More tantalum supply could mean lower Ta cap tags

An expected increase in tantalum ore should mean stable to declining prices for tantalum capacitors

By James Carbone

07/07/2011

Electronics buyers can expect the price of tantalum capacitors to stabilize and perhaps decline later this year because of greater supply of tantalum ore.

Prices for tantalum capacitors increased last year and early this year because of the high cost of tantalum and strong capacitor demand. The price had increased from about $35 per pound several years ago to about $130 per pound currently because of the shutdown of tantalum mines in Australia and the issue of conflict minerals in the Democratic Republic of Congo (DRC).

Rebels in the Congo have used tantalum, tin, tungsten, and gold to fund war efforts, which have killed more than five million people since 1998. As a result, many companies do not want to buy tantalum and other raw materials that support the rebels.

In addition, last year Congress passed the Dodd-Frank Act, which was signed by President Obama. The law imposes reporting requirements on companies that use conflict minerals. Use of conflict minerals must be reported to the SEC and companies must disclose whether the materials originated in the Democratic Republic of the Congo or an adjoining country.

While there are legal, legitimate mines in non-conflict areas of the Congo, the president of the country shut down all mining last year, impacting supply of tantalum and other minerals. The issue of conflict metals plus the shutting down of mines has crimped tantalum supply resulting in higher prices that capacitor manufacturers have to pay. They in turn have passed some of the increases onto tantalum capacitor buyers.

The mine in Australia shut down a couple years ago because of the financial crisis and because the price of tantalum fallen to about $35 a pound. However, the price of tantalum has rebounded to about $150 a pound, and Global Advanced Metals (GAM), formerly Talison Tantalum, has reopened its Wodgina mine in Western Australia.

Bag-and-tag

In addition, mining of tantalum in the Congo should soon resume with legitimate mines using a “bag and tag” scheme to guarantee traceability of tantalum.

The official name of the bag and tag program is the ITRI Tin Supply Chain Initiative (iTSCi), said Richard Burt, president of Tantalum-Niobium International Study Center (T.I.C).

Under the program, minerals are tracked from the mine to the smelter or tantalum processors, according to Burt.

“It simply requires that each and every bag of tantalum which leaves the mine site has little plastic tag affixed to it by a government representative. That tag follows a bag of materials right through the supply chain,” Burt said.

“The tags are only placed in bags of tantalum from legitimate mines, not those controlled by rebels. The tags have such information as the name of the mine, when the tantalum was mined, the name of the person who put the tag on the bag. Information is also placed into a logbook and into a database so that each bag can be traced by the tag as it moves in the supply chain,” said Burt.

Burt said the bag-and-tag program is being used in Rwanda and the Katanga province in DRC. “We are still awaiting funds to start to roll out the program in Kivu.” Kivu is a province in DRC.

Bag-and-tag will be rolled out to the conflict area of DRC in the very near future, Burt added. “I can't exactly say when. Funding is imminent from a southern African government source but it has not yet been declared.”

Burt said once the program is in place and tantalum mining resumes, it will have a significant impact on worldwide tantalum supply.

In a normal year, about 11 percent of the world’s tantalum originates from DRC.

Burt noted that the Congo can produce tantalum at the rate of one million pounds per year. “But it has never produced one million pounds a year. It has produced at the rate of one million pounds per year for couple months.” GAM said its Wodjina mine can produce about 1.4 million pounds per year.

Dig for tantalum

Tantalum capacitor manufacturers will welcome greater supply of tantalum. They point out that there is no shortage of tantalum. It just needs to be taken out of the ground.

“Between Africa, Australia, and South America, there is plenty of tantalum out there,” said Dan Persico, vice president, strategic marketing and business developments for Kemet Corp., headquartered in Simpsonville, S.C. “It is an issue of supply and demand and they (mine owners) waited until the price got up there. The upswing has supported them and demand has not diminished.”

Persico added the influx of more tantalum should stabilize prices in the future, but mining of tantalum in Africa is key. “Prices will remain high until the issues in Africa around the Congo and conflict minerals are resolved and we can start getting material out of Africa again.” That should happen by the end of the year.

“It should impact prices. Once material starts flowing, there will be enough access in the market place,” said Persico, “Unless the guys in Australia start to back off and shut down the mines again.”

The price may drop in the future, "but it will never get down to $35 per pound again," Persico noted.

Jim Carbone Jim Carbone is a freelance writer covering the electronics supply chain. A veteran journalist, Jim was a writer and editor for Electronics Purchasing and Purchasing magazines for 21 years. He covered electronics distribution, semiconductors, passive components and connectors for the magazines. He also wrote extensively about the strategic purchasing strategies of electronics OEMs and electronics manufacturing services providers. Jim was a member of an editorial team that was a finalist for a Jesse Neal Award-- considered the Pulitzer Prize of business journalism-- for print and online stories in 2009 about buying during the recession. He also wrote content for Purchasing.com, which was named a Top 10 Great Website by Media Business Magazine. Before covering the electronics industry, Jim worked as a reporter and editor for United Press International for nine years. He started his career as a newspaper reporter and photographer. Jim is a graduate of the State University of New York at Albany.