‘Black Swans’ in tin and tantalum mining and their implications for electronics manufacturers Presented by: John P. Sykes 123 Including input from: Nick Gardiner 1 , Allan Trench 124 , and Laurence Robb 5 And with grateful acknowledgement of Peter Kettle 6 , Tom Mulqueen 6 and Cui Lin 6 1. Curtin University; 2. The University of Western Australia; 3. Greenfields Research Ltd; 4. CRU Group Ltd; 5. Oxford University; 6. ITRI Ltd Argus Media-Metal Pages China Metals Week, Guangzhou, 18 th Nov 2015
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Black Swans in tin & tantalum mining and their implications for electronics suppliers - Sykes et al - Nov 2015 - Greenfields Research / Centre for Exploration Targeting / Curtin University
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‘Black Swans’ in tin and
tantalum mining and
their implications for
electronics
manufacturers
Presented by: John P. Sykes123
Including input from: Nick Gardiner1, Allan Trench124, and Laurence Robb5
And with grateful acknowledgement of Peter Kettle6, Tom Mulqueen6 and Cui Lin6
1. Curtin University; 2. The University of Western Australia; 3. Greenfields Research Ltd;
4. CRU Group Ltd; 5. Oxford University; 6. ITRI Ltd
Argus Media-Metal Pages China Metals Week, Guangzhou, 18th Nov 2015
Argus Media-Metal Pages China Metals Week (Guangzhou)
The past is no indicator of the future in
the tin and tantalum industries
18th Nov 2015
?
0
10,000
20,000
30,000
40,000
50,000
60,000
1974
1977
1980
1983
1986
1989
1992
1995
1998
2001
2004
2007
2010
2013
Pri
ce
(2
01
3 U
S$
/t)
Tin Prices (US$2013):1974-2013
0
100,000
200,000
300,000
400,000
500,000
600,000
700,000
800,000
900,000
1974
1977
1980
1983
1986
1989
1992
1995
1998
2001
2004
2007
2010
2013
Pri
ce
(2
01
3 U
S$
/t)
Tantalum Prices (US$2013) – 1974-2013
?
'Black Swans' in tin and tantalum mining
Source: United States Geological Survey (USGS)
Slide 2 of 25
Argus Media-Metal Pages China Metals Week (Guangzhou)
Are the tin and tantalum markets
vulnerable to ‘Blacks Swans’?
“a rare bird in the lands,
and very much like a
black swan”
- Juvenal, 1st Cent AD
18th Nov 2015
• A surprise event with major impact;
• Rationalised with hindsight;
• If the relevant data were available it
could have mitigated
- Based on Nassim Taleb (2007)
'Black Swans' in tin and tantalum mining
Slide 3 of 25
Argus Media-Metal Pages China Metals Week (Guangzhou)
THE CASE FOR ‘BLACK
SWANS’ IN TANTALUM MINING
‘Black Swans’ in tin and tantalum mining and the implications
for electronics manufacturers
18th Nov 2015
'Black Swans' in tin and tantalum mining
Slide 4 of 25
Argus Media-Metal Pages China Metals Week (Guangzhou)
Tantalum is ‘critical’ to the electronics
industry but vulnerable to supply shocks
18th Nov 2015
Source: Tantalum-Niobium International Study Centre (TIC) 0
100,000
200,000
300,000
400,000
500,000
600,000
700,000
800,000
900,000
1974
1977
1980
1983
1986
1989
1992
1995
1998
2001
2004
2007
2010
2013
Pri
ce
(2
01
3 U
S$
/t)
Tantalum Prices (US$2013) – 1974-2013
'Black Swans' in tin and tantalum mining
Slide 5 of 25
Argus Media-Metal Pages China Metals Week (Guangzhou)
Such as the switch from Asian tin slag
production to Australian mines
18th Nov 2015
0
200
400
600
800
1000
1200
1400
1600
19
98
1999
2000
2001
2002
2003
2004
Annual mined tantalum production (tonnes)
OtherAfrica
CentralAfrica
Canada
Brazil
Australia
Source: Tantalum-Niobium International Study Centre (TIC)
Source: United States Geological Survey (USGS)
'Black Swans' in tin and tantalum mining
Slide 6 of 25
Argus Media-Metal Pages China Metals Week (Guangzhou)
Then the rise of D.R. Congo artisanal
mining and “conflict minerals”
18th Nov 2015
0
200
400
600
800
1000
1200
1400
1600
2005
2006
2007
2008
2009
2010
20
11
2012
2013
2014
Annual mined tantalum production (tonnes)
ROW
Other Africa
Central Africa
Canada
Brazil
Australia
Source: United States Geological Survey (USGS) Image: Shutterstock
'Black Swans' in tin and tantalum mining
Slide 7 of 25
Argus Media-Metal Pages China Metals Week (Guangzhou)
Now we look set for another structural
supply shift as the conflict trade ends
0.00
20.00
40.00
60.00
80.00
100.00
120.00
140.00
200
6
200
6
200
7
200
8
200
9
201
0
201
1
201
2
201
3
201
4
201
5
Metal Pages Tantalite basis 30% Ta2O5 (EU) $/lb Ta2O5
18th Nov 2015
Closure of
Wodgina
mine
Passage of
Dodd-Frank
Act
Global Financial
Crisis
Source: Pete Souza (Whitehouse Photostream)
Post-spike demand
destruction?
'Black Swans' in tin and tantalum mining
Slide 8 of 25
Argus Media-Metal Pages China Metals Week (Guangzhou)
But where will this new tantalum supply
come from?
35%
58%
3% 3% 1%
USGS Reserves Estimate (>150,000 tonnes)
Australia Brazil Canada
Ethiopia Other
41%
21%
10%
10% 9%
7% 2%
TIC Estimated "Likely Resources" (%)
South America Australia
Russia & Middle East China & SE Asia
Central Africa Other Africa
North America
18th Nov 2015
'Black Swans' in tin and tantalum mining
Slide 9 of 25
Argus Media-Metal Pages China Metals Week (Guangzhou)
Tantalum uncertainties: In summary
• Tantalum is ‘critical’ to the electronics industry but vulnerable to
supply shocks;
• As exemplified by the switch from Asian tin smelter slag
production to Australian mine production in the 1990s/ early 2000s;
• Then the rise of D.R. Congo artisanal mining and “conflict
minerals” from about 2010;
• Now we look set for another structural supply shift as the conflict
tantalum trade is brought to an end;
• But where will this new tantalum supply come from? There are
large tantalum resources but all with cost, technical and political
problems;
• What does this mean for the electronics industry? What is the likely
future availability and price of tantalum?
18th Nov 2015
'Black Swans' in tin and tantalum mining
Slide 10 of 25
Argus Media-Metal Pages China Metals Week (Guangzhou)
THE CASE FOR ‘BLACK
SWANS’ IN TIN MINING
‘Black Swans’ in tin and tantalum mining and the implications
for electronics manufacturers
18th Nov 2015
'Black Swans' in tin and tantalum mining
Slide 11 of 25
Argus Media-Metal Pages China Metals Week (Guangzhou)
0
5
10
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25
30
35
40
45
50
0 to5
5 to10
10 to15
15 to20
20 to25
25 to30
30 to35
35 to40
Tin prices were recently at 30 year highs
18th Nov 2015
Long-term tin price history US$/tonne, inflation adjusted 2014 prices Price range, $000/tonne, 2014 real terms