Tantalum threatened by Dodd-Frank, Australian cuts

CAPE TOWN, South Africa — Markets for tantalum metals used primarily in electronics could face short supplies by as early as 2014 in part because of reduced Australian primary production and impending restrictions from the U.S. Dodd-Frank Wall Street reform law aimed at curbing trade of illegal and artisanal produced minerals from the Democratic Republic of Congo (DRC) that is the source of the metal.

“Consequently the establishment of new tantalum sources outside the DRC we believe is imperative,” Lara Smith, managing director of Johannesburg-based Core Consultants told the Investing in Africa Mining Indaba conference here this week.

Smith says the 2008-2009 recession had caused a reduction in demand for electronics, which had a knock-on effect on tantalum supplies, but that studies done by her firm had concluded that if the market moves beyond a a conservative steady growth of 4% in the coming years, a supply shortage could develop within three years. Consequently she believes that prices should ultimately move to reflect this circumstance.

Smith noted that tantalum reserves are dispersed around the globe with only 10% of proven reserved actually found in Africa, and only 2% located in Central Africa. “That being said, it has been estimated that since 2009 over 50% of the world tantalum supply originated from Africa and a significant portion of that is said to come from artisanal mining in the DRC,” she says.

Smith added that it is probably more sensible to talk about the most likely resource base, recognizing that artisanal mine and illegal miners typically do not prove up their reserve base. “If you consider the most likely resource base, then Africa would account for about 16% of global resources, and Central Africa [about] 9%,” she says.

New technologies leading to miniaturization of electric devices – which have become smaller, lighter and with more processing power – have resulted in increased usage of tantalum, Smith says, noting that in particular, tantalum-based capacitors are on the rise in automotive electronics, mobile phones, personal computers and wireless devices. Capacitors now account for 60% of tantalum consumption, compared to only 51% in 2004.

While tantalum consumption has increased by around 3.5 million tonnes since 2004, growth in tantalum demand has been relatively lackluster over the past 15 years or so when compared to other metals used in electronic sectors. But Smith says analysis found that demand from the automotive sector could lead to three-fold growth in tantalum consumption from 2007.

On the supply side, production has traditionally been supplemented by secondary sources, including the US Defense Logistics Agency’s (DLA) stockpile sales, recycling, long-term contracts and sourcing from slags resulting from production of other metals. These secondary sources accounted for about 45% of supply in 2007, Smith noted.

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