China is turning to an unlikely country to supply tin after new trading rules affected exports of tin from Indonesia but it maybe getting apprehensive about where to source additional supplies.
Myanmar, while not a long term solution for China, the world's top metals consumer, has more than doubled its exports of tin ore and concentrates this year.
However, this is a stop gap solution at best, shoring up an alternative source of the metal used mainly for solder in its large electronics industry.
Australia is poised to ultimately pick up some slack from diversification away from Indonesia supplies.
China is also sourcing tin from Bolivia, Japan, Malaysia and LME stockpiles, steadfastly trying to diversify its tin supplies away from Indonesia away from reliance on one market.
China has relied on Indonesia for the bulk of its tin imports, taking more than 15,000 tonnes last year, but sales have slumped since the Southeast Asian nation ruled that producers could only sell ingots of the highest purity, a move aimed at boosting the value of its exports.
China's imports from Indonesia were down 72 percent year-on-year in July to just 484 tonnes of refined tin.
By contrast, tin ore shipped from Myanmar has more than tripled in July to 8,392 tonnes. Imports for the first seven months of the year are already more than the whole of 2012.
The Myanmar figures are for tin ore and concentrate and do not specify tin content, so it is not possible to work out how much tin would be produced from the increased exports.
Myanmar's total production is believed to be in the "low single-digit thousands" of tonnes, compared with 100,000 tons for Indonesia.
China also produces about 100,000 tonnes of tin a year, but faces a shortfall of 50,000 to 60,000 tonnes, which it meets through recycling and through imports of unrefined ore and refined tin.
Positive for Australian tin companies
Stellar Resources (ASX:SRZ) is one company primed to benefit from Indonesia's loss.
Stellar recently completed a Pre-Feasibility Study that demonstrated technical and economic viability of its Heemskirk Tin project in Tasmania.
Key takeaways of PFS
- Annual production of 4,327 tonnes of tin in concentrate represents an 11% increase from the scoping study estimate
- Competitive direct mining and processing cash costs of US$12,268/t of tin in concentrate and mine gate cash operating cost of US$14,389/t including mine and plant business sustaining expenditure and corporate overheads.
- Initial mine life of 7 years with potential to expand once additional drilling within the current resource is complete
- Mining plan increases head grade to 1.06% tin from scoping study estimate of 0.93%.
Stellar will identify a in industry participant to help progress the project through Definitive Feasibility Study and into development as well as commit to a DFS as soon as possible.
The Pre-Feasibility Study for Stellar's Heemskirk Tin project demonstrates technical and economic viability for Stellar Resources.
There are also other positives for SRZ: Heemskirk has the highest grade, undeveloped tin resource in Australia. It has transport, power and water on the doorstep unlike many of its overseas brethren.
Macquarie Commodities report
A research report by Macquarie has reported the rise in use of tin.
With the rise of new electronic products such as tablets and smart phones, where the typical tin-solder content ranges from 0.7 grams to 1.0 grams, we can expect to see an increase in demand for tin.
This demand is buoyed with tin use being widely considered to be the most promising technology for storing energy in mobile electronics, electric vehicles and renewable energy systems, such as for wind and solar power (source: Peter Kettle, ITRI).
Although, the electronics manufacturing industry has run down stocks of tin solder over the last two years in response to flat and in some cases declining sales, the rise in shipments is a positive indicator for the future of tin.
This is supported by Macquarie's data that suggests the market could be moving towards a period of re-stocking,
which could add to an improved outlook for tin.
The conservative parameters used offer considerable upside in the event of an increase in tin prices or Resource,
further highlighting the value of the project, which Singapore-based broker PhillipCapital had recently described as
having “the “best tin grade of any project and the volume of contained tin is enough to get serious industry interest”.
Glowing broker report
Phillip Capital said, "Stellar Resources is the cheapest tin equity exposure anywhere ... We expect that the results of the PFS will be the basis of a decision by an industry partner to buy a share of the project. "
The Heemskirk project is a major potential source of new supply, enhanced by its high grade.
Phillip Capital added the Heemskirk project will attract interest from industry players who are seeking a secure tin supply.