Ways to Invest in Tantalum

- September 10th, 2020

What are the ways to invest in tantalum? The market for this critical metal is fairly opaque, but interested investors have options.

With impressive ductility and the ability to resist heat and corrosion, tantalum is one of the five major refractory metals and an important industrial commodity.

Due to its high thermal conductivity, about two-thirds of tantalum is used in electronic capacitors, a fundamental component of cellphones and other modern technologies. Tantalum’s high melting point and corrosion resistance are also critical properties for use in superalloys. Because it causes no immune response in humans, the metal is also used in surgical appliances as a replacement for bone, as a connector of torn nerves and as a binding agent for muscles.

The tantalum market can be difficult to understand, but because it is essential for electronics companies and other industrial end users, some consider the metal a compelling investment. Read on for a brief overview of tantalum supply and demand dynamics, and a look at how to invest in this critical metal.

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Ways to invest in tantalum: Supply and demand

Tantalum is rare, averaging only 2 parts per million in the Earth’s crust. There are few mines solely dedicated to production of the refractory metal, meaning tantalum is mainly produced as a by-product; a significant portion of conflict-free tantalum products are mined as a by-product of lithium production.

The Democratic Republic of Congo (DRC) is the world’s largest tantalum producer, putting out 740 metric tons in 2019; Rwanda comes in second, with tantalum-mining production reaching 370 metric tons in 2019. Brazil, Nigeria and China are other key tantalum producers.

The DRC is a major producer of many metals aside from tantalum, but for over a decade the extraction of these resources has been linked to conflict, human rights abuses and corruption. For that reason, tantalum is known as a conflict mineral; other common conflict minerals are tin, tungsten and gold.

To curb the production of conflict minerals, some government bodies have put rules in place to ensure that companies disclose which mines the metals they use come from. In 2021, the European Union will strengthen its conflict minerals regulations, while in the US it’s possible that 2010 legislation put in place by Barack Obama could be eliminated under President Donald Trump.

Looking more closely at tantalum supply, Roskill notes that during 2019 demand for lithium was impacted by China’s cuts to electric vehicle (EV) incentives. As mentioned, tantalum is a common by-product of lithium, and lithium producers such as Talison Lithium, Pilbara Minerals (ASX:PLS,OTC Pink:PILBF) and Alita Resources also produce some tantalum. Tantalum supply from miners like this can therefore be impacted when lithium demand is lower.

In March 2020, the Chinese government extended EV subsidies until 2022, which Roskill said is “likely to stimulate a return to strengthening lithium demand and revitalise the Australian tantalum sector.” In 2019, Australia was responsible for 20 metric tons of global tantalum production.

There is also a developing tantalum recycling market that does not rely on new tantalum ore production, but instead uses waste and scrap metal to fill its reserves.

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In terms of demand, Roskill sees the need for tantalum products rising 4.6 percent per year from 2019 to 2029, though growth rates for individual end-use markets will vary.

Overall, growth will be supported by demand from the automotive sector and the tantalum capacitor segment, as well as from demand for tantalum chemicals and sputtering targets. The research firm also sees 5G network growth spurring consumption of tantalum.

Ways to invest in tantalum: How to invest

While tantalum is essential for modern electronics and many other products, the tantalum market is extremely small. Like most critical metals, it is not traded on a commodities exchange, and as a result investors can have a hard time gaining exposure to it.

One way investors can play the tantalum market is by looking at the mining industry and researching tantalum resource companies.

Pure tantalum companies are few and far between because so little tantalum is produced and so much of the tantalum that is mined is produced by artisanal miners and small-scale mining. What’s more, many tantalum-producing companies are privately owned — Global Advanced Metals, which holds the Wodgina and Greenbushes operations, is one such company.

Galaxy Resources (ASX:GXY), which produces tantalum and lithium at its Western Australia-based Mount Cattlin operation, is an example of a large public company that produces tantalum.

Investors willing to dig a little deeper may be interested in tantalum exploration companies. Again, these companies are few and far between, and they often focus on more metals than tantalum. That said, there are certainly some options to choose from, and many of them are appealing because they operate outside contentious areas like the DRC.

Here are a few juniors with exposure to tantalum that are currently listed on the TSXV and ASX; all had market caps over $10 million as of August 13, 2020:

  • Commerce Resources (TSXV:CCE,OTC Pink:CMRZF)
  • Critical Elements (TSXV:CRE,OTCQX:CRECF)
  • Frontier Lithium (TSXV:FL)

This is an updated version of an article originally published by the Investing News Network in 2013.

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Securities Disclosure: I, Melissa Pistilli, hold no direct investment interest in any company mentioned in this article.

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