Friday February 9, 5:59 am Eastern Time
FEATURE-Rare metal key to making smaller
mobile phones
By Paul de Bendern
HELSINKI, Feb 9 (Reuters) - Only a few years ago the mobile phone was a brick-like,
unreliable and expensive device targeted at the few with deep, reinforced pockets.
Today, it's a small, light, everyday, inexpensive product used by more than 700 million people, or about 12 percent of the
world's population.
What led to this dramatic change?
One important factor was the use of certain metals, such as copper, nickel, palladium, gold and tantalum, to help reduce the
size of a cellular phone.
Industry experts say that all the technology now packed into a mobile phone, such as batteries, flash memory chips,
microprocessors, and liquid crystal displays (LCDs), could have filled a whole office floor less than 30 years ago.
Take for example the silver-grey precious metal tantalum, which is largely mined in Australia and Central Africa.
Tantalum, a powder compacted for use in producing passive capacitors, has been a key factor in reducing the size of the
mobile phone in recent years.
The expensive and rare powder is used to build these capacitors that regulate voltage at high temperatures.
Demand for this tiny but sophisticated component from the likes of mobile phone giants Nokia and Motorola (NYSE:MOT -
news) has pushed the price of the precious metal around 600 percent higher in less than three years, traders say.
Tantalum highlights the importance ``old'' economy precious metals have in the make-up of ``new'' economy products, not just
in mobile phones but also in portable computers, game consoles and other electronic devices where size is king.
Around one third of the world's tantalum is mined by Australian company Sons of Gwalia (Australia:SGW.AX - news) alone.
PRECIOUS METAL HELPS RUN HEART OF CELLPHONE
A mobile phone is one of the most intricate devices that people use on a daily basis, but many don't know that it's really a radio
-- an extremely sophisticated radio that sends and receives signals and works under very low power.
If you dissect a phone you will find it holds a battery, a small microphone, a tiny speaker, a liquid crystal display, a keyboard
not unlike a TV remote control, an antenna -- used for receiving and transmitting signals -- and a circuit board.
But it is the printed fibre glass circuit board and the content that sits on top of it that make the phone tick. Gold plating covers
the surfaces of circuit boards and connectors.
While the cellular phone is mostly made out of plastics, it is run by several powerful computer chips.
Some of the key parts are the microprocessor, the digital signal processor (DSP), the read-only-memory (ROM), connectors,
the radio frequency (RF) power sector and flash memory chips.
But the tantalum capacitor and other passive capacitors are also crucial. About 35 percent of them are made for mobile phone
makers, according to industry experts.
They are used as storage vessels, storing energy, ready for use when there is a big surge of energy to a cellular phone.
These components help supply that extra kick of energy for the phone which the battery cannot provide on its own.
They are also used as an ingredient of superalloys, principally for use in aircraft engines and spacecraft.
DEMAND OUTSTRIPPING SUPPLY
The unexpected surge in demand from mobile phone and computer makers in recent years has boosted the price of tantalum on
the metals market, forcing makers of tantalum capacitors, such as American companies AVX Corp (NYSE:AVX - news) and
Kemet Corp (NYSE:KEM - news) to pass on some of the cost to their clients.
Last year more than 400 million phones were sold globally, a 45 percent increase on the previous year. In 2001 mobile phone
leaders expect over 500 million units to be sold worldwide.
Because cellular phones are not yet recyclable, manufacturers cannot reuse the rare metals for future phones. But plans are
underway to allow for limited recycling.
Tantalum prices have also stayed high because demand is outstripping supply and the only replacement to tantalum capacitors
-- ceramic capacitors -- cannot yet be made small enough to fit the dimensions of tiny cellular phones.
``There's no substitute for tantalum that would meet the requirements of mobile phones,'' said Jim McCombie, managing
director of A&M Minerals and Metals Ltd, which trades tantalum.
Last year annual usage of tantalum stood at around five million pounds (lbs), up from three million in 1997 and yearly demand is
rising by around 15 percent, tantalum traders say.
The rise in demand is also due to a rise in non-mobile phone electronics, especially from makers of small electronic devices.
Prices for tantalum jumped to around $350 per pound last month, up from $40 in 1997, traders said. In the early 1990s the
metal traded at around $20 per pound.
But one trader said the price range was now off its highs as financial markets digested news that the mobile phone market
would not grow as fast as expected in coming years.
``We may now be past the big peak in tantalum, but demand is still outstripping supply and will do so for the foreseeable
future,'' said one tantalum trader. ``At least until scientists have found a viable replacement.''
Even if the consumer appetite for mobile phones cools it will still be a big market and tantalum traders expect to see increased
demand from Asian manufacturers of electronic gadgets that are also constrained by size.
``Tantalum may not be the flavour of the month, but it's still in fashion,'' said London-based McCombie. |
