Last week, MetalMiner ran a story examining the import and export trends for tantalum. The author discussed the skyrocketing number of tantalum imports compared to falling US exports.
As a follow-up commentary to that guest post from our friends at Zepol, we’d argue the bigger story involves the month-to-month trends of imports (and not so much of exports) – and specifically the time period before and after the August 22, 2012, SEC conflict minerals rule promulgation.
According to Chris Grove, director of communications at Commerce Resources, a junior tantalum mining firm: “In Q1 2013, we became aware of a company in China that stopped selling material to the US…we understood that their feedstock did not comply with the conflict minerals rules.” In terms of the yearly import trends reported on MetalMiner, Grove said, “to be honest, the story’s trends make sense through the eighth month of 2012 (Ed. note: that Chinese imports increased), but this can’t be the story post-Aug. 22,” given the new rules.
“I would expect to see that pie graph shift quite significantly with China looking a lot different,” Grove suggested, “but the real question we have to ask is, has the country of origin changed along with the quantities?” Grove expects a significant drop in 2013 imports from China. If no data supports that then, “the tantalum industry has found a way around the ruling.”
And therein lies the rub.
When Zepol came back to MetalMiner with monthly data, we noticed a slight decline in the overall dollar amount of tantalum imports, but by January of this year, the numbers look close to their pre-August 22 import levels. Moreover, the dollar value of imports from China hit a peak in January of this year as well! (Click on the table below to expand.)
We asked Grove for his reaction to the monthly data.
“This suggests very clearly to me that the demand for tantalum is increasing,” he said, “which makes perfect sense considering the overall increasing demand for products themselves that need tantalum for their design and performance.”
Nor did Grove sound surprised by the leading countries of origin of tantalum; China and Kazakhstan primarily, as importers of raw tantalum materials and then processing into an oxide for export:
But when we asked Grove to comment on why overall import levels do not appear to have dipped and, in fact, arguably increased, he reminded us that the earliest filing deadline for conflict minerals comes in May 2014.
And once tantalum ore moves to an oxide form, it becomes untraceable.
The main exporters of oxide have likely stockpiled the processed oxide (ed. note: the tantalum supply chain tends toward stockpiling vs. JIT-type ordering) and have now secured conflict-free raw materials for ongoing operations. In other words, conflict materials have likely already converted to a processed oxide and have made their way to US firms.
For the first reporting period, buying organizations will likely declare tantalum oxide “source undeterminable,” whereas by the 2015 reporting period, most of the processed oxides will likely come from conflict-free sources.
In the meantime, MetalMiner, in conjunction with Zepol, will continue to monitor February and March import data to report on import levels.