Tantalum threatened by Dodd-Frank, Australian cuts

But she says that since 2007, there have been no DLA sales of tantalum. Additionally, recycling is becoming more difficult because of high costs and the miniaturization of electronic parts, which use less tantalum metal. Retrieval of tantalum from tin slag is also declining, she says, noting that another speaker at the conference had shown fore forecasts of tin supply projecting 0.8% of increased supply in 2012 and 0.2% for the next five years.

“Moreover tantalum is traditionally sold under long-term contracts as opposed to the spot market,” Smith says, noting that end-user companies have always engaged in preemptive buying. During the tech boom tantalum inventories were stored up by companies based on their projection of their demand for their products and when the tech bubble burst those stockpiles were prolonged further.

Similarly, in 2008 the economic recession and ensuing slowdown in consumer demand insured that tantalum consumers were long on supply. “We conjecture that the reason the prices are not yet perspective of a deficit market is due to these stockpiles, which we estimate will be depleted over the next 12 months or so as consumer demand improves,” Smith says.

In terms of primary sources, in December 2008 Australia’s Talison Minerals Pty. Ltd., which since has been renamed Global Advanced Metals, placed its two Australian mines on care and maintenance. The mines, Greenbushes and Wodgina, together annually accounted for 2.4 million pounds tantalum pentoxide or 38% of global tantalum supply.

Operations of the Wodgina mine restarted in January 2011 but the company indicated that they would only produce around 700,000 pounds per year. “In reality we understand that they are producing closer to half a million pounds,” she added.

In addition to the global financial crisis, the other reason cited for halting production in Australia was the influx of low-priced coltan minerals, from which tantalum metal is extract, coming from the DRC’s illegal and artisanal miners, Smith says.

The Dodd-Frank law enacted in July 2010 requires that companies who consume minerals from conflict zones, in particular tantalum, tin, tungsten and gold from the DRC, have to now show provenance of these minerals and demonstrate that they are not conflict or “blood” minerals.

“This could facilitate the issue of lower priced imports of coltan,” Smith says but noted that the implementation of the act has since been delayed a number of times, most recently in December.

Under the act companies are expected to be granted a grace period of 12 months to either demonstrate provenance or find alternative supply sources. “This means that full implementation of this legislation will most likely not come into effect before the end of 2013,” she says. “Subsequently cheaper coltan from the DRC and Rwanda may continue to fill the supply gap and stabilize prices.”

Consideration of current and future tantalum project plans were used by Core Consultants in forecasting the outlook for supply demand and future price direction of this strategic metal.

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