Nobody can deny that Tin is in the grips of one of the longest-running squeezes ever seen in commodities markets, and there’s little sign of it letting up.
Yet, as far as I can tell, no so-called 'expert' can provide an adequate and definitive answer as to when they believe things will normalise. It all seems to be just guesswork with too many variables. For instance, the implications of Indonesia's export ban to encourage downstream projects, Myanmar issues, Malaysia force majeure on deliveries, CV19 in Africa, etc are not just problems for when the Tin supply/demand may settle down but how they think that may be addressed is the bigger question.
Typically, backwardations tend to be fairly short-lived, as high spot prices encourage producers and traders to deliver cargoes into exchanges, replenishing supplies and helping to push spot prices back below futures. But the unrelenting surge in demand and logistical challenges in getting metal where it’s needed have created a rare long-running squeeze that’s dragged inventories lower and helped lift prices sharply higher. See story.
Maybe SRZ predicted this scenario. Back in 2016, it prepared work on a Fast Start Study: SRZ Announcement 27 July 2016. These are old figures now but they do provide a guide as to what may need to happen. Note, I've taken the liberty to update it to reflect today's more profitable spot price:
Fast Start Study shows opportunity for:
16% increase in head grade to 1.23% tin
First ore in 6 months of mining commencement – 50% faster than OPFS
57% reduction in preproduction capital cost to $47.5m
Competitive unit cash operating cost of A$14,677/t at today’s LME spot tin price of A$57,200/t (US$40,000/t) = a profit of A$42,523/t
Mining Lease application over Heemskirk tin deposits and tailings dam all accepted by Mineral Resources Tasmania
SRZ has positioned itself to be one of the first new supply movers in this cycle. Looking forward to imminent assay results coming soon.
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