Defining The Future Of Tin Mining - Apr 2012 - Greenfields Research

Defining the future of tin mining

ITRI International Tin Conference, Cape Town – South Africa, 25 April 2012

John P. Sykes – Director, Greenfields Research Ltd


Contents

1 Mine type: costly alluvial production

2 Geography: decline in Asia

3 By-products: dependent on other riches

4 Company type: dealing with capital costs

5 Conclusions: identifying competitive new tin supply

Defining the tin mine of the future

Mine type – costly alluvial

production

Alluvial and artisanal important for tin

mining in contrast to other base metals

Images: Greenfields Research

Alluvial & artisanal mining dominate

marginal production

Hard rock Alluvial Artisanal (non-alluvial)

Data: ITRI/Greenfields Research

2012 Q1 Tin Cash Price

293,100t (est.)

Hard or soft: Grade is king!

Theoretical change in cost due to changes in ore grade for a primary tin,

alluvial mine in Indonesia, producing 7,500 tonnes of tin per year, from a

team of gravel pumps, with a 100% recovery.


Approximate

grade of S.E.

Asian alluvial ores

Mining Processing Other

Hard or soft: Grade is king!


Underground mine is a theoretical primary tin, underground mine in Australia,

producing 7,500 tonnes of tin per year, with a processing recovery of 75%.

Open pit mine is a theoretical primary tin, open pit mine in Australia, producing 7,500

tonnes of tin per year, with a processing recovery of 75%.

Approximate grade

of new hard rock

projects

Mining Processing

Other

Alluvial mining vulnerable to oil prices

Theoretical cost breakdown for a primary tin, open pit mine in Australia grading 0.490%,

producing 7,500 tonnes of tin per year, with a 75% recovery.

Theoretical cost breakdown for a primary tin, alluvial mine in Indonesia grading 0.215kg/m3,

producing 7,500 tonnes of tin per year, from a team of gravel pumps, with a 100% recovery.

Theoretical cost breakdown for a primary tin, underground mine in Australia grading 1.700%,

producing 7,500 tonnes of tin per year, with a 75% recovery.


Fuel Electricity Labour Other

Vulnerable to labour

costs

Vulnerable to fuel costs

Alluvial & artisanal mining in decline

Hard rock Alluvial Artisanal (non-alluvial)


341,400t (est.)


Geography – decline in Asia

Asian countries dominate production,

very few developed world tin miners

World Tin Mine Production (2012 est.)


Marginal alluvial and artisanal mining

in Asia & South America vulnerable

Asia

Africa

Australasia

South America

Europe/Russia


293,100t (est.)

Developed versus developing world

labour rates versus fuel prices?


Developed nations a safer investment,

important for large capital projects

Country Ranking (of 181)

Canada 4th

Australia 5th

- -

USA 10th

- -

Germany 20th

- -

UK 25th

- -

Spain 27th

Country Ranking (of 181)

Peru 56th

- -

China 71st

Brazil 72nd

- -

Indonesia 111th

- -

Bolivia 125th

- -

DR Congo 159th

Rankings based on Greenfields Research’s proprietary mining political risk ranking system. The ranking system correlates economic data sets that cover

most of the world’s countries (such as the Transparency International Corruption Index, the World Bank Doing Business dataset and GDP/land area)

with well known mining industry political risk surveys, including the Fraser Institute, Behre Dolbear and ResourceStocks, to get a system which ranks all

countries by their suitability for mining, not just those in the mining industry surveys.

Data: Greenfields Research

Exchange rates important, a stronger

Rupiah raises marginal costs

IDR8,000:USD1.00

IDR10,000:USD1.00

IDR12,000:USD1.00

312,600t (est.)


Asian mining in decline, replaced by

developed world production

World Tin Mine Production (2017 est.)


More developed world production

coming on-stream


Asia

Africa

Australasia

South America

North America

Europe & Russia

341,400t (est.)


By-products – dependent on other

riches

Tin mining is dependent on a wide

variety of by-products

Copper

Australia & China

Silver

China


Images: Shutterstock, www.csksg.com, www.tradekorea.com,

www.cdves.com, American Elements, Wikipedia

Lead

China

Zinc

Bolivia, China

Antimony

China Indium

China

Gallium

China

Tungsten

Egypt, Mongolia,

Myanmar

Tantalum

Burundi, Congo,

Rwanda

Niobium

Brazil, Burundi,

Nigeria

World Tin Mine By-Products (2012 est.)

http://www.csksg.com/

http://www.tradekorea.com/

http://www.cdves.com/

By-products complicate economics

None

Copper

Tantalum

Tungsten

Zinc

Polymetallic

Other


293,100t (est.)

