The Globe and Mail, Friday, January 5, 2001
Little-known tantalum rare, but its future shines
By Allan Robinson
TORONTO-Tantalum. Never heard of it? Not surprising.
It's a rare metal, but one with everyday uses. Tantalum is found in the guts
of cellular phones, computers, pagers and even Sony's Playstation 2 and
Nintendo's Gameboy.
Its principal use is in the manufacture of capacitors-critical computer
components that regulate electrical flow-because it's a good conductor. That
market accounts for about 60 per cent of demand. But the metal is in short
supply and prices are skyrocketing, having soared tenfold this year as
buyers scramble for supplies.
As a result, a tiny group of Canadian exploration companies is taking a
renewed interest in looking for the hard-to-find metal in northwestern
Ontario and parts of Quebec and Manitoba.
But in addition to electronics, tantalum has a lot of other uses. Need
artificial hips and knees? Tantalum is used because the human body doesn't
reject it.
It's also used in superalloys in jet fighters, engines, weapon systems and
nuclear reactors. As an alloy, it is used to create hard tools for cutting
and to create specialized glass for optical purposes.
Its industrial applications range from chemical processing-such as the
production of acids-to the manufacture of insecticides and pharmaceuticals.
Tantalum is ideal for those applications because it resists corrosion.
Tantalum is sold under long-term contracts between producers and users and
there is no open auction market to determine prices. But there is one public
indicator of what buyers are willing to pay because of the metal's role in
the defence industry.
This year, prices for the strategic metal have soared to $443.90 (U.S.) a
pound according to the U.S. Defense Logistics Agency, compared with the
average price of $40 to $55 a pound under long-term contracts. The agency
reports sales from the U.S. National Defense Stockpile Center. The most
recent sale consisted of a lot of 205,000 pounds for $91-million in
December.
In September, 148,395 pounds were sold for $182.60 a pound and in June,
147,855 pounds were sold at $106 a pound.
"They [the U.S. Defense Stockpile Center] enter the market when there's a
need," said one mine executive. "There's definitely a shortage of raw
material."
Some estimate that the worldwide production of tantalum is about five
million pounds, while the U.S. Geological Survey Minerals Yearbook estimates
annual consumption is about 5.5 million pounds.
The Tantalum-Niobium International Study Center in Brussels said the growth
rate in demand for tantalum from 1993 to 1999 was 8.9 per cent a year.
However, taking into account the strong demand in 2000, the annual rate of
growth from 1995 to 2000 could be 12 per cent a year, it said.
The Ontario Geological Survey (OGS) estimates that the demand for tantalum
rose about 20 per cent this year because of growth in the electronics
industry.
A recent report from Merrill Lynch & Co. warned investors in the electronic
components industry that "we have become much more concerned [that] the
short supply of tantalum powder could make earnings-per-share growth even
more challenging during 2001."
North America's only tantalum mine, located at Lac du Bonnet in Manitoba,
accounts for only a tiny share of world production. It is owned by Tantalum
Mining Corp. of Canada Ltd., a wholly owned subsidiary of Boston-based Cabot
Corp.
Production from the underground mine and mill, which employs 230, is sent to
Cabot Performance Materials in Boyertown, Pa., for processing.
"The market is booming right now," said David Lewis, a senior markets
analyst for Cabot Corp. Cabot is a major supplier of tantalum, which is part
of the company's focus on high-performance materials. Cabot buys most of its
tantalum from a wide range of suppliers. The company is finding that passing
higher prices along to its customers is difficult, Mr. Lewis said.
Cabot would consider developing other sources, he said. However, he adds,
"It's not really our mission in life to be in the mining industry."
The biggest player in tantalum mining, supplying about 25 per cent of the
world market, is Sons of Gwalia Ltd., an Australian gold mining company. It
has plans to double production to 2.3 million pounds a year by 2003 by
spending $100-million (Australian), but many think there will be a need for
more mines around the world.
In Canada, the interest of the exploration companies has been focused on
northwestern Ontario.
"They [tantalum prospects] are a tough target," said Donald Bubar, president
of Avalon Ventures Ltd. of Toronto. The metal is found in low
concentrations. It is in oxide rocks, which are non-conductors, making it
difficult to find targets using geophysical techniques and airborne surveys.
"Northwestern Ontario is just prime geology to find these types of
deposits," Mr. Bubar said.
In the search for tantalum, geologists must look for pegmatites, a
crystalline rock formed by cooling magma, which sometimes concentrates other
exotic metals such as cesium, lithium and rubidium.
"It's just good old-fashioned prospecting, along with a good knowledge of
what the rare metals look like in the field, that will result in the
discovery of most tantalum prospects," said Dr. Frederick Breaks, a
geoscientist with the OGS.
Dr. Breaks said that the OGS has worked closely with Dr. Andrew Tindle, a
geology professor with Britain's Open University, in discovering tantalum
prospects in northwestern Ontario.
Dr. Tindle is an expert in using electron-microprobes to distinguish the
various tantalum minerals present in a given type of pegmatite. An
electron-microprobe bombards a rock sample with a beam of high-energy
electrons to determine what minerals are in the sample.
That program has been under way since 1993 and many discoveries have been
made in the Kenora, Ont., area, but none yet that are big enough to justify
a mine.
Avalon is exploring two targets in Ontario and one on the border in
Manitoba. It has a deal with a private company in the tantalum industry
giving that firm the right to earn a 50-per-cent interest in any of Avalon's
tantalum targets by spending $5-million (Canadian) on exploration.
Tantalum Mining has a joint venture with Gossan Resources Ltd. of Winnipeg
to explore a property near Kenora.
Other Canadian juniors looking for tantalum in Ontario include Houston Lake
Mining Inc. of Val Caron, Ont., and Champion Bear Resources Ltd. of Calgary.
One of the largest U.S. producers of tantalum capacitors, Kemet Corp. of
South Carolina, has reached a deal to help an Australian company develop
tantalum properties in that country.
Mine expansions and some exploration success could result in tantalum prices
falling dramatically as they did in 1979-80 when another supply squeeze came
to an end.
The 2000 squeeze
$(U.S.) a pound contained tantalum pentox, isolated prices
June 2000 $106.00 a pound
Sept. 2000 $182.60 a pound
Dec. 2000 $443.90 a pound
Source: U.S. Geological Survey (Cunningham, 1999) |
