Tantalum Market Overview
Patrick Stratton, Roskill Information Services and David Henderson, Rittenhouse International Resources
Tantalum was identified in Sweden in 1802. It has several defining characteristics. One is that it has a very high melting point, 3,017°C, which is exceeded only by that of tungsten, rhenium, osmium and carbon. It is also highly corrosion-resistant to most acids below 150°C, hard (Mohs hardness of 6.5) and in most cases chemically inert. This combination of attributes means that it has a wide range of applications. The main use for tantalum derives from its high volumetric efficiency, which makes it a key material used in electronic capacitors.
Occurrence and resources
Tantalum occurs almost always with niobium, an element with some end-uses in common, in a wide range of minerals that have greatly varying proportions of both metals. Some of these minerals are mined exclusively for the niobium values, and the tantalum is probably rarely recovered during processing. The Araxá pyrochlore deposit in Brazil is a good example of this; it is by far the world’s largest source of niobium but produces no marketable tantalum. Some others, such as the Wodgina mine in Australia, are exploited for the tantalum and the niobium is disregarded. Yet others contain commercially viable proportions of both elements and the two can be considered as co-products, even if the tantalum commands a much higher price, perhaps in a ratio of 10:1. Such deposits are widely distributed around the world and form the basis of much of the artisanal columbite-tantalite mining that takes place, particularly in Central Africa. Tantalum and niobium also occur frequently with zirconium, lithium and the rare earth elements. Many of the new multi-commodity projects seen in the last few years have had tantalum and niobium as contributors to the overall potential revenue stream, but not as the major reasons for development. Such projects will not become sources of tantalum unless they are commercialised for their main purpose.
For most of the 2000s it was often reported that the majority of the world’s tantalum resources were located in Central Africa and in the Democratic Republic of Congo (DRC) in particular. Towards the end of the decade, however, the Tantalum-Niobium International Study Center, the industry’s principal forum, estimated that some 40% of the most likely global resource base is in Brazil and elsewhere in South America, followed by Australia, with 21%. Central Africa was estimated to account for less than 10%. At about 700Mlb Ta2O5, (317.5kt) the estimated global tantalum resource is sufficient to last for more than 150 years at historical peak production levels.
World Tantalum Supply 2000 to 2011, (000's lb, Ta2O5)
The supply of tantalum to the market derives from several sources: hard rock or artisanal mining; tin slags and synthetic concentrates; scrap; and stockpiles. Tantalum production from conventional/hard rock and artisanal mining represents by far the largest part of tantalum supply. In 2011, these sources accounted for 67% of the 3.75Mlb Ta2O5 (1,393t contained Ta) supplied to the market. This has been the case since the start of the 2000s, with mining making up 55-75% of overall supply, and typically 60-70%.
In 2011, approximately half of primary supply came from hard rock mines in Australia (Wodgina), Brazil (Mibra and Pitinga), Ethiopia (Kenticha), Mozambique (Marropino), China (Yichun and Nanping) and Russia (Lovozero). Australia and Brazil each provided about 30% of hard rock supply, with Africa adding 22%. That material was destined for the global market. The balance, from China and Russia, was consumed by processors in the domestic market. The breakdown for 2012 would look rather different. Global Advanced Metals (GAM) suspended mining at Wodgina during the year, although it continued to meet its delivery obligations from other sources. Noventa continued to struggle with technical and financial difficulties at Marropino that had prevented the operation from ever reaching its full potential but, in November 2012, announced a substantial refinancing deal with its main shareholder. Kenticha also suspended activities pending a search for finance to address the problem of rising levels of radioactivity that had made its ore unsaleable in the international market. This issue is not unique to Ethiopia, as controls on the transportation of radioactive ores are becoming stricter on a global basis and denial of shipment is increasingly common. It is quite likely that in future there will be greater emphasis placed on processing ore to non-radioactive concentrates at the point of production or at least in the country of production.
The contribution of artisanal mining to primary supply can be split into two categories. One part can be described as mainstream artisanal mining, which has been undertaken for many years in Brazil, Nigeria and other areas of Africa, including Central Africa. This made up 16% of primary supply in 2011. The other part is what is often described as conflict tantalum. This is artisanal mining in areas of the DRC that are largely under the control of warring militias and the proceeds from mining are used to fund the ongoing conflict.
This issue has been the subject of considerable international concern from some years. The conflict tantalum is mostly smuggled through neighbouring countries, such as Rwanda, making its true origins very difficult to guarantee or in many cases even to determine. As a result, a number of the major international processors for some time followed a policy of not knowingly purchasing any tantalum ores from anywhere in the region. Tantalum ore from the conflict region is a major part of overall primary supply, accounting for an estimated 23% in 2011. Almost all is believed to have been ultimately purchased by processors in China.
