Tin is a tiny market, not covered by any analysts. Needed for electronics and renewable energy. It can fly in the next bull market.
May 2022 Tin Panel with Adrian Godas and Piet VanRusselt. The presentation is disjointed and slides blurry, so I try to provide a summary here. Timestamps in (brackets).
(1:30) Demand
History of Tin:
- Tin can be bent but doesn't break
- 3300 to 1000 BC, bronze (Cu + tin)
- Cornwall: was producing from 2000BC to 1989, they may be restarting now.
- 1960 : 5K/ton. 1956: first tin council, tried to control the market, export quota. Up to 20K in 1980. Producers (outside the council grew from 10% to 30%).
- 1980: M'sia tried to corner the market with Marc Rich (of Glencore), they lowered exports. The tin council saw it happening, they limited backwardation, the price dripped in 1 year back to 15K. In 1985, tin council went bankrupt, buying buffer stock (120K tones, when the market was 200K tons per year). Market went back to 5K.
- (6:25) 1990s: Start of computers. Big ramp up in price.
- 2008 price back to 5K in a few months. Few years later back to 33K.
- Last month (April 2022) from $50K to $35K in a month, common in such a small market. Market size is 350-380kt per year, so a small 10-20kt change makes a big difference.
- (7:20) Conflict free tin (in 2010), sourcing of big suppliers agreed to responsible tin sourcing. Alphamin. Artisanal mine: taken over by them to make it an official (conflict free) mine.
- (13:53) Previously used 60:40 tin:lead mix in EU, but banned in 2006
- (8:15) Lead free tin. Lead used to be a big part of solder. Now in solder: 89% tin, 3-8% silver. A small amount of lead: 0.1%.
- (9:10) Tin is a niche market: 10-15bn dollars a year. 1/10th of the copper market, 1/20th of the gold market. No analysts following it.
- Market size is 350-380kt per year
- (10:00) Demand catalysts: 50% solder, driven by renewable energy. Solar power in 2015 used 5kt, today its using 18-20kt, expect in 5 years will be 30kt.
- (10:45) 5G: we have 30-40% more chips in phone.
- (11:15) EV content is 800g to 1.5kg, ICE vehicle is 400g.
- A challenge for tin demand: miniaturisation of chips: need less chips so less solder.
- The slide flashed at (13:54) shows tin demand for renewable energy:
- (14:00) Only 1g of tin in a smartphone. Tin price can rise 10X without affecting the smartphone.
One third production in China. A quarter from Indonesia. 10% from Peru, and another 10% from Burma (which may as well be China).
(15:41) @Respulator 's numbers:
(16:08) China. Flat supply for 20 years. Mostly from mature mines in Yunan. A few new ones in Inner Mongolia.
- Example: Geiju: big mine, world class asset. They say they cant increase production. This article provides some color on Geiju's demise: it looks like a dying cowboy town.
(17:14) Indonesia. PT Timah controls all smelting, majority of production is from sea ("artisanal mining") which fucks the environment.
- Supply varies, depends on Monsoons.
- Thinks that rising costs create a new tin price floor at $30K
- Only started producing in 2011.
- A wildcard. Maybe hard to produce as mines need to produce underground, in war zones in the middle of the jungle in the country's interior. But they may keep finding new resources.
(20:01) Africa. 5 mines listed.
(21:20) South America: All from Boliva, Brazil and Peru.
(22:12) Australia. Had a lot of past production, but only one producing mine (MetalsX - 8K per year). A lot of potential mines (Ardlethan, Cleveland, Granville, Heemskirk) - but he thinks they have bad metallurgy, with too much sulfites. Maybe Toronga can come online in future,
(23:08) Europe. Hopeful that South Crofty (Cornwall - 3K) and Tellehauser (Germany - 3K) can come on line in a few years.
(24:19) Other:
- Syrymbet: Potential 6.5K in Kazakstan. Complex metalurgy/ore, many by-products. Has had a decade of feasibility studies with nothing built.
- Russia: Silligdar: want to expand 2K.
(25:18) Supply conclusion:
- Production to fall to 250K by 2030
- Only 2 new projects. B2 tailings in Preu, Mpana in Congo
- Big mining companies cannot invest, its too small. They could buy the whole sector many times over.
(30:20) Questions
(30:31) Recycling? He can't find any info. Tin market too small.
- Because its always used in small quantities (iPhone is 5 or 6c, and they can recover only half of it).
- Electronics is easier.
- Chemicals is impossible. 10X more costly that new tin.
- (32:23) Some efforts to substitute tin in solar. Probably go back to lead. They have tried to use resins, but not conductive enough, adds complexity to assembly process.
- Substitute (in PVC?), use thin (calcium?), but worse performance.
- Silver is too sensitive to heat to use as solder.
- Third recycling source is tinplate is now 10-12% demand, going down 1% every year.
(37:00) Can big miners return? He thinks its too small. Alphamin is only worth 1bn, don't even bother with due diligence. The selling point for Alphamin is supply security, not profits.
(40:42) How would you play the expected increase in tin price. Alphamin will probably be taken over, MetalsX is the only remaining producer. They do not bother with explorers.
41:81: Not looking at explorers, the producers are cheap enough.
41:50: Scale of PT Timah and their ability to scale. Trying to predict artisanal miners output is impossible. Other sectors (fishing, tourism) are complaining because the tine miners are destroying environment. Vietnam, SEA or African artisanal miners may be able to increase production. This is a risk to the bull thesis because a small increase of even 10kt may change the market.
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