Wednesday 1st October 2014

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Conflict-free tantalum

End-users can help real miners develop legitimate sources of this crucial metal

by Michael Kachanovsky

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Tantalum is not well-known. Rarely mentioned in financial news, the metal is often traded in opaque transactions between processors and end-users. Its worldwide production is a fraction of the output for more common metals like aluminum and copper.

Tantalum demand has been estimated between six and seven million pounds per year, a tiny market indeed. But do not assume that tantalum is unimportant, as it plays a significant role in nearly all high-end electronics. The metal is irreplaceable. It cannot be substituted with other, more commonly available elements or alloys without losing qualities in the finished components.

Conflict-free tantalum

Although not a well-known commodity, tantalum has wide-ranging applications that suggest end-users will take steps to secure
their future supply.

Tantalum production can’t keep pace even with current demand. Meanwhile new products require additional supply. End-users are acutely aware of this shortfall. Since Australia’s Wodgina mine closed in 2012, a major source of tantalum production was lost and spot prices have risen steadily. Wodgina accounted for about 1.4 million pounds per year. Now Australia produces just a few thousand pounds a year.

Brazil remains a dominant tantalum source, with several operating mines. About a quarter of historic world supply originated from the country. The Mibra mine, operated by Companhia Industrial Fluminense, is the country’s largest tantalum producer. But even this mine was limited to processing tailings during recent months while expansion plans were underway to increase open pit production. Mibra is expected to produce about 400,000 pounds tantalum per year, still a relatively small amount of the world’s total projected demand.

Ethiopia was once a significant producer. The Kenticha mine is considered to have one of the world’s largest tantalum resources. But production has been suspended due to contamination from uranium, which caused problems with radioactivity during transport. In 2012 Ethiopian exports were halted and the country is considering new processing capacity to deal with the problem. However Elinito, a significant mine developer with other African assets, recently offered to invest in a processing plant to restart Kenticha’s production. The plant would use a hydrometallurgical circuit to remove uranium, yielding a high-purity tantalum-niobium concentrate. For the immediate future, however, this is still on the drawing board, pending government approval and development of the processing plant.

Mozambique has also been a significant tantalum exporter. Here too, production shortfalls have limited output in recent years. The Marropino mine is the country’s largest producer, operated by the Noventa Group. The company has reported a string of operational problems including severe weather, processing plant shutdowns and unreliable electrical supply, all of which cut production sharply. Mine output has fallen from more than 5,300 pounds to just 1,600 pounds in 2012 and early 2013. While the company states that it aspires to increase future tantalum production, the situation in Mozambique is not unique. It illustrates tantalum’s tenuous supply outlook.

With few legitimate sources for tantalum production, much of the world’s supply comes from conflict minerals. They are delivered by small-scale artisanal output that is smuggled across borders to be sold from neutral countries. For example, in the Democratic Republic of the Congo, rebel groups control large parts of the country. They have imposed dictatorial rule on local communities and generated small-scale mine production under conditions so harsh that they actually approach slavery. High-value minerals and diamonds, including tantalum concentrate, are smuggled into neighbouring countries like Rwanda and sold to finance the rebels’ activities. Since there are no producing tantalum mines in Rwanda, it is likely that much of the country’s output comes from DRC conflict sources. One could make the same assumption for several other nearby countries.

The human and environmental toll of mining and smuggling conflict minerals presents a crisis. However, in an age when money is often the only consideration, this human rights abuse is often ignored. The proportion of this shadow tantalum inventory in total world supply is difficult to estimate.

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