Tin miners have bright future as demand rises STAND by for a re-ranking of Australia's tin hopefuls. Peruvian mining giant Minsur recently put together a list of the world's top tin resources, China being No 1 with 60 per cent of the known tin.
The biggest single mine is Minsur's Pitinga operation in Brazil with a resource of 628,000 contained tonnes (its San Rafael mine in Peru, which will close in 2017, accounts for close to 10 per cent of world supply).
Grouped together in the resource-size rankings are four Australian companies: Kasbah Resources (KAS) at 54,000 contained tonnes in Morocco; Stellar Resources (SRZ) with 50,370 tonnes near Zeehan; Consolidated Tin Mines (CSD) in Queensland with 43,800 tonnes; and Gippsland (GIP), which is gearing up to produce in Egypt, with 32,960 contained tonnes.
Pure Speculation has been pretty much alone in banging the tin drum in Australia since this column burst into life in 2006, but the metal is starting at long last to get some local market momentum. World demand this year is estimated at 362,000 tonnes.
Apart from its traditional role lining food and drink cans, tin's biggest growth area is in lead-free solder; its use in electronics is soaring. Of the past six years, tin has been in deficit in five. More deficits lie ahead.
This is why a branch of the Toyota empire last week acquired 20 per cent of Kasbah's Achmmach project. Toyota Tsusho accounts for about 8 per cent of world trade in tin and clearly wants to increase that -- and make sure its Japanese customers have a ready supply in an increasingly tight market. Toyota's final payout will depend on the results of the definitive feasibility study, but Mike Millikan at Hartleys estimates Kasbah will receive more than $24 million.
Pieter Bruinstroop at Octa Phillip (the interesting name adopted after the merger of Intersuisse and Austock Securities) is more optimistic. He expects the final payment to be about $45m, which to Bruinstroop ensures Kasbah's equity funding requirements to develop Achmmach will be covered. He also assumes outstanding options (all in the money) will be exercised, bringing in another $10.5m. Kasbah will be announcing a new resource figure later this month -- and this could see the project leap a few rungs on the Minsur table.
Meanwhile, Foster Stockbroking says Metals X (MLX) remains one of its key picks for this year given the stock's leverage to the tin price this year and next. While not included on Minsur's resources league table, Metals X -- unlike the other Australian plays -- is a producer and accounts for about 2.5 per cent of global supply from its Mt Bischoff and Renison mines in Tasmania.
Foster's estimate is that London Metal Exchange tin stockpiles range between five and 10 days' world consumption. The broker sees MLX as the only local exposure to tin production in the ASX for the next two to three years, while the other players work their way through their development phases.
Tin finished on the LME at $US23,325 a tonne. The exchange's warehouses held 11,570 tonnes at week's end.