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http://www.nytimes.com/2011/11/17/business/global/prices-of-rare-earth-metals-declining-sharply.html?_r=1&ref=keithbradsher

By our staff writers

Tantalum’s dysfunctional supply chain will see demand in capacitors continue to decline. “Just 1% of all capacitors are made of tantalum: it’s a very expensive product,” said Bill Millman, Technical and Quality Director, AVX Tantalum Division, based in the UK. “I don’t imagine that growth in tantalum capacitors will grow in line with electronics. We will not see anywhere near the demand of 2000 and consumption of both powder and wire will be down,” he said, noting that stability and volumetric efficiency are two factors that can be improved in tantalum capacitors. Millman noted that a £70-80 per lb tantalum contained in Ta2O5 price would make for a more stable market.

David Miller, General Manager Strategic Development, at Global Advanced Materials talked about the challenging decade for tantalum, including the issue of material coming from Conflict Zones, the global recession, falling demand and declining prices. “It is important for the industry to support programmes working
with miners to develop conflict fee mining [in Central Africa]. Supply from this region has fallen but we still don’t know how much is conflicted metal,” he told delegates.

Miller said that there needs to be a rethink of the supply chain which remains very lengthy and complicated. “Miners margins have been reduced as pressure is applied down the chain,” he said, adding that GAM has been working with end-users on marketing to add value throughout the chain and in end-products. Their buying of Cabot Supermetals earlier this year has gone some way to reducing the supply chain.

Asked if he can see other processors locking in sources of supply and endeavouring to shorten the supply chain, Miller told delegates that he expects to see more industry developments. “I can see other processors acquiring or locking in sources, but it’s a small industry and how far can it do this before anti-trust issues kick in. Some processors are keen on full integration and the need to secure their long-term supplies. The aerospace industry is very keen. They need more than two years reliability on supplies,” Miller added.

On the area of conflict metal, Mike Loch, Director, EHS Strategic Initiatives at Motorola Solutions said that the tantalum audit as part of the conflict free smelter programme has been in full swing since September and tungsten and gold are about to go into the pre-audit phase.

As part of the programme, an independent auditor looks at all the inputs and outputs at the smelter and ensures all materials are conflict fee. The audit includes recycled material in the assessment.

Smelters cover the cost of the audit because, he said, they need to be able to stay engaged with their customers in the electronics industry. “It’s a self-sustaining vision,” he said.

There is good support for the development of both tin and tantalum certification programmes in the DR of Congo, with $3.2m coming from the US government and a further $2m from other players. A public-private partnership to raise further finance was recently announced in Washington DC, which he sees as particularly helpful to tin. At the moment, a programme is working with AVX, MMR in the DRC and the F&X smelter in China. GAM is also a member of the EICC extractive group.

Loch said that a second shipment of tantalite has just been released from MMR’s warehouse in Kalemi, while the first shipment has arrived at the Conflict Free Smelter at F&X in China. Intel, HP and two ODMs have signed up to the programme too and there will be an evaluation in the first quarter of 2012 to see if this can be taken from a pilot to full programme.

Roskill’s Suzanne Shaw said that the economic downturn will see a decline in consumption of tantalum capacitors which are being substituted by aluminium polymers. “Capacitors remain the largest market for tantalum, but demand is declining,” she said.

Confirming the more pessimistic outlook for tantalum, David Henderson of Rittenhouse International Resources, said that tantalum is a “no or low growth market”.

“I am now expecting less of a shortfall in the market this year and in 2012 there will be a 650,000 lb surplus,” he said. Looking to 2012 he said there are a number of variables for the market to watch: what will be the effect of GAM buying Cabot Supermetals? Will there be more material coming from Central Africa? (At the moment Henderson reckons only about 10% of supply comes from this region.) Will Marropino start producing? In closing Henderson said he thinks the ore price will fall well below $100 per lb of Ta in Ta2O5.

In tin, the Indonesian Tin Association’s ban on exports will have an impact on China’s smelters, Sheila Ju, an analyst with Beijing Antaike Information Services, said. “Since the ban by Indonesian smelters we have already seen an impact with prices going up,” she said, adding that Chinese smelters (which re-refine the Indonesian tin) are consuming stock at the moment.

Indonesia’s independent producers have recently formed the Indonesian Tin Association, which aims to establish its own “Babel” price independent of those set on the London Metal Exchange and in China’s domestic market.

Ju said that China will remain a net importer of tin, but it depends on the price. Consumption will also continue to grow, but not at recent levels as the development of the electronic industry is slowing down. “Consumption of solder will slow down. There is a clack of a major new application to drive growth for tin in China,” she said.

China’s import price for tin has rebounded over the LME level in recent months leading to a surge in imports, particularly in September, which marked a historical high since April 2010.

Ju said that in 2010 and 2011 the tin market surplus in China is decreasing. Raw material supplies for smelters will remain tight. “Domestic mines are depleted and there are no new big deposits. Self-sufficiency in tin concentrates is falling in the coming years. The Chinese government is trying to control the domestic tin mining industry,” Ju added.

However, mine output is above the 73,000-tonne quote and it remains uncertain how much comes from illegal mining.

Imports of concentrates will increase but there are challenges even with this. Vietnam has increased its export tariff from 12% to 20% and other countries may follow suit.

Copyright Metal Events Ltd 2012