Intro to Tantalum Investing

Intro to Tantalum Investing

Fri, Feb 12, 2010

Feature
Articles, Uncategorized

By Melissa Pistilli—Exclusive to Tantalum
Investing News
Element and Historical Information

Tantalum
(Ta) is a chemical element with the atomic number 73 and is named after
the Greek mythological figure Tantalus.
First discovered in 1802 by Anders Ekeberg, tantalum was first produced
in metallic form in 1864. Prior to tungsten, metallic tantalum was used
as filament in light bulbs. The rare, hard metal is blue-gray in
colour.

Some of its other special qualities include:

• Excellent capacity to store and release an electrical charge
  
• Exceedingly high melting point of about 3,000° C
• Highly corrosion-resistant
• Alloys well with other metals
• Superconductive for electricity

A member of the refractory metals group, it occurs in the mineral
tantalite and is always found with the very similar element niobium
(Nb). When more tantalum than niobium is present it is called tantalite;
when more niobium than tantalum is present it is called columbite (or
niobite). In Africa, tantalum is known as coltan.

Occurrence

Tantalum ores occur mainly in Australia, Brazil, Canada, Africa
nations including the Burundi, the Democratic Republic of the Congo
(DRC), Gabon, Namibia, Nigeria, Rwanda, South Africa and Uganda; and to a
lesser extent Ta is also found in southeast Asia.

Major Uses

Tantalum is mainly used in electronic components such as capacitors
and some high-power resistors in everyday items like cell phones,
personal and laptop computers, digital and video cameras, LCD/Plasma
televisions, and handheld gaming devices.

When alloyed with other metals tantalum is used in fabricating
carbide tools for metalworking equipment, jet engine components,
chemical process equipment, nuclear reactors and missile parts.

It’s also widely used in automotive electronics such as anti-lock
braking systems (ABS), navigation systems, wheel traction control,
airbag inflation, engine management and fuel economy.

Other uses include:

• Fabrication of surgical instruments and implants
• Chemical reaction vessels and pipes for corrosive liquids
• Heat exchanging coils
• Fabrication of high refractive index glass for camera lenses

• Production of vacuum furnace parts
• Fabrication of components for chemical plants, nuclear power plants,
  airplanes and missiles

Supply/Demand Fundamentals

Since 1995, demand for tantalum has grown on average by about 8
to 12 per cent every year, increasing exploration projects globally.

Supply is quickly coming under pressure since the United States
Defense Logistics Agency (USDLA) curbed stockpile sales, which had
previously flooded the market. Adding further distress, Australia’s major tantalum operation, responsible
for 30 per cent of global supply, shut down in 2008. The Great Lakes
region of Central Africa has become a focal point of supply production;
however the bloody political strife in the DRC, of which tantalum plays a financial role, may
cause the world to look elsewhere for its tantalum supplies.

Pricing

The supply/demand fundamentals for tantalum are becoming much more
price positive. Tantalum does not trade in spot markets, but rather in
negotiated markets with long-term fixed contracts. Interestingly, it’s
considered taboo in the tantalum industry to publicly discuss contract
prices.

Supply Chain

The handful of actual tantalum producers sell their ore to just a few
processors, which operate in China, Estonia, Germany, Japan, Kazakhstan
and the US. Once processed, the product for electronic goods
consumption is then sold to capacitor manufacturers such as Kemet
Electronics, AVX, Samsung and Vishay, who then sell those capacitors to
companies like Apple (iPod), Sony (Playstation), Research in Motion
(Blackberry), Panasonic, Nintendo (Wii), Cisco Systems Inc,
Hewlett-Packard and IBM.

Conflict Controversy

The violent political conflict in the Congo has unfortunately been
funded in large part by conflict minerals like gold, tin, tungsten and
tantalum. The guerrilla and so-called military soldiers using what
amounts to slave labour to mine tantalum ore has made central Africa a
cheap place to acquire the mineral, making it stiff competition for
other producing regions.

However, concerned NGO’s, local and international government
officials, industry leaders and even electronics consumers are putting
pressure on the tantalum industry to ensure conflict minerals are not
making their way into consumer products. The hope is that by cutting off
the demand for conflict minerals, the militias will lose the ability to
finance their murder, rape and pillaging of the region’s people and
resources.

Two of the most vocal groups calling for action are Global Witness
(instrumental in bringing about the Kimberley Process, which has helped
to curtail the blood diamond trade) and the Enough Project founded by the Center for
American Progress.

Investing in Tantalum

Tantalum is a hot investment right now because its supply/demand
fundamentals are strong and it offers investors the opportunity to make a
difference in the world. The conflict in the Congo and the pressure
from organizations like Global Witness and international agencies like
the UN to halt the traffic of conflict minerals is expected to place
huge downward pressure on supply at the same time that demand for
tantalum products is heating up.

The tantalum mining sector is a tight industry with few major players
and there now exists opportunity for juniors operating in conflict free
zones to establish a foothold in the market. According to Sam Kiri, director at Proactive Investors North
America, “the tantalum industry is experiencing a transitional period on
a number of fronts and there exists only a handful of emerging
companies poised to take advantage.”

Investing in and building up the conflict-free tantalum industry will
help put the pressure on those companies still purchasing conflict
minerals to clean up their act and will hopefully help to eventually end
the atrocities occurring on a daily basis in the region.