accordingto a new special study report from UK metals research consultancy,Roskill Information Services, there are fears in the tantalum marketthat serious shortages are looming. Weak recent demand has kept priceslow. As a consequence primary output has been cut dramatically andprocessors are increasingly relying on stock drawdowns to make up theshortfall. If there is even a modest recovery in demand for tantalum inthe near future, the market faces a difficult period.
Tantalum'smajor usage at present is in the production of electronic components,mainly capacitors and some high-power resistors. Because of the sizeand weight advantages, tantalum capacitors are attractive for mobiletelephones, personal computers, and automotive electronics. Tantalumis also used to produce a variety of alloys that have high meltingpoints, are strong and have good ductility.
Alloyed withother metals, it is also used in making carbide tools for metalworkingequipment and in the production of superalloys for jet enginecomponents, chemical process equipment, nuclear reactors, and for themilitary. Due to the fact that it resists attack by body fluids and isnonirritating, tantalum is widely used in making surgical instrumentsand implants. For example, porous tantalum coatings are used in theconstruction of orthopaedic implants due to the metal's ability to forma direct bond to hard tissue.
Akey issue in the tantalum market, says Roskill, has been the continuingsupply of low-cost columbite-tantalite (coltan) mined in CentralAfrica, in the DRC and Rwanda, mostly illegally, and sold to fund rebelmilitias. The major processors will not knowingly buy such material andalmost all of it goes to China. The availability of large and growingquantities of cheap tantalum, at a time when global demand for consumerelectronics is down and processors are holding substantial raw materialstocks, has, however, placed the conventional tantalum industry undergreat pressure.
Unable to win the large increase in pricesit needed to be economic, the world's largest primary producer, Talisonin Australia, suspended mining operations in late 2008. It was soonfollowed by two others. Within the space of a few months, close to 40%of global primary tantalum capacity was taken out of the market. Thereare no guarantees as to when, or even if, it will be brought back intoproduction.
However,Roskill reckons that the market remains well-supplied in the immediateshort term. A key characteristic of the tantalum industry in recentyears has been that supply has nearly always been greater than demand.As a result, large inventories have been built up at most levels of thesupply chain. Those stocks are not inexhaustible. In addition, the USstrategic stockpile has gone for good and there are questions as howlong tin slags can continue to constitute an important tantalumfeedstock.
As has beenthe case in the past, processors are increasingly turning to scrap andother forms of secondary tantalum. Their receipts of secondary materialgrew by 70% in 2007 and by a further 25% in 2008. The growing use ofscrap is evident in trade data.
Thetantalum processing industry is attempting to develop systems to keepcoltan out of the market by providing ways to physically indentify itbefore it is processed and becomes untraceable. Some processors aremore committed to this than others, and the system is not yet fully inplace, but the industry in general is facing mounting pressure fromcapacitor manufacturers and OEMs to ensure that coltan is not used. Itis quite likely that the supply of coltan to the market will fallsharply over the next year or two.
Whatwill compensate for the likely supply shortfall? Production is beingexpanded in several countries but probably not by enough to replace thecoltan. Numerous new tantalum-niobium projects are in the pipeline andseveral would be very large producers. The big question is when theywill come on-stream. Of the three mega-projects, one was originallyplanned to come into production in 2006, while another has been held upfor over two years by red tape. The third may come into production in2011.
Theglobal economic downturn had a very marked effect on the tantalumsupply/demand balance. Demand in 2009 will very probably prove to be40% down on 2008, but Roskill considers it will fully recover by 2012,although much will obviously depend on the continuing strength of anyglobal economic revival. Whether or not sufficient supply will be inplace to meet that demand recovery is another issue entirely.
AsRoskill summarises, a large part of the primary supply chain is notproducing in 2009 and there are no clear indications as to when, or if,it will come back to the market. Inventories are running down, scrapis in shorter supply because of a fall in capacitor manufacture and itis quite possible that legislation under consideration in the USA couldseverely restrict or even halt the supply of tantalum from CentralAfrica.
Itis almost certain therefore, Roskill reckons, that a tantalum supplysqueeze is approaching. If demand picks up faster than expected, aspike in spot prices seems inevitable. Stability will probably notreturn to the market until the new projects come on-stream, orconsumers accept contract prices at a level sufficient for Australia'sTalison to reopen its mining operation.
For full details of the Roskill report go to www.roskill.com/reports/tantalum