Attempts are being made to halt the trade in conflict tantalum, while enabling legitimate artisanal mining to flourish in areas of the region not affected by the conflict. One of the major moves has been section 1502 of Wall Street Reform and Consumer Protection Act (“Dodd-Frank”) which essentially requires, or will require, companies reporting to the SEC to disclose whether or not the tantalum they buy originates in the conflict region. Dodd-Frank has received criticism for being extremely onerous and costly to implement and is also regarded by some observers as being too loosely worded. A major problem with the whole issue of conflict tantalum is the ability to track tantalum back through several stages to its original source. A key element of this is the concept of “bag and tag”, which essentially means identifying tantalum ore at the source of production and providing the means to track it down the chain.
The industry itself has introduced several schemes to address this. One is the Conflict-Free Smelter (CFS) Program, which was developed by the electronics industry to eradicate unethical sources of raw materials from the supply chain. Driven by the Electronics Industry Citizenship Coalition (EICC) and Global e-Sustainability Initiative (GeSI), the CFS Program is being adopted by the automotive, aerospace and other metal-consuming industries and a growing number of tantalum smelters are now certified as conflict-free.
Other initiatives have been launched at company level. One example is the Solutions for Hope Project, created by Motorola and the capacitor manufacturer AVX, which operates as a closed-pipe supply line with a defined set of key suppliers, including artisanal cooperatives. Another capacitor manufacturer, Kemet, has adopted a similar closed-pipe approach. Like AVX, Kemet aims to source ethical artisanal tantalum minerals in the conflict-free Katanga province of the DRC. That will be processed to the intermediate product, K-salt, at a new plant in South Africa and then further processed to capacitor-grade tantalum powder at Kemet’s plant in the USA. Most of these initiatives have only recently been introduced and it is too early to know how successful they will ultimately be. They will all stand or fall depending on how reliable the tracking and tracing mechanisms prove to be. In late 2012, two major concerns have come to the fore. Both were predictable. One is that the United Nations has identified cases where legitimate tags have been sold to illegal producers, enabling them to launder conflict tantalum. The other is that there has been renewed fighting in the DRC, with rebel forces taking control over areas of the country that have substantial tantalum resources and that are close to the principal smuggling routes. While neither of these events destroys the idea of developing a legitimate artisanal supply base in Central Africa, it is equally true that recent events have not made it any easier.
Tin slags were once the largest contributor to tantalum supply, making up about two thirds of total supply. In recent years they have become far less important, contributing probably less than 10% of total primary supply, in line with a large reduction in tin mining in countries that host tin ores with higher tantalum contents. There are three types of tantalum-bearing slag to consider: slags from current tin smelting; low-grade slag dumps; and large slag dumps. The first of these represents a continuing source of new tantalum. The second is waste material that was used for road core or land reclamation in the past but became more valuable when tantalum prices rose and was recovered by companies that knew where it was. This is a finite source. The last category is possibly of most interest at present. There are several slag dumps in Brazil that are large enough to be considered almost as tantalum resources. They are being actively examined and could become major sources of tantalum supply for some years.
Sales of tantalum from the US strategic stockpile, build up during the Cold War years were a large contributor to supply during the first half of the 2000s but the inventory was largely exhausted by the middle of the decade. Inventories throughout the supply chain are a significant factor in determining tantalum pricing and the demand for primary tantalum. At the end of the 2000s, it was estimated that some industry inventories were sufficient to last for two years. This, in part, enabled consumers to resist pressure from the mining sector to accept substantial increases in contract prices for tantalum ore. In 2010 and 2011 there was a very marked increase in US imports of tantalum scrap. It is highly likely that the material was aimed at rebuilding inventories.
Tantalum wastes and scrap form an important part of over tantalum supply, accounting for 15-30% of total supply between 2000 and 2011. Secondary materials include processors’ own internal scrap, consumer scrap returned for recycling and tantalum-bearing residues. More secondary tantalum is traded than is reported. Superalloy scrap, for example, would typically be described as nickel scrap in customs documentation. That scrap does, however, contain significant quantities of tantalum, rhenium and other metals, and those metals are recovered during processing.
Tantalum enters international trade in a number of forms: ores and concentrates; slags; K-salt and other chemical intermediates; worked and unworked metal; and scrap/residues. Official trade statistics for tantalum are generally poor, owing to data being withheld for reasons of confidentiality, aggregated tariff codes and, as outlined above, the opaque nature of much of the trade in artisanal production. There are, however, some general rules of thumb.
Tantalum, in any form, at some point passes through the hands of processors, of which there are relatively few of global significance. Some, such as H C Starck and Cabot Supermetals, the latter now owned by GAM, have traditionally relied mainly on hard rock mines, although they do buy from a variety of sources. In contrast, Chinese processors, which include some of the very largest in the world, are far more geared to the spot market and to artisanal production in particular. This will continue to be the case, although artisanal production in Africa is becoming more important to western consumers.
