Compared to the number of deals done to purchase the recently dubbed “green” commodities like copper, lithium, nickel and platinum, tin brokers have traditionally been kept in check by a restrained global market. However, tin traders have seen a significant uptick in activity in recent times. Not only that, but tin mines around the world are in the news again as the uses for tin in the great transition multiplies.
In a modern economy, tin is strategic, and its applications numerous. So much so that demand continues to outstrip supply. To complicate matters further, that gap is becoming increasingly wider each day as the world stutters in a disaster-ridden post Covid-19 world, where geopolitics and more Covid-19 lockdowns in Asia, continues to plague ports, logistics companies, smelters, and mines.
Despite the tin suppliers’ woes, players in the fourth industrial revolution, and the new green economy, demands better technology and more renewable energy. Tin is integral to both. Reuters metals columnist Andy Home once wrote that “soldering (for which tin is needed), will drive increased tin demand as the world tools up for the Industrial Revolution Version 4. Tin is literally the glue that binds together the machines needed to interface with the virtual and robotic worlds.”
Although lockdown induced injections over the last few years are fading as workers return to the office, other trends are emerging that will give tin demand another nudge. For example, tin is a crucial element in the manufacturing of tinplate, which, in turn, is used in the canned food industry. The growing global aversion to plastic has seen canned food regain substantial market share, while the current rise in worldwide inflation is likely to boost the canned food industry further.
African producers are the big winners
But it is not only the trading platforms that have seen a shake-up in the traditionally diminutive tin markets. While some of the world’s leading tin mines in the East and Russia are seemingly fading, others have been rocked by external factors that have turned the small tin world on its head, and in the process shrunk supply to a trickle. The winners in all this turmoil are without a doubt the African producers.
Alphamin’s monster Bisie mine in the Eastern Congo continues to lead the charges. While Alphamin’s Bisie have been filling the mills, diminishing their stockpiles, and emptying containers, the stalwarts of tin mining in the rest of the world are trying to sit out a particularly torrid time in their history. But one mines’ loss is another mines gain.
Bisie continues to grow in stature and with the development of Mpama South imminent, it has another splendid deposit in its arsenal. In fact, if early drilling is anything to go by, Mpama South might be an even greater gift to the world than its high-grade twin sister Mpama North.
Mpama South shaping up to be a world beater
Alphamin said in a recent statement that the opportunity to take advantage of the current shortfall in tin concentrate supply and the ability of Alphamin to self-fund the projects, played a critical role in the decision to develop Mpama South over the next 20 months.
First product at Mpama South is expected to be delivered in December 2023. This might seem long way of, but it is a lot faster than most greenfield mines, which, in some cases, can take up to 10 years to reach full production after a maiden MRE. At full capacity, Mpama South is forecast to produce close to 7,232 tonnes of tin-in-concentrate annually.
Exceptional exploration results at Bisie over the last year and a half confirms theories that the Bisie Ridge may soon be recognised as another tin province.
Alphamin’s vision is to become one of the world’s largest sustainable tin producers. From a capital allocation perspective, the company considers the combination of investment in growth, significant exploration, and a high dividend yield a robust value proposition. Dividend distributions will be considered semi-annually based on excess free cash after taking account of the capital funding requirements for the new Mpama South expansion project.
Exploration activity continues to be a focus area with expansionary and infill drilling expenditure of ~US$20million planned for FY2022. To date, approximately 85% of drill holes completed have intercepted visual tin mineralisation.
Chinese imports offer a substantial boost
Besides the exploration boost, Alphamin is expected to take further advantage of the shortage of tin in the global markets as other top mines falter, and as the local price in China soars.
According to the International Tin Association (ITA) the latest customs data from China indicates that the country imported significant quantities of tin during March 2022.
China imported some 28,986 tonnes of tin ores and concentrates (gross weight) in March 2022. This material was estimated to contain about 11,100 tonnes of tin, up 85% both month-on-month and year-on-year.
“Although 74% of the estimated tin content came from Myanmar, totalling roughly 6,700 tonnes, significant volumes were shipped from Australia, the DRC (mostly from Bisie) and from Thailand.”
Production woes shrink global supply
Production at Lima headquartered Minsur’s mines in Peru dropped in the first quarter of 2022 following smelter maintenance and Covid-19 preventative measures amidst another wave of soaring infections.
Minsur is one of the world’s largest tin producers and operates the San Rafael tin mine and B2 tailings reprocessing project in Peru, along with the Pisco smelter.
During the same quarter, Russian miner Seligdar could barely manage to produce a combined 542 tonnes of tin-in-concentrate. That is from both their mines in Russia. Seligdar owns and operates the Festivalnoye and Pravourmiyskoye mines in the Russian Far East through its subsidiary Rusolovo.
The first quarter figures are down 35% quarter-on-quarter and 20% lower year-on-year. According to the company, output was lower due to natural variations in the ore grade at the two mines.
The apparent grade at the two mines, based on the volume of ore processed and an estimated 70% tin recovery, was 0.59% Sn. This is down from 0.82% in Q4 2021. Compare that with an average grade of about 4% at Mpama North and you’ll realise why Alphamin is regarded as such a rare phenomenon.
According to the ITA, sanctions on Russian metals have been well-publicised, but it is unlikely that Seligdar has been affected on the tin side. Around half of all Russian tin concentrates are smelted domestically, with the rest going to Asia where there are few sanctions against Russia.
In April Chinese miner Yunnan Tin Co, the world’s largest tin producer, was forced to temporarily cease operations at one of its mines. Mining at the company’s Yunnan Hualian Zinc and Indium Co. subsidiary ceased on 18 April to comply with the local government’s Covid-19 control policy.
Early in May, an explosion at a mining site in Man Maw in Myanmar, tragically killed nine workers, injuring a further 30. In response, the local government has issued a statement calling for a review of mine safety.
According to the ITA, a review will take place over the next three months. “Although the statement asserts that “all substandard mines will be closed” for that period, local sources indicate that this is not the case. The local government will instead review mines individually, closing them for a shorter period.
The ITA says that there are still several Covid-19 cases in Myanmar which are reducing operating hours at mines and processing plants. “On top of this, some mines are struggling with cash flow. Major smelters in China have recently ceased concentrate purchases from Myanmar, due to long-term deals with other producers and a lack of demand for refined tin.
The beast at Alphamin’s Bisie
With Alphamin’s strong run in the last two years and more good news on the cards in 2022, it is hard to imagine that Bisie would not become the most prolific and highest-grade tin mine in the world within the next two to three years.
When Alphamin combines the production from Mpama North and Mpama South, the company expects the Bisie complex to produce approximately 20,000 tonnes of tin-in-concentrate annually from 2024. According to the International Tin Association (ITA) the rapid development of Mpama South will help to narrow the forecast deficits in the tin market over the next decade.
The Ridge at Bisie is about 20km in length of which an extremely small area has been drilled up to now even after the extensive drilling programme that got underway late in 2020.
When Bisie was initially developed Alphamin only drilled out a deposit of five million tonnes. The Bisie mine was designed to be a “staged rollout”, where sufficient Resources were identified to support an initial operation with an adequate Life of Mine and acceptable returns. Once operating, further drilling would be carried out with internally generated cash flow.