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SOG negotiating future tantalum sales, sells to China

Sarah Belfield


Monday, May 10, 2004
SONS of Gwalia is in negotiations with its two major tantalum customers for contracts beyond the end of 2005, with agreement expected to be reached by the end of the current quarter.

SOG has previously forecast sales of 2.1 million pounds of tantalum pentoxide in fiscal 2004, with marginal increases in volume until December 2005.

Since 1991, SOG has sold nearly all of its tantalum product to Cabot Corp of the United States and HC Starck, a division of the German Bayer Group.

However, the company recently made its first sale into the Chinese market, the third largest market globally for raw tantalum.

SOG has completed an agreement for the sale of 150,000lb of tantalum in concentrates to an unnamed, established Chinese-owned tantalum processor, with delivery to take place in the second half of this calendar year.

In March 2003, SOG made a sale of 200,000lb of tantalum in concentrates to a trader third party via a joint venture. Under the joint venture arrangement, the material was placed in a joint venture stockpile and SOG received part payment (US$30 per pound) at the time.

MiningNews.net understands a sunset clause was also included in the terms of the arrangement, with the joint venture company having until the end of this calendar year to sell the stockpiled material.

In its announcement, SOG stated that material for the Chinese sale will be sourced from the stockpile.

SOG regards the Chinese sale as a sign the tantalum market outlook is improving.

SOG shares were unchanged at $2.32 in late afternoon trading on the ASX.