COMMODITIES & AGRICULTURE: Tantalum demand grows as
electronic devices shrink: From a contaminant to an essential of
high-tech production, new sources of the metal are being sought,
writes Paul Solman:
Financial Times ; 23-Nov-1999 02:14:48 am ; 721 words
The tantalum market is undergoing significant change as demand grows and
traditional production gives way to mining from ores.
Once considered merely a contaminant in the production of tin, tantalum's
applications include metal-cutting, heat-resistant super alloys for the
aerospace industry, and anti-corrosive materials for the chemicals and
pharmaceuticals sectors.
Since the beginning of the decade it has also become increasingly important
in the electronics industry, where it is used to make high-quality capacitors for
mobile phones, computers, car electronics, video cameras, pagers and other
small devices.
"The main advantage of tantalum is that it has a very high capacitance per
volume," says George Korinek, market analyst. "For that reason, it has
benefited from the trend towards making electronic objects smaller."
There are about 20bn tantalum capacitors in use, and the latest miniature
mobile phones have an average of about 10 tantalum components, Mr Korinek
says.
Electronic applications for the metal have jumped so sharply in the past 10
years that they now account for almost two-thirds of consumption, compared
with 12 per cent going to aerospace, 9 per cent to metal-cutting and 17 per
cent to chemicals and pharmaceuticals.
Analysts estimate global demand is now about 4m lbs a year, and growing at
an annual rate of 4-5 per cent.
A side-effect of that growth is that one of the traditional production methods is
beginning to be exhausted.
Twenty years ago, about 70 per cent of the world's tantalum was recovered
from slag created by production of tin. As the slags have run down, the
amount of tantalum produced from this source has diminished, now
accounting for only 18 per cent of annual production.
A small amount is recovered from recycled scrap, processors' stockpiles and
from strategic metal supplies held by the US Defense Logistics Agency,
which are being run down.
However, the main source of tantalum has shifted to mining from hard ores,
which accounts for 40 per cent of supplies.
"There will always be a certain amount of tantalum produced from tin slags,
but hard ores are becoming more and more important to satisfy demand for
the metal," says Peter Lalor, executive chairman of Australian mining group
Sons of Gwalia.
SGW's core business is gold, but it also has the world's largest tantalum
reserves at its Greenbush and Wogina mines in Western Australia, and
produced 929,000 lbs of tantalum in the 1999 financial year.
Smaller mining opera-tions are located at the Yichun mine in China, Metallurg
in Brazil and Tanco in Canada, but SGW accounts for half of mined tantalum
production.
"Up until about three or four years ago, there was genuine concern among
tantalum users about whether there would be sufficient production to satisfy
the growth in demand," Mr Lalor says. "However, the development of
Greenbush and Wogina has ensured we will be able to keep up."
Mr Lalor says that even without further exploration, SGW has tantalum
reserves of about 50m lbs. However, the group is also investing heavily in
research and development in an effort to increase the amount of tantalum
recovered from ore.
This is crucial if prices of the metal are to remain under control.
Market values of tantalum are difficult to gauge as much of the metal is sold
through confidential long-term contracts. SGW has deals with Cabot
Corporation of the US and H.C. Starck, part of Germany's Bayer group, both
of which are leading processors of tantalum.
However, Metal Bulletin, the trade magazine, quotes prices of about Dollars
40 a pound, and industry insiders say the highest quality metal can be worth
Dollars 50 a pound on the spot market.
Prices have risen sharply from about Dollars 30 in the past two or three years
on the back of the rising demand in the electronics industry, but producers
and traders are keen to avoid further big increases.
Though tantalum is a premium material for manufacturing miniature
capacitors, it faces competition from less expensive materials such as
aluminium and ceramics.
"Increasing demand could push prices up further, but our challenge is to
ensure that we get a good rate of return from our production," Mr Lalor says.
"There is a keen understanding in the industry that allowing prices to rise fast
would be shooting ourselves in the foot." |
