Turbulence to Continue for Tantalum Market
From a low of $52/lb Ta2O5 at the start of 2017, prices hit $88/lb by the end of the year; they are now over $100/lb.
The last 18 months have been an eventful period in the tantalum industry, according to Roskill, and it probably isn’t over yet. 2017 began with a major fire at AMG’s Mibra operation in Brazil that halted much of its production of tantalum concentrate, all of which was being supplied to processor GAM. That forced GAM to seek alternative sources at a time when downstream demand suddenly picked up and processors with little or no inventory were caught off-guard. Inevitably, that led to a sharp increase in market prices. From a low of $52/lb Ta2O5 at the start of 2017, prices hit $88/lb by the end of the year; they are now over $100/lb.
It is quite likely that consumers have replenished inventories, perhaps moving away from the hand-to-mouth approach adopted in recent years. AMG has rebuilt the Mibra concentrator, although perhaps mainly to feed its plans for lithium production. In Australia, supply of by-product tantalum from lithium mining will soon add a large amount of undeniably conflict-free tantalum to supply. As a byproduct, that tantalum will probably be quite low cost, which should reduce supply-side pressure on prices.
In addition, legitimate supply from parts of Africa, such as Namibia, and South America is growing, although mine production in China has been reduced by the closure of one of its major mines. These sources have the potential to become much more important. Recycling remains a major and probably increasingly important source of supply. Almost a third of tantalum units supplied to the market are from revert or post-use scrap, and all but one end-use market is expected to show growth in demand over the forecast period.
Another factor impacting the tantalum industry is the decision by the DRC government to increase the royalty on tantalum exports. Although it is still far from being the highest mining royalty in the world, it will almost certainly encourage greater smuggling via neighboring countries, making it harder for buyers to prove the origin of raw material supply chains (which is required in most jurisdictions).
Additional information is available at https://roskill.com.