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Market: AIM
Sector: Equity Instruments
Epic: UKX
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Web Site: Fox-Davies Capital
Other Articles: 02-07-200901-07-200930-06-2009

Fox-Davies Capital

Fox-Davies Capital specialises in international resource companies and has a substantial background in emerging markets. FDC is dedicated to providing in depth sector, commodity, regional and company specific reports, driven by the aim of being specialist providers of high quality analysis on natural resource companies worldwide. Find out more at www.fox-davies.com
Wednesday, November 26, 2008

Talison Minerals suspends mining at world's largest tantaum operation

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Event


A significant event occurred in the tantalum market today when  Talison Minerals announced  that it is suspending mining at the world’s largest tantalum operation at Wodgina, 100 kilometres south of Port Hedland, Western Australia from early December 2008.
 
Comment


During 2008, the Wodgina mine has supplied more than 30 per cent of the world’s tantalum, which is used in popular consumer electronic products such as mobile  phones, digital cameras, gaming consoles and computers. The mine closure is based on two facts.
 
Firstly, the recent global financial crisis has seen a severe downturn in worldwide demand for consumer electronics, resulting in lower demand for tantalum. As a consequence, Talison’s customers have sufficient tantalum for the near future and have not needed to extend their current contracts.
 
Secondly, a long-term and increasing trend to reduce material costs in the electronics supply chain, which strongly encourages increased tantalum supply from Central Africa, and particularly from the Democratic Republic of Congo. This material is often illegally mined and its revenues used to support the ongoing civil war in the north-east of the Congo.
 
We believe that Talison’s two most important customers are Stark and Cabot, neither of which we understand would use “blood“ tantalum. This closure will reduce world production capacity by 1.4M lbs, albeit temporarily. We anticipate that the market will have recovered by the time Gippsland’s Adu Dabbab mine commences production, and with the probability of two by-products, tin and feldspar, should put Gippsland in a strong position.

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