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Market fundamentals for antimony, used in fire retardant materials, look promising.
Native antimony and calcite. Image by Rock Currier, published on Wikimedia Commons.
Compared to gold, silver, or rare earths, antimony is not a very “sexy” metal.
Antimony cannot be used to make jewelry, doesn’t appear in cell phones and is not publicly traded on any metals exchange. But the silver-grey metalloid is quietly making its way onto investors’ radar with some solid fundamentals, due mostly to an undersupplied market.
Like rare earths and graphite, most antimony is mined in China, specifically at the Xikuuangshan mine in Hunan province, the world’s largest antimony deposit. Antimony is typically extracted from the sulfide mineral stibnite, with lower grades concentrated by floth flotation and higher grades smelted.
The US Geological Survey (USGS) estimates there are about 1.83 million tonnes of global antimony reserves, with total production in 2012 of 180,000 tonnes. China produced the lion’s share, 150,000 tonnes, with the remainder produced by Russia, South Africa, Tajikistan, Bolivia and a handful of other countries. The United States does not mine any primary antimony, although one company in Montana was able to produce antimony metal and oxide using foreign feedstock, notes USGS.
As well as through mining, antimony can be derived by recycling lead-acid batteries, and it is also produced as a by-product of smelting other metals, mainly gold, copper and silver.
Top critical metal
While most people have never heard of antimony, it is without a doubt one of the most vital materials due to its primary use as a fire retardant. Compounded as antimony trioxide, antimony is used in fire-retardant bedding, children’s clothing, toys, aircraft and car seat covers — a sector that makes up about 60 percent of the antimony market. Antimony is also consumed in alloys for batteries, plain bearings and solders. Future applications include use as a component in phase-change memory, which could lead to a dramatic increase in computer transfer speeds.
The British Geological Survey in 2012 named antimony the most at risk of a supply disruption due to the high concentration of production in one country: China.
Chinese monopoly cracking
In a story that sounds familiar to followers of rare earths, the Chinese stranglehold on antimony production is weakening, and that is providing opportunities for non-Chinese companies and investors in the west. According to an infographic published by Visual Capitalist, 17 percent of antimony supply is sourced from small, illegal, polluting mines in China. Like the recent crackdown on illegal rare earths concentrate, these mines are gradually being identified and shut down, resulting in fewer antimony exports.
Minormetals.com reported that Hunan province has curbed output to comply with Chinese government restrictions; along with shutting illegal mines, the government has a mandate to protect domestic supply of antimony to feed China’s industrialization. This supply is threatened because, as Visual Capitalist points out, China has nearly exhausted its supply of high-grade antimony ore.
Seven-fold price increase
As a result of the above-mentioned factors, antimony has enjoyed a significant price increase over the past several years. In 2002, the metal was being sold for $2,000 tonne, but by 2011 it had risen a whopping 700 percent, to around $15,000 per MT. While the price has dropped from its 2011 highs, it is still selling at a considerable premium to previous lulls, currently sitting just under $10,000/MT.
At those prices, antimony consumers may look to substitute the metal for something else, but as Minormetals.com points out, that will be difficult because alternatives to antimony are hard to find. The website also notes that high prices should make previous uneconomic sources of production look more attractive, naming Armenia, Australia, Canada, China, Georgia, Italy, Laos, Russia and Turkey as potential antimony jurisdictions.
Bullish outlook
The reduction in Chinese exports of antimony has not been made up by non-Chinese mines, most of which closed down due to Chinese dominance in the sector and a flagging metal price. That makes for a healthy antimony market, with demand outstripping supply resulting in a climbing price. Strong demand for antimony combined with dwindling and precarious supply will exacerbate the current supply deficit notes Visual Capitalist, with the price expected to climb 5 percent annually to reach $20,000 per tonne by 2020.
Antimony has not escaped the notice of Hallgarten & Company’s principal mining analyst, Chris Ecclestone, who told The Metals Report recently that antimony is his favorite specialty metal.
“The antimony market has seen little investment for years because of waning China dominance. Now, new applications for antimony are shaking out the old producers and changing the market dynamic,” said Ecclestone, who observes that “every metal mineral has a different story.” “Most Western mines closed down decades ago, but recently, a few Western mines have reopened, although not enough to make up for reduced Chinese exports. As a result, I expect antimony to be strong.”
How to invest in antimony
Without a physical metals market, antimony investors must place their bets on mining equities. Here are four options:
Toronto-listed Mandalay Resources (TSX:MND) is developing the Costerfield gold and antimony mine in Australia, acquired in 2009. In 2011 the company initiated a preliminary economic assessment for mining the Cuffley Lode, located just north of the Augusta Lode currently being mined. The PEA is expected in the third quarter of this year.
Village Main Reef (OTCMKTS:VMRFF) has a producing gold-antimony mine in the Limpopo province of South Africa. The company claims on its website that the Consolidated Murchison mine is one of the largest producers of antimony outside China. It also contains a 1.35 million gold-equivalent life of mine reserve, with an estimated mine life of 11 years at current production rates.
Mountain Lake Minerals, (CNSX:MLK) a newly formed exploration company that trades on the Canadian National Stock Exchange, is drilling the Little River Property on the Canadian province of Newfoundland. The property contains high-grade gold and antimony occurrences along a 21-kilometer strike. It is 80 kilometers south of the Beaver Brook mine, which was the only primary-producing antimony mine in Canada or the United States before being put on care and maintenance in January.
United States Antimony Corp (NYSE:UAMY) operates the only significant antimony smelter in the Unites States and is increasing its supply of antimony from properties in Mexico and from other third parties. USAC has the rights to mine the Wadley Mine in the State of San Luis Potosi, Mexico, historically the largest producer of antimony in North and Central America. The mine is expected to come on stream immediately with direct shipping ore (DSO) and this will be followed with gravity concentrates by the end of 2013.
Securities Disclosure: I, Andrew Topf, hold no direct investment interest in any company mentioned in this article.
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