That 6% growth amounts to 300,000 pounds a year of new tantalum oxide (Ta2O5) supply required. Taking that and other factors into account, the equivalent of one of Noventa’s mines, such as the existing Marropino mine or the due-to-bebuilt Morrua mine, has to come on stream every year.
The biggest market for tantalum, a rare, hard, ductile, inert metal is in the production of capacitors, used in items such as cell phones, laptops and digital cameras. These capacitors, which are required to hold and release electric charge instantaneously and where low power loss is important, account for about 60% of Ta2O5 uptake. “Although a lot of R&D was done to find alternatives, following the price spike in 2000, it has instead proved that capacitors made from substitute material need to be about ten times the size to achieve the same functionality,” Wood says.
Tantalum, a harder metal than titanium, is also used in the production of super alloys for turbine blades. It is used in surgical equipment and is being considered in prosthetics provided ways are found to reduce the amount of material required because of the weight implications.
The reason growth in tantalum demand over the past decade-and-a-half has been slower than the equivalent 30% growth in demand for the digital electronics devices in which the metal is used is one of efficiency. “The manufacturers have managed over time to achieve the same results using smaller capacitors, but that process has just reached its plateau for now.”
Unusually, in comparison with most other commodities, long term Ta2O5 contracts come at a premium to the spot market, but it is a commodity with a very volatile history. In 1998 the price of Ta2O5 was about US$18/lb – US$20/lb and this leaped to US$300/lb in 2000 before collapsing to US$10/lb in 2001/02. Since then it has been in a flat and recently climbing trend to its current level of US$50/lb. “The peak was a result of the IT tech bubble,” Wood says.
During the tech bubble companies built up huge stockpiles of tantalum, based on the then inflated projections of demand for tech products. When the bubble collapsed so did the tantalum price as companies were left holding stockpiles of the material. “It was only in 2007 that this surplus finally got out of the system, but in the interim the flat tantalum price delayed the development of new mines.”
Noventa was the exception as it started to develop a tantalum project in Mozambique in about 2001/02 just as the price bottomed. While the company is now well positioned, it required patient shareholders, with Noventa having invested some US$65 million to date.
Supply Vs Demand of Ta2O5
There are three primary global off-takers of Ta2O5, which account for 80% of the world market. They take up the mineral in the form of concentrate with 25% to 30% contained tantalum and produce capacitor grade tantalum powder. This requires a significant investment in plant and equipment. Two of these companies are Cabot in the US which owns the Tanco mine, and German company HC Starck. Each accounts for about 30% of the powder market, and Chinese company Ningxia accounts for another 20%. These groups supply capacitor producers such as Vishay, Kemet, GE, Rohm and AVX which in turn supply companies such as Dell, Nokia, Intel, etc. “The powder producers need to know that they will have suitable feedstock for their plants,” Wood says, “and the concentrate must conform to their specifications, which are tight.”
Some of the suppliers of the five million pounds a year of Ta2O5 to the market recently ceased this supply. One is the US Defence Logistics Agency (DLA), which strategically stored the mineral throughout the Cold War. After the Cold War it began selling Ta2O5 at a rate of 500,000 pounds a year. Wood says this selling came to a conclusion at the end of 2006.
The world’s largest producer of tantalum is Talison Minerals of Australia, acquired by the Denver-based Resource Capital Fund following the insolvency of The Sons of Gwalia. Talison’s assets have in the recent past accounted for almost half, 2.3 million pounds, of Ta2O5 supply to the world market. However, Talison owns the Greenbushes tantalum, lithium and tin mine which until recently produced one million pounds of Ta2O5 a year but is now on care and maintenance because of its high production costs. The earliest that mine would return to production would be 2012 and because of high overheads the mine has to go into full production, which means there is no scope for a stepped ramp up. Talison also owns the Wodgina mine in Australia, which produces 1.3 million pounds a year of Ta2O5.
“The result of the closure of the Greenbushes mine and the ending of stockpile sales from the DLA was the sudden disappearance of 30% of the supply to the market. This occurred between mid 2006 and mid-2007,” Wood says. In addition the amount of scrap and recycled tantalum which has been about one million pounds a year, roughly 20% of the market, is decreasing as it becomes more difficult to separate out tantalum capacitors from increasingly miniaturised integrated circuit board chips. “As a result we think recycling will decrease over time, not increase.”
