Two interesting pieces have appeared on tantalum and cobalt and as neither of these metals have end markets they have been appended in toto with credits to the writers and their publications. First Doug Bartolomew of a magazine called Baseline wrote an article a few days ago entitled, “Tantalum Shortage Delays Boeing 787 Dreamliner�.
Boeing, which only a year ago was cruising smoothly through design, development and early manufacturing of its new 787 Dreamliner commercial aircraft, has hit some heavy turbulence. Just months before the first 787 was to roll out off the assembly line at Boeing's Everett, Wash., plant, the company said it would be delayed six months due to problems with software integration and supply chain issues.
The Chicago-based aerospace giant-struggling to gear up to fulfill more than 700 orders for the new passenger jet- disappointed investors and customers with the news that the first Dreamliner would be assembled near the end of 2008 instead of midyear. An estimated 30 to 35 Dreamliners originally promised for delivery next year were pushed back to 2009.
The company, which only last September had downplayed its manufacturing challenges, suddenly revealed that even the careful tracking of every aspect of the new aircraft from virtual design to delivery using Dassault Systemes' product lifecycle management (PLM) software wasn't enough to insulate it from real-world parts shortages, supplier missteps and software integration snafus.
In its latest statement to analysts and media, the company blamed the delay on "flight control software and systems integration activities" as well as "out-of-sequence manufacturing and parts shortages." As a result of materials shortages-specifically a lack of corrosion-resistant tantalum fasteners-Boeing and its suppliers were unable to complete some assemblies in the proper sequence, causing a production holdup.
Boeing competitor Airbus suffered a similar, if not more serious, trip-up with its manufacturing of a new airliner a year and a half ago. Repeated delays in the building of its double-decker A380 superjumbo ultimately cost the four-nation aerospace consortium two years and an estimated $6 billion. Cargo giant Federal Express cancelled an order for 10 Airbus A380s and replaced it with one valued at $3.5 billion for 15 Boeing 777 air freighters.
Although Boeing's manufacturing woes haven't escalated to that level, both analysts and customers have grown more suspect of the aerospace firm's commitment to an aggressive production schedule of 109 Dreamliners by year-end 2009. "We're in a very intense period while we work on how to get through this situation," says company spokeswoman Laurie Gunter. Kevin Fowler, 787 systems integration vice president, declined to be interviewed for this story.
“One problem Boeing has had is material shortages, particularly tantalum fasteners," says Mike Burkett, vice president for value chain strategies at AMR Research. "This is not really a PLM problem but more a supply chain risk management issue, because its supplier ran out of tantalum, so Boeing ran out of fasteners. With any new design, you should always look at sourcing, which should be well integrated into the design process."
Despite having supply chain software, manufacturers find it difficult to predict which parts or raw materials will be in limited supply when time comes for manufacturing. One way they can cushion the impact of a shortage is to line up a backup supplier in advance. In the case of tantalum, the material was involved in a shortage that affected the entire electronics industry in 2000-2001, with some device manufacturers placing orders for tantalum capacitors as much as 18 months in advance. ------------------------------------------------------- Xiao Yu at Bloomberg came out with a similarly encouraging piece about rising demand for cobalt from China.
Global demand for cobalt may rise 14 per cent by 2010, led by increasing Chinese consumption of the metal, used in jet engines and laptop computer batteries. Consumption may gain to 65,000 metric tons from 57,000 tons this year, said David Weight, general manager of U.K. based Cobalt Development Institute, in an interview in Ningbo, China.
“Demand may increase to 85,000 tons by 2020,� he said. Cobalt use in China, the world's fastest growing major economy, has grown 10 per cent annually in the past five years, driving up global prices. The country accounts for a fifth of total demand. “Cobalt usage will be driven mainly by China and the U.S., where gas-powered turbines, rechargeable batteries and cutting tools will lead the growth,� Weight said.
Katanga Mining has agreed to buy Nikanor for about US$2 billion to create the world's largest producer. Projects being developed by Katanga Mining in the Democratic Republic of Congo, CVRD in New Caledonia and BHP Billiton in Australia will add 50,000 tons of supply in 2010, bringing global output to around 120,000 tons, according to slides presented by Weight at the cobalt conference in Ningbo.
It may take longer than 2010 to bring all the production on stream because of rising labour costs, energy prices and insufficient equipment supplies and transportation, he said. ‘Less volatile’ cobalt supplies will increase by 10,000 tons in 2008 and prices may be ‘less volatile’ compared with this year, he said, declining to give a forecast.
“Prices may gain to as high as US$34 a pound this year on concern about supplies from the Congo, the largest producer of the metal,� Colin Hamilton, an analyst at London-based research company CRU, said on Sept. 28. The price of cobalt has added 22 per cent this year to US$30.70 as of Nov. 7, according to Metal Bulletin.
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