The Metals Report: Could the [SEC’s Conflict Minerals] regulation spawn more offtake or end-user agreements with resource companies that have viable deposits of these commodities in desirable jurisdictions?
Lisa Reisman: Definitely. Companies are not looking to skirt the law. They want to try to comply with it. To do that, they are going to be forced to look at alternative sources to develop the supply chain. It’s a good opportunity for junior mining companies.
To some extent, the markets already work like that. Tantalum is a great example of a metal where companies basically buy forward. They’re not buying on the spot market. They’re buying on contracts. They’re looking to shore up and lock-in long-term supply contracts. We will see more, not less, of that.
The other question is: Will this legislation effectively choke off certain sources of supply, which could trigger shortages? There will be opportunity on that front for tin, tungsten and tantalum.
TMR: Can you tell us about the market right now for tantalum, tungsten and tin?
LR: The U.S. government put out a Strategic Minerals Report recently that identified those three metals as critical and potentially problematic from a supply standpoint.
Tantalum is not necessarily in short supply right now, but the price is well supported. It’s behaving differently than other metals, like steel, aluminum, copper and others that have fallen in price since the start of the year.
There are elements of the tantalum supply chains that are in short supply—a lot of domestic or non-DRC is available. In 2012, the U.S. imported $314 million ($314M) worth of tantalum. Of that, $108M came from China, $51.7M came from Kazakhstan and $43M came from Germany.
Tungsten looks a bit like tantalum except the majority of its concentration and processing is in China. From a conflict minerals standpoint, if your Chinese supplier tells you that the ore is conflict-free, can you believe it? Most manufacturers would probably say no.
TMR: What are some examples of development-stage tantalum, tungsten and tin projects in conflict-free jurisdictions that manufacturers might be interested in starting relationships with?
LR: Commerce Resources Corp. (CCE:TSX.V; D7H:FSE; CMRZF:OTCQX) is an obvious one. It is extremely close to production this year or next. It is probably at the point where it is doing offtake agreements.
TMR: When is the earliest that its Blue River tantalum and niobium project in British Columbia, Canada, could be in production?
LR: Commerce is targeting 2014. It made the shift from being institutionally focused to being more end-user focused. It is trying to better understand who the big players are in the North American market and tying those relationships together. It is more visible to end users. It used to only be at rare earth metal conferences, but now I’m seeing it at places where end users of tantalum are.
There are other projects as well: one in Egypt that’s quite substantial, Critical Elements Corp. (CRE:TSX.V) in Canada and NOVENTa (NVTA:AIM). Many of these companies are far from actually becoming operational, but Commerce and some of these others should make it to market.
This portion of the interview has been condensed and edited. Read the full interview here.