Zinifex tantalised by SoG tantalum Robin Bromby October 11, 2005
www.theage.com.au
ZINC and lead giant Zinifex has signalled it could be a buyer for the failed Sons of Gwalia's huge tantalum mines as part of a diversification strategy.
This followed the announcement yesterday that Zinifex was forming a tantalum alliance with Mitsubishi and Perth-based Haddington Resources to be called Australian Tantalum.
Tantalum is used in a range of electronics, telecommunications and aerospace applications and, in metal form, it sells for about $US100,000 a tonne while oxide concentrates from mines fetch around $US65/lb.
Haddington is the only other Australian producer of tantalum but its 200,000 pounds a year from the Bald Hill mine is dwarfed by SoG's capacity of more than 2.1 million pounds a year.
The appeal for Haddington's new partners is the 1500sqkm of exploration prospects held by the junior miner in Western Australia and the Northern Territory.
Haddington was, until September 30, tied to a supply contract with the administrators of SoG. But the Ferrier Hodgson team running the collapsed tantalum-gold miner gave Haddington less than a fortnight's notice it would not renew the contract to take metal from the junior's Bald Hill mine to supplement SoG's own output.
Zinifex spokesman Martin McFarlane said yesterday his company had previously signalled it was looking to diversify into niche metals, if an acquisition of the right scale, with significant returns and lasting competitive value, was possible.
Tantalum had met those yardsticks.
Zinifex would be looking for further tantalum opportunities.
He said it was unclear what would happen to SoG's Greenbushes and Wodgina mines - together providing a dominant world position in the tantalum market - under the present administrators.
"But if they bring it (the SoG business) to market, we might be an interested party if the price is acceptable," Mr McFarlane said.
Investors clearly saw the implications of Zinifex's move, marking the stock up 26c to $4.53. Greenbushes and Wodgina between them hold 75 per cent of the world's defined tantalum reserves and have been producing 50 per cent of global demand. The mines have been maintained in operating condition by the administrators.
Mitsubishi and Zinifex will provide an initial $1.5 million a year for exploration as part of their alliance with Haddington and will also finance feasibility studies on discoveries, and would end up owning 33.33 per cent of any larger development, leaving smaller projects to Haddington to mine alone.
The decision to include Mitsubishi also signals a ground shift in tantalum marketing.
That market has been dominated by Cabot Corp of the US and Bayer of Germany, SoG's two customers.
Mitsubishi has many years of experience trading in specialty metals, and this move signals that the Japanese giant is looking to expand its interest in this metal.
Its Mitsubishi Materials division, which handles metals, has 336 offices in 21 countries, and employs 21,000 people.
HDN Price at posting:
0.0¢ Sentiment: None Disclosure: Held
A personalised tool to help users track selected stocks. Delivering real-time notifications on price updates, announcements, and performance stats on each to help make informed investment decisions.
(20min delay)