Tantalum capacitor supply could tighten because of mining cutbacks

Tantalum capacitor supply could tighten because of mining cutbacks

It might be harder to source tantalum capacitors in the next couple years. Sharp cutbacks in tantalum ore mining could lead to supply tightness in tantalum capacitors in 2011 and 2012, according to a new report.

The problem is that a lot of tantalum production has ceased because of low prices for tantalum ore, says Patrick Stratton, an analyst with United Kingdom-based market researcher Roskill, who authored a recent report called The Economics of Tantalum.

“Capacitors are obviously a major user of tantalum,” says Stratton. “There is a strong possibility there could be a supply crunch of primary tantalum in 2012 and possibly as early as 2011,” he says. A supply crunch resulted in a severe shortage of tantalum capacitors in 2001.

Talison Minerals, which is a major producer of tantalum in Australia, ceased production because of weak demand and falling prices. Since Talison cut production last December, prices have fallen about $48/lb to $36, according to website metal-pages.com.

Other tantalum production operations in Mozambique and Canada have ceased operations and tantalum production fell by two-thirds this year and tantalum consumption fell by about 50% in the first half of the year, says metal-pages.com

Talison has said it won’t resume tantalum ore production until the price increases, but it has not said what the price needs to be.

Right now, cutbacks in tantalum production do not pose a problem because there are large inventories of tantalum which were built up since the last tantalum crisis. However, now “those inventories are being draw down” and it is not known how long the inventories will last, says Stratton.

Capacitor manufacturers don’t seem to be overly concerned about tantalum ore supply.

If there is a tantalum shortage “it won’t be a huge one,” says Dave Valletta, executive vice-president for worldwide sales at Vishay Intertechnology, based in Malvern, Pa. “The capacity is there, but it may mean there needs to be a certain price level to be established before that capacity comes back online,” he says.

A key question is how strong tantalum capacitor demand will be in the next few years. Researcher DECISION, based in Paris, says the global market for tantalum capacitors will decline from $2.3 billion in 2008 to $2.1 billion by 2010, but then increase to $2.3 billion by 2013.

How significant the impact of reduction of tantalum ore production on capacitor supply remains to be seen. Suppliers say there are high inventories levels of tantalum powder.

“Most manufacturers have a stockpile of tantalum powder built up and some of them have multiple years of inventory of powder on hand,” says Jim Wright, vice president of technology and marketing at NIC Components in Melville, N.Y.

Source: purchasing.com

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