Add to this the UN ban of use of tantalum from the Lake Kivu area in the eastern Democratic Republic of Congo, where it has been mined under the auspices of warlords, which has dried up supply from that source. The repercussions for any company found using such disreputable material in its high profile consumer electronics goods would be massive. So untouchable has that source of supply become that producers from that area can only get US$25/lb for their product compared to the benchmark international prices of US$50/lb.
Wood says, though, that while the Ta2O5 price may increase by 50% to US$75/lb next year, the boom-bust scenario of earlier in the decade won’t be repeated. “In general both the suppliers and off-takers are striving for greater stability and higher levels of certainty. It benefits all parties to have some predictability of demand and cost of supply, and also the determination of the origin of the material is increasingly important.” This places Mozambique and Noventa, which believes it will be the lowest cost producer of Ta2O5, in a strong position.
Of the remaining 1.2 million pounds a year of Ta2O5 supply not yet accounted for in this article, Noventa, whose CEO is Dr John Herselman (a former CEO of Bateman Projects), is the largest supplier. It has existing production of 300,000 lb/year from its single mine, Marropino, and plans to build up to the mine’s steady state production rate of 450,000 lb/year by the end of 2008. Other notable producers are Tanco in Canada, which produces 150,000 lb/year and the Kentchica mine in Ethiopia which produces 100,000 lb/year of Ta2O5. In Brazil two mines, Paranapanema and Mibra, produce about 150,000 lb/year and 100,000 lb/year respectively. There are also some three mines in China that each produce between 50,000 and 100,000 lb/year of Ta2O5. This leaves another 250,000 lb/year to be accounted for by small and artisanal operations in Zimbabwe, Mozambique, the DRC, Nigeria and to a small extent Namibia.
Wood does not see many projects coming on stream soon to replace supply that has dried up and accommodate growth in demand. “Western Australia is developing so many projects across the commodity board that a small tantalum project is going to struggle to compete for the project and other skills required in any short timeframe.”
One project that is at an advanced stage is Gippsland’s US$125 million Abu Dabab project in Egypt, which will produce 650,000 lb/year of Ta2O5. The recent announcement that the location of the processing plant has been changed and that salt water will now be used suggests a possible delay in production coming on stream.
There are undoubtedly good deposits in the eastern DRC, those held by Banro before its dispute with the Congolese government saw it retain its gold licences but lose the rights to tantalum and cassiterite. “There is also a reasonable amount of tantalum in Saudi Arabia. These deposits have a high uranium content and in that country uranium has recently become somewhat strategic. Renewal of tantalum exploration licences have been delayed.
“In South America the tantalum is found in association with niobium. Compared with Mozambique where the tantalum niobium ratio is 4:1, in Brazil it is 1:1 or even 1:2. The market for niobium is reasonably concentrated and is unlikely to encourage the opening of new tantalum mines that would create a surplus of niobium. Thus new tantalum mines will probably occur in countries where the deposits have low niobium ratios.”
There is the Motzfeld project in Greenland being undertaken by Angus & Ross but it will be sometime before that comes online. Wood is not aware of any projects in south east Asia, and while there are some small projects in China the output never hits the market outside that region. The same can be said for any production from Kazakhstan and Russia.
Thus Wood believes the most advanced new projects with the greatest potential for meeting demand are Noventa’s projects in Mozambique’s Zambezi province. In addition to Marropino is its Morrua project, a similar sized operation that is in the engineering stage. Mechanical completion is estimated to be 12 months after construction commences. These projects can at a low capital cost, some US$35-45 million, add 500,000 lb/year of production and achieve this at 50% lower operating costs than other new projects. This is due to higher grades, the availability of water and electricity and also the projects’ setting in Mozambique, a country that has proven to be an investor friendly environment for greenfields commodity projects (Mozal, Moma). Wood says that Noventa aims to be the world’s lowest cost industrial scale producer of tantalum, and the goal is to produce 700,000 to 950,000 lb/year.
