Tungsten and tantalum expected to become highly scarce

Tungsten and tantalum have started to emerge as “critical” global metals and areFoto_Newsletter#3 expected to become highly scarce from 2015, Core Consultants MD Lara Smith said on Wednesday at the Geological Society of South Africa’s 2013 GeoForum conference in Johannesburg. The European Union and the US Department of Defense have already put these metals at the top of their critical list.

Critical metals are defined as those metals with a critical risk to supply, on which humans are highly dependent for survival, and which are necessary for the continuation of a modern way of life.

Smith noted that these minerals were conventionally dominated by a single supplier or country, commonly experienced under-investment in the development of new projects, and presented limited potential for substitution.

“In addition, critical metals are finding increased application in modern, portable devices, as well as in military or defense applications and are, therefore, of strategic importance to several countries,” she commented.

TUNGSTEN

Based on these parameters, tungsten had increasingly emerged as a critical metal, most notably as a result of its limited supply.

Smith noted that China, which produced the majority of the world’s tungsten supply, also accounted for more than half of world demand and was its fastest-growing consumer, which had driven the State to take certain measures to ensure that its own domestic needs were met.

Moreover, in recent years, demand had outpaced supply, necessitating the sale of stockpiles held by the governments of China, Russia and the US. “Based on China’s decision to limit exports to the rest of the world, we estimate that the primary tungsten market is in deficit and, this year, we expect the deficit to be in the order of 15 000 t,” cautioned Smith.. According to the US Geological Survey, the US stockpile has already fallen from around 35,500t to 7,500t over the past ten years.

In addition, tungsten prices were expected to rise in tandem with increased Chinese input costs, such as labor, as well as rising taxes and high inflation.

TANTALUM

While also considered a critical metal, Smith observed that the tantalum market differed from the tungsten market in that its reserves were more widely dispersed, despite over 50% of the world’s tantalum supply having originated from Africa.

“The risk to the tantalum market is that 16% of supply is estimated to originate from artisanal mining activities, while a further 23% originates from a conflict area,” she noted.

As with a number of minor metals, new technologies, leading to the miniaturization of electronic devices, had resulted in increased use of tantalum.

Smith commented that tantalum-based capacitors, in particular, were on the rise and were increasingly used in automotive electronics, mobile phones, personal computers and wireless devices.

“Capacitors now account for 60% of tantalum consumption, compared with 51% in 2004. While growth in tantalum demand has been relatively lackluster over the past 15 years or so, compared to other metals in the electronics sector, this application could lead to three-fold growth from 2007 levels,” Smith said.

In terms of tantalum’s tradability, she noted that, as it was not traded openly, its market has always been subject to large swings in over- and undersupply.

Most tantalum was sold under long-term contracts rather than through the spot market, which had traditionally resulted in pre-emptive buying. As a result, prices did not always immediately reflect the supply/demand deficit.

Tantalum prices had recently demonstrated volatility, increasing by over 300%.

“As a result, gauging a long-term stable price is challenging, but if we assume a conservative steady growth rate of consumer electronics in the coming years of around 4%, then the market will be perfectly balanced. Growth above 4% will result in a supply shortage by next year and we, therefore, assert that prices have now bottomed out and should start reflecting our expectation of a market deficit,” said Smith.

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Source:
The above story is reprinted from an article published by Mining Weekly. The original article was written by Natalie Greve.
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