Estimated world consumption of tantalum, 2005 to 2011 (t Ta)
Tantalum is a high value market, with 99.9% min. metal trading at more than US$500/kg during the second half of 2012. It is, however, not large in tonnage terms. Demand peaked during the internet bubble of 2000 and reached an estimated 2,300t. Demand in later years has been rather lower and was in the range of 1,600-1,700tpy between 2005 and 2007. The recent peak in demand was in 2008, when an estimated 1,855t were consumed. The global economic downturn had a major impact on demand for tantalum, which fell overall by 40% in 2009, to 1,125t. No segment of the tantalum market was left untouched, although the individual decreases varied considerably (23% to 49%). There was strong recovery in 2010, when an estimated 1,765t were consumed, before the market eased in 2011. When available, data for 2012 will probably show stagnant demand, at best. A return to slow but steady growth in demand is probable from 2013 onward, with a level of about 2,000t possibly being reached in 2016.
The use of tantalum can be broadly broken down into four product types. Tantalum powder is used mostly in electronics. Tantalum metal has many applications in chemical processing, medical devices and alloys. High-grade tantalum oxide is used in camera lenses and X-ray equipment. Tantalum carbide is used in cutting tools.
Tantalum has a wide range of markets, with the largest being the electronics industry. The principal use (40% in 2011) is in capacitors, which are found in all electronic devices. In this market, tantalum competes with lower-cost ceramic and aluminium capacitors and its use is thus largely limited to high-end applications where its high volumetric capacity and stability are critical. An electronic device containing hundreds of capacitors may have only one tantalum capacitor. In unit terms, tantalum accounts for only about 1% of the total capacitance market. In value terms, however, its share is about 10%. This market for tantalum is considered to be mature and is expected to show the lowest rate of growth in demand among the major applications at about 2%py from 2013 to 2016.
Other significant electronic uses for tantalum are sputtering targets (12% of 2011 consumption) and surface acoustic wave filters. The principal non-electronic application for tantalum (21% in 2011) is in superalloys, which are used in aerospace and land-based gas turbines. Superalloys, along with sputtering targets and tantalum chemicals, have probably the highest demand growth potential in the coming years, with increases of 8%py anticipated. Superalloys alone could account for nearly half of the anticipated tonnage growth in demand for tantalum over the next few years and are used in applications that are less volatile and less price-elastic than is the case with electronics.
Combined, carbides, chemicals and mill products made up the remaining 27% of tantalum consumption in 2011 and are expected to show growth of 5%py through 2016.
Tantalum prices are most commonly described in terms of the Ta2O5 content of ores and concentrates, on a 30% contained basis. These prices are the reference point for the industry, although information is available on prices for other tantalum products. The two principal mechanisms for Ta2O5 prices are long-term contract prices and spot prices. Most production is usually from hard rock mines, such as those in Australia and Brazil, and is sold to processors on long-term contracts, the details of which are seldom made public. The balance, much of it artisanal production, is typically traded on the spot market. Contract prices are usually higher than market prices, although the gap narrowed in 2009 and there was convergence in 2010 and 2011.
Spot prices for tantalite spiked in 2000, reaching US$350/lb, as the result of rapidly growing demand for tantalum in consumer electronics and a belief that the supply of tantalum was going to move into deficit. In reality, very little tantalum was traded at the published spot price, there was no supply shortage and the demand boom ended. Spot prices fell sharply. In the years that followed, prices were fairly stable. From 2005 until 2009, spot prices were generally below US$40/lb and average contract prices at approximately US$60/lb. The generally low level of spot prices was at least partly due to the availability of low-priced tantalum minerals from Central Africa, minerals that were frequently conflict-related. Towards the end of 2008 Talison (now GAM) announced that it was seeking a substantial increase in its contract prices. The increase amounted to as much as 80% over its existing contract price of about US$75/lb. With low market prices, weak demand for tantalum caused by the global economic downturn and the existence of large consumer inventories of tantalum, it failed to obtain the desired increase and suspended mining operations.
Spot prices began to rise rapidly in early 2010, as global economic conditions improved and inventories became depleted, and by mid-year were comparable to Talison’s previous contract price. By early 2011 prices were three times higher than a year previously. This prompted Talison (by then GAM) to restart production, at a contract prices believed to be US$150/lb. Mibra agreed contracts at a similar price, and Noventa came back into production, albeit at much lower contract prices than GAM or Mibra. Demand for tantalum weakened again during 2011 and the average spot price published by Metal Pages slipped from US$133/lb to about US$100/lb by year-end. GAM suspended mine production at Wodgina once again. Another recovery in prices occurred in 2012, with a level of US$125-135/lb being reached by October. Renewed fighting in the DRC in late 2012 once again raised the possibility of a widespread reluctance to purchase tantalum minerals from anywhere in the region, and with it the possibility of a sharp upward movement in tantalum prices.