The adage that says “if it sounds too good to be true, it probably isn’t” doesn’t always ring true when it comes to tin mining. In the tin sector, anything is possible at any time – a cliché reflected in the volatile tin price and the strife that has befallen some of the world’s top producers in the turbulent post-Covid-19 years.
Tin price aside, when the producer of 4% of the world’s mined tin and one of the highest-grade tin producers globally, reports a 10% quarterly increase in average tin grades to 4.38% with stockpiles of ore averaging 5.98%, one takes notice, and any of the great believers in the “too good to be true” mantra, would be forgiven for being a tad suspicious. However, when these beliefs inform investment decisions, it could ultimately end up in tears.
The grades at Alphamin’s Mpama North operation at the world-class Bisie complex in the eastern parts of the Democratic Republic of the Congo (DRC) were already off the charts when the production team started mining at Bisie in 2015. With average grades north of 4.2%, the tin market quickly took notice once the Alphamin team hacked their way through the forest and improved the plant’s initial processing capacity. The grade at that stage was high enough to knock the socks off any pessimistic non-believer in Aphamin’s high-risk-high-reward endeavour.
Alphamin ups the ante at Bisie
When Alphamin thus recorded average tin grades of 4.38% and a record Q1 tin production of 3,187 tonnes in March this year, the company binned the “too good to be true” saying forever. What’s more, they did it at a time when other top tin mines in the world are being put on ice despite a growing enthusiasm for the uses of tin in the future, and while new tin mining projects are struggling to hit the ground running.
Alphamin’s record production exceeded the company’s market guidance for March 2023 (3,000 tonnes). Run-of-mine volumes processed were scaled back due to the higher tin grades to increase recoveries. The run-of-mine and crushed ore stockpiles ahead of the processing plant were at record levels at quarter-end, being 15,011 tonnes at an average tin grade of 5,98%.
With the tin price hovering at about US$26,432/t during the quarter, Alphamin’s share price could return to red-hot in a less inspiring year for the tin market than the last. Nevertheless, tin’s future looks bright amidst the doom and gloom of geopolitical tensions, climate change urgency, and macroeconomic shocks.
The crucial role of tin
According to the International Tin Association’s (ITA) findings in TIN2030, a new strategic report on the tin sector, tin will have a crucial role in enabling a sustainable global energy transition and digitalization over the next decade.
The ITA report further highlights the importance of tin to everyday life and its growing role as an essential enabler for the energy transition and digitalization. “As the glue that holds together almost all electronic and electrical infrastructure, its significance will increase.
“Another strong indication that the demand for tin will surge. ITA estimates that $1.4 billion is needed to deliver 50,000 tpa more tin by 2030”.
Against this backdrop, Alphamin has prioritized the development of Mpama South, its second large deposit at the Bisie complex. During the March quarter, US$15m of cash was spent developing Mpama South. Capital allocation during FY2023 will be prioritized toward further development at Mpama South, DRC income tax payments, and shareholder distributions.
Development of Mpama South
According to a recent statement by Alphamin, about 808m of underground development on two levels to connect Mpama North and Mpama South has been completed. More than 369m of development was completed in Q1 2023.
The Mpama South deposit has been intersected in a number of planned underground crosscuts. Development is expected to significantly accelerate from May 2023 as more underground equipment arrives on site. Additional grade control drilling is being completed to enable detailed short-term planning for the commencement of stopping later in 2023.
The company says that work commenced in January 2023 on the Mpama South portal with the excavation, stabilizing, and shotcreting of the portal area being completed.
The adit was established with 49m of adit and associated cubbies having been excavated and supported through the moderately weathered ground. Ground conditions will improve significantly when hard rock is encountered towards the end of April 2023 and advance rates will increase thereafter.
“Additional underground mining and maintenance staff have been recruited and are being mobilized in line with the mechanized machine deliveries,” says Alphamin.
The Mpama South processing plant as a whole project is about 66% complete and the company expects it to come online in December 2023. Alphamin predicts that the entire Mpama South development project will be completed within the budget of US$116m with commissioning targeted in December 2023. The project is expected to increase annual contained tin production from ~12,000 tonnes to ~20,000 tonnes.
Mining in Wa grinds to a halt
While Alphamin expects a bumper 2023 at Bisie in the DRC, Wa State in Myanmar, traditionally one of the top-producing tin regions in the world, recently announced the suspension of all its mining operations from August 2023. When tin mining activities in Wa State grind to a halt within a few months from now, it would have produced almost 10% of the world’s tin concentrate supply.
Wa is a major tin mining district in Myanmar, and sources a significant portion of concentrate for China, the world’s largest refined tin producer.
In 2022, almost two-thirds of China’s imported tin-in-concentrate came from Myanmar, totaling 48,000 tonnes. About 40,000 tonnes of this came from the country’s mine production, of which 70% is estimated to have come from Wa State. An additional 8,000 tonnes came from Wa government stockpiles during the record tin prices in early 2022.
According to the Wa State Central Economic Planning Commission, the radical steps to suspend all the mining and excavation of mineral resources were necessary to protect the remaining mineral resources in Wa State until mature mining conditions are in place.
If the suspension of mining activities in Wa State remains in place for the remainder of the year, it will have a significant effect on the market and the tin price. Alphamin’s ramp-up at Mpama South could thus not have come at a better time for the company. With the tin market heading for a supply deficit sooner rather than later, it is a matter of “seeing is believing” rather than “too good to be true.”