Tin industry uneconomic without by-

products


Cash Cost

NBP Cash Cost

293,100t (est.)

Tin mining will become more

dependent on by-products

Copper

Australia,

China,

Germany,

Kazakhstan,

Peru, UK

Silver

Australia, Canada,

China, Kazakhstan,

USA


Images: Shutterstock, www.csksg.com, www.tradekorea.com,

www.cdves.com, American Elements, Wikipedia, www.made-in-china.com

Lead

China

Zinc

Australia, Bolivia,

Canada, China,

Germany, UK,

USA

Antimony

China Indium

Australia,

Canada, China,

Germany

Gallium

China,

Germany

Tungsten

Australia, Canada,

Egypt, Kazakhstan,

Mongolia,

Myanmar, Portugal,

Russia, Spain, UK,

USA

Tantalum

Australia, Burundi,

Congo, Egypt,

Kazakhstan, Rwanda

Niobium

Brazil,

Burundi,

Nigeria

Iron Ore

Australia,

Kazakhstan

Molybdenum

Canada

Titanium

Kazakhstan

Zirconium

Brazil

World Tin Mine By-Products (2012 est.)

http://www.csksg.com/

http://www.tradekorea.com/

http://www.cdves.com/

http://www.made-in-china.com/





By-products will increasingly

complicate economics


None

Copper

Tantalum

Tungsten

Zinc

Polymetallic

Other

341,400t (est.)


Company type – dealing with

capital costs

Dominated by small, private

companies and state miners

~44,000t, 15%,

Private/Public, Peru

~38,500t, 13%,

State/Public, Indonesia

~27,750t, 9.5%,

State/Public, China

~10,000t, 3.5%,

State, Bolivia

~7,000t, 2.4%,

Private, China

~6,750t, 2.3%,

Public, Australia

~5,000t, 1.7%,

Public, Indonesia

~3,500t, 1.2%,

State, Vietnam

~2,500t, 0.9%,

Public, Bolivia

~2,500t, 0.9%,

Private, China


Images: Company websites, ITRI, Wikipedia

Some privately-owned marginal

alluvial & artisanal mines vulnerable

Private

Public

State

293,100t (est.)


Financing adds to operating costs,

bigger companies may be required


NBP Full Cost

NBP Cash Cost

293,100t (est.)

Substantial investment required in new

tin supply, bigger companies required

Company Project Capex

(US$M)

Capacity

(t/y Sn)

Capex

(US$/t/y)

Source

Stellar Resources Heemskirk 108.0 3,900 27,700 Scoping 2011

Venture Minerals Mount Lindsay 144.6* 3,700 39,100 PFS 2011

Kasbah Resources Achmmach 85.3 5,600 15,200 Scoping 2010

Metals X Rentails 173.2 5,300 32,700 Feasibility 2009

Total & average 511.1 18,500 27,629

Total new mine supply required 2011-15: 70,000t/y

Average capital cost per tonne new capacity: $27,500

Total investment required in new supply: $1.925 B


* Mount Lindsay is a tin-tungsten-magnetite project. The tungsten

plant in particular greatly adds to capital costs.

Increasing role for public listed

companies and larger companies


Private

Public

State

341,400t (est.)


Conclusions – identifying future

competitive tin supply

New supply will have to enter the cost

curve lower than marginal alluvials


Operating (2012) Brownfields Greyfields

Greenfields New projects need to

enter the cost curve

here!

341,400t (est.)

These projects

currently

uneconomic

Absorbing capital costs will be a

challenge for the industry

Operating (2012)

Brownfields

Greyfields

Greenfields


341,400t (est.)


Conclusions

1 Alluvial tin supply falling to be replaced by hard rock mining.

2 Declining Asian mining, opportunities elsewhere in the world.

3 Increasing reliance on by-products as grades decline.

4 Future supply will have much higher capital costs.

5 BUT new mines have to be lower cost than marginal alluvial

mines.

Contact Details:

John P. Sykes

Director, Greenfields Research

[email protected]

www.greenfieldsresearch.com

Defining The Future Of Tin Mining - Apr 2012 - Greenfields Research

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