UK-based Roskill believes higher demand for computers, mobile phones and other consumer electronics will drive tantalum prices up long term.
In a new report, UK research firm Roskill predicts that tantalum consumption will rise by over 3 percent per year to 2026 on higher demand for computers, mobile phones and other consumer electronics that contain tantalum.
The firm explains that a floor price of $50 to $60 per pound for tantalum pentoxide should sustain supply from artisanal and by-product sources; however, in the long term prices should edge up to about $80.
Roskill on tantalum supply
Australia accounted for about 60 percent of global tantalum supply until around 2010, according to Roskill. Currently, tantalum production is concentrated in South America and Africa. Burundi, the Dominican Republic of Congo and Rwanda were responsible for between 45 and 55 percent of global supply in 2016. Approximately one-fifth of global supply comes from South America through two privately owned mines in Brazil and from artisanal columbite mining. AMG Lithium’s Mibra project is expected to start producing tantalum concentrate in mid-2018.
In Australia, tantalum is mostly mined as a by-product of lithium mining at Talison Lithium’s Greenbushes mine. Pilbara Minerals (ASX:PLS) plans to develop another lithium-tantalum mining project, and recently received a $15-million investment from the Australian government. Atlas Iron’s (ASX:AGO) Wodgina mine also produces tantalum, but as of June 2015, the company estimated that only two years of mine life remained. Roskill notes that growth in lithium demand for lithium-ion batteries for electric vehicles could increase tantalum output in Australia, which is attractive as a guaranteed conflict-free source.
Tantalum conflict minerals regulations
Roskill notes that the US House recently voted to repeal Dodd-Frank legislation, including Section 1502, which calls for companies that file reports with the Securities and Exchange Commission (SEC) to report whether they have sourced materials from conflict minerals countries, including the Democratic Republic of Congo (DRC). Even if the Dodd-Frank repeal does not gain Senate approval, SEC Chairman Michael Piwowar said in April that the SEC will no longer be enforcing the 2012 rule requiring that firms verify that their products do not use conflict minerals.
As conflict minerals regulations loosen in the US, they are tightening in Europe. In November 2016, the EU agreed to compulsory checks on conflict minerals supply chains starting in 2021. The regulation will apply to importers of gold, tin, tungsten and tantalum, and will cover about 95 percent of EU imports. Smaller importers, including dentists and jewelers, will be exempt because the administrative costs would be too high.
The conflict minerals rules will require senior management to keep records for five years, share due diligence policies with the public and allow for whistleblowers to identify risk-prone supply contracts. Under the regulation, companies will also have to develop supply chain traceability systems. Their risk management processes will be open to independent third-party audits, which will be made available to member state authorities.
The EU conflict minerals regulations will apply starting on July 9, 2017, but the majority of the provisions will not come into effect until January 2021 — leaving time for companies to adjust their practices.
Roskill says that companies try to ensure that their supply chains remain conflict free through a “bagging and tagging” identification system. The system has been introduced “with varying degrees of success,” and other options are being considered. One of the new methods is a “geological passport” that lists and compares the unique characteristics of the ore with data from mine sites to reduce smuggling. The passport idea is being tested to determine its cost effectiveness.
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Securities Disclosure: I, Melissa Shaw, hold no direct investment interest in any company mentioned in this article.