Burmese exports dent investor hopes for tin sector
THE AUSTRALIAN NOVEMBER 10, 2014 12:00AM
Robin Bromby
Business columnist
Sydney
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TIN has had a disappointing 2014. In 2013, the metal was the toast of the London Metal Exchange, the best performer in the base metals complex, losing far less (2.7 per cent) than copper, nickel and the others in a not-too-good year.
However, with just over seven weeks to go, tin is the likely wooden spoon recipient this year, down 10.6 per cent. The metal managed to get back over the $US20,000-a-tonne level on Friday, but interest here in the tin sector seems subdued (to say the least).
What went wrong? Myanmar, that’s what. Suddenly, the Burmese became big suppliers to China, the exports across the border being much greater than the rest of the tin industry had expected, overwhelming (still valid) forecasts of a growing tin deficit.
Then Indonesia in the second quarter stepped up exports, triggering fears the price could collapse to around $US18,000 a tonne. That did not happen, the worst being the recent drop to the mid $US19,000s.
ITRI, the world tin body, now has staffers in Myanmar trying to get a handle on how tin mines there are shaping up, but ITRI’s Peter Kettle believes output levels have peaked. Kettle says had the price fallen to the $US18,000-a-tonne level, much world production would have gone under water. This, in turn, would have stalled investment in new projects, which need tin at well over $US20,000 to make them work.
“In fact, it will need to be stable around $US25,000 before the hundreds of millions needed will be available,” he adds.
He is confident the future deficit story is still valid. ITRI expects the supply deficit to increase from 2529 tonnes in 2013 to 80,456 tonnes in 2020. By the latter date, the world’s largest producer, Yunnan Tin, projects the tin price to be around $US40,000 a tonne. This year’s refined tin production should come near 352,000 tonnes.
It is still possible to get into tin plays at bargain-basement prices. Even the well-advanced Kasbah Resources (KAS), close to nailing down the money needed to develop its Morocco project, is seeing its shares trading at just 6.3c, while Aus Tin (ANW) with its Taronga, NSW, project trades at 0.4c (market cap: $3.73 million), Elementos (ELT) with a promising Tasmanian project is yours at 0.7c a share, while Stellar Resources (SRZ), which claims to have the highest grade undeveloped ASX-listed tin resource — 71,5000 tonnes worth $1.6 billion — is valued by the market at $9m. And for 0.4c there are shares in Victory Mines (VIC) and its Bolivian tin dreams.
Consolidated Tin Mines (CSD) should be a tin producer next year. It is also absorbing an operating zinc-lead-copper business in the same area of Queensland (giving it exposure to rising zinc prices). CSD is capped at $14m, its shares last trading at 5.5c.
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