However, Wood says that the go ahead of Morrua is dependant on the grid power, promised to the operation, being in place. In addition, the Marropino mine, which now uses diesel generators, will be fed by a 33 kV overhead line from EdM’s Uape substation, routed via Morrua. This power line is under construction and is expected to be completed by the end of 2008. Currently Marropino uses five generators ranging from one to 8 kVA and the cost of diesel accounts for some 33% of the mine’s total operating cost. When Noventa is producing from the hard rock material at Morrua, unlike the soft rock it is mining at Marropino and for which no crushing and milling is required, it will require up to 2 MW for mills and this calls for grid power.
Marropino is located 350 km northeast of the provincial capital, Quelimane and the operation undertakes conventional truck and shovel mining. Overall, Noventa has ten concessions and Wood believes these are the best concessions for tantalum mining in Mozambique. They were drilled by the East Germans and Russians in the past and good records were kept. The tantalum deposits Noventa is developing in Mozambique are found in mineralised pegmatites that are also well known for containing morganite, a rare pink gemstone.
Marropino has an average grade of 224 parts per million of Ta2O5. The stripping ratio over Marropino’s remaining six year life of mine is 1:1. While the mining is currently soft rock material the transition to hard rock is expected towards the end of 2009. The mining of the Ta2O5 involves strict geological control and blending various grades of feedstock. “This results in double or triple handling of the ore and is one of the reasons why diesel costs are so high,” Wood says. The eventual pit rim of the Marropino mine will be approximately 450 metres (north-south) by 600 metres (east-west) and will have a final depth of about 120 metres.
The mining fleet at Marropino consists of two CAT 345 excavators, single CAT 980, 966 and 950 loaders, three Cat 730 ADT’s, three Bell B25 ADT’s, single D9 and D6 bulldozers, a CAT 140G grader and a water bowser, plus a backhoe and a P&H mobile crane that supports both fleet and process plant maintenance. Because of the mine’s remoteness from the nearest sizable town, it is important that it be self sufficient in terms of parts and maintenance.
The run of mine material is first passed over a static and then a vibrating grizzly to remove all lumps greater than 100 mm. The ore is then scrubbed and wet screened to remove all + 2 mm sized material. The – 2 mm material is then suitable for concentration by gravity separation. This process includes cyclones, spirals and a wet gyrating table before the end product, a concentrate containing about 10% Ta2O5, goes through a drier. The plant processes 200 to 220 tonnes per hour, 24 hours a day.
“Due to the location of the various deposits, we will build a separate wet plant for each operation,” Wood says. Noventa’s final concentrating plant is located centrally at Marropino and uses a process of electrostatic separation, magnetic separation and air tumblers to increase the percentage of tantalum in the concentrate to the targeted 25% – 30%. “The important thing to note is that the whole process does not involve any chemical processing. Avoiding that route is a huge advantage to managing the operation.”
At Morrua, which will be located 25 km distant from Marropino as the crow flies and 40 km by road, the stripping ratio will be 6.5:1. Morrua, for which planning began in 2006, will have a 10 or 11 year life of mine. The feed to the Morrua plant will average about 470 ppm of Ta2O5 over the life of mine.
The concentrate is trucked from Mozambique some 3,600 km to Walvis Bay in Namibia for export. “The reason is that the concentrate contains uranium and while radioactivity is low it surpasses the level where conventional transport is accepted. Walvis Bay deals with the Rossing output and the ships that put in there are able to carry class 7 radioactive material.”
Wood has considered the alternative, which would entail using hydrofluoric acid to reduce the radioactive content of the ore. However, considering the experience and skill levels required, the fact that transporting hydrofluoric acid to the site represents a risk, and the fact that the overall cost benefit is fairly neutral, Noventa opted to stick to the long transport route via Walvis Bay.
At the moment Noventa is a single mine single commodity producer. It has no plans to venture into other commodities, and though it is about to build its second mine this will not provide geographical diversification. “We would like to diversify our geographic risk,” Wood says. The company is looking at possibilities in Africa, in particular. “We will joint venture but we are not explorers. Our expertise lies in developing and bringing projects to account. Our primary skill is to build mining projects and run the logistics that go with such operations.”