Tantalum is one of the least talked about metals out there.
And yet, it may also be the most interesting and the most profitable.
This is a metal that’s essential to modern technology. It’s used in cell phones, airplanes, nuclear power plants, surgical equipment, and more...
It’s a rare earth (or critical) metal that’s difficult to access but is vital to national security.
But there’s virtually none in the U.S. or Europe.
So, if all this sounds interesting enough to you, keep reading. Because over the next few minutes, I'll tell you everything that you need to know about tantalum: what it is, where it comes from, and how to profit from it.
What Exactly Is Tantalum?
As I’ve already mentioned, tantalum is a rare earth metal. These are unique metals. In many cases, their supplies are actually abundant, but they can be both difficult and expensive to process.
There are few primary mines, as a result.
Tantalum, specifically, is a strong, ductile metal. It’s tough but malleable and can be drawn into fine wire. It has a high melting point and is extremely stable at temperatures lower than 150 degrees Celsius.
It’s often alloyed with steel to increase all these attributes, and it’s frequently used as a substitute for platinum, which is more expensive.
Tantalum has a natural protective layer that gives it a high resistance to chemicals and corrosion — so much so that it’s virtually immune to deterioration. This makes it ideal for structures that are exposed to the elements, especially bridges and water tanks.
It’s not affected by bodily fluids, either, and it doesn’t irritate the human body in any way. This makes it perfect for surgical sutures, implants, pacemakers, artificial joints, and bone plates.
In fact, tantalum’s durability, reliability, and versatility make it perfect for almost anything.
This is why it’s used in chemical plants, nuclear power plants, airplanes, and missiles. It also shrinks the size of personal electronic devices like cell phones and tablets.
Indeed, tantalum's primary use is in capacitors. Tantalum capacitors have an extremely high capacitance packed in a small volume, leaving more room for other forms of hardware. It’s also used to create surface acoustic wave filters, which improve audio quality in speakers.
Smartphones, laptops, tablets, hard drives, DVD players, PS3s… Tantalum can be found in all these things and more. The average cell phone has about 40 mg. of tantalum inside.
With such a vital role in modern technology, it’s no surprise that tantalum demand is on the rise. Demand has more than doubled since 2010 — with the price of refined tantalum rising to $300 per lb. Lower-grade tantalum goes for roughly a third of that.
UK-based firm Roskill believes that higher demand for consumer electronics, alone, will drive tantalum prices 3% higher annually through 2026.
So, where does it come from?
Supplies and Production
Tantalum production is scattered and unreliable.
Latin America and Australia contribute most of the global tantalum supplies, with a single mine in Brazil accounting for 20% of the world’s production.
A decade ago, Australia was responsible for nearly 60% of global tantalum supply. But that fell to almost zero by the end of 2010 as low prices made conventional mining there uneconomic.
Today, tantalum is mostly mined as a by-product of lithium at a few Australian mines. One such mine is Talison Lithium’s Greenbushes mine. Another is Pilbara Minerals’ lithium-tantalum mining project, which is still under development.
Atlas Iron’s Wodgina mine also produces tantalum. But as of June 2015, the company estimated that only two years of mine life remained.
Roskill notes that rising demand for lithium-ion batteries for electric vehicles (EVs) will increase tantalum output in Australia in the years ahead.
Similarly, AMG Lithium’s Mibra project in Brazil is expected to start producing tantalum concentrate in mid-2018.
However, these are really the only credible tantalum projects that are currently available.
Aside from them, artisanal miners make up 16% of global tantalum supplies. These are freelance subsistence miners. They’re individuals or tiny groups of people who work independently — digging the earth, panning rivers, and collecting slags from smelters.
Some artisanal miners are entirely legitimate, but others operate in so-called “conflict areas.” This means that the minerals are often in the hands of warlords and that proceeds are used to fund violence.
Two decades ago, tantalum resources funded portions of the Second Congo War, the bloodiest conflict since World War II. The Democratic Republic of Congo (DRC), Burundi, and Rwanda all participated. And yet, these three countries were responsible for between 45% and 55% of global supply in 2016.
All three are still plagued by violence and political instability to this day.
So essentially, half of the world’s tantalum production is unreliable at best. And at worst, it’s wrung from the blood of brutally oppressed people.
Investing in Tantalum
Ultimately, any investors who want to invest in tantalum without getting blood on their hands should stick to the aforementioned Australian miners — Talison Lithium and Pilbara Minerals (ASX: PLS).
Talison isn’t a stand-alone stock. Rather, it's 51% owned by China's Sichuan Tianqi Lithium Industries with U.S.-based Albemarle (NYSE: ALB) holding the rest.
Pilbara Minerals, on the other hand, is an independent company.
It’s also the proprietor of the world's second-largest lithium project — Pilgangoora.
Pilbara's most recent mineral resource update showed measured, indicated, and inferred reserves of 128.6 million tonnes of spodumene grading 1.22% lithium, good for roughly 1.57 million tonnes of lithium oxide. It also contained 39 million lb. of tantalite.
Unlike Talison, Pilbara is Pilgangoora's sole owner.
The company recently raised $100 million through a share placement to fund the project and expects to begin operations next year. It's also signed an offtake agreement with Chinese firm General Lithium.
Pilbara CEO Ken Brinsden says potential Chinese customers are already building new processing operations, noting that most westerners aren't aware that many Chinese electric car makers are buttressing demand.
He says his company will increase focus on new lithium developers and look for low-cost operations with proximity to ports.
Overall, the outlook for lithium, tantalum, and thus, Pilbara looks strong going forward.
- The Outsider Club Research Team