‘With its established demand, tin is not just a bet on new technologies – unlike cobalt and lithium – but will still benefit from the build out and development of the same technologies.
‘Given strong demand expectations, forecasts of supply deficits and the overreliance on artisanal mining, it’s surprising how little attention has been paid to a metal essential for the Information Age and the energy transition.’
Johan van den Hooven, Benelux regional director
What are tin’s main applications?
Tin’s largest application, at 49%, is in solders – low melting point, conductive alloys. Solders act as both glue and conductor between individual electronic components and between components and printed circuit boards (PCBs). It is this combination of being able to fix components in place and to ensure good conduction that makes them critical to electronic circuitry. Previously, solders were typically a 60:40 tin–lead alloy, but with the banning of lead in solders in 2006 by the European Union, China and California, 95% of solders are expected to be lead-free by 2023.
The second application is in chemical compounds, at 18% of demand. Largest among these is as a stabiliser in PVC (7.7% of annual usage), with smaller applications such as catalysts in the production of other plastics, pigments in the ceramic industry and as a coating for glass.
Tin itself is proven to be non-toxic and corrosion-resistant. With a low melting point and an ability to form a thin layer on metals, it makes an ideal covering to give steel toxic-free, corrosion resistance, in the form of ‘tinplate’. Tinning, as a means of protecting against rust, is likely to have started around 3000 BC, but the modern, continuous ‘strip mill’ appeared only in the late 1920s. Today, tinplate accounts for 12% of demand and is found in eponymously named tin cans and aerosols.
A lesser-known use is in the production of glass, through the Pilkington ‘float glass’ method, invented in 1952. Molten glass is poured on to a flat stream of molten tin, ensuring two flat surfaces. Previously, panes of glass were formed using rollers, which required expensive post-polishing. Each week, 970,000 metric tons of glass are produced, almost all through the Pilkington method.
|MARKET CAP ($M)
|Yunnan Tin Co Ltd
|Timah Tbk PT
|Alphamin Resources Corp
|Malaysia Smelting Corporation Bhd
|Empresa Metalurgica Vinto
Source: Refinitiv at 9 April 2021
What are the opportunities for demand growth?
The growth potential for tin cannot be underestimated. It is so fundamental to renewable energy, electric vehicles and IT systems that the Massachusetts Institute of Technology (MIT) estimates tin is the most pivotal metal to new technologies and the energy transition, well ahead of cobalt, lithium and with more than twice the number of applications as nickel.
Of tin’s applications, electronics is both the most significant today and also the greatest source of potential demand expansion. It is inconceivable to consider life without electronic devices, which would be unfeasible without tin solders, and looking forward electronic demand is only set to increase. Appetite for electronic devices has been forecast to grow at 4.8% each year to 2025. These figures now look conservative given that the COVID-19 pandemic has sped up the move to home-working and increased the appeal of smart-home and in-house entertainment systems.
Electronics are also lifting demand for tin-based chemicals. Capacitive touch-sensitive screens, used on smartphones for example, employ a thin layer of indium-tin oxide to detect screen contact. The proliferation of touch-screen electronics has boosted demand for this oxide. Tin demand will be further bolstered by the accelerating environmental sector. In the near term, renewable infrastructure development, such as solar-panel farms and wind turbines, require extensive control circuitry, which will feed into solder demand.
Further out is the potential demand from batteries for electric vehicles. Tin compound additives already offer important performance improvement in lead acid batteries, but this could be overshadowed by tin usage in electric vehicles (EVs). Lithium-ion batteries (LiB) have been shown to achieve significant increases in specific energy – the amount of power in a kilogram of battery – if tin is added to the graphite anodes. This is especially useful in EVs and electric planes, as it would allow the same range from smaller or lighter batteries. With the exponential growth in electric cars, demand for tin from LiB batteries is forecast to ramp up from almost nothing today to account for 3–4% of tin demand by 2025, and more as EVs usurp internal combustion engine vehicles in the second half of the decade.
Are there threats to tin?
Threats to tin demand are principally from cost reduction, through reduced usage and substitution with cheaper materials, and health regulations.
Circuit designers strive to use fewer components and to miniaturise the electronic footprint of gadgets; both these trends reduce the amount of solder needed. At the same time, epoxy resins can hold components in place, though some soldering is still needed to provide conductivity. Although using epoxy resins adds complexity to assembly, for large components it can make financial sense.
In chemicals, the threat comes from cheaper alternatives or the need to comply with regulatory pressures. For example, zinc–calcium compounds can be used as a PVC stabiliser, even if performance is inferior. These also bring compliance with various regulations, such as the EU REACH and food-contact legislation.
Tinplate is under more direct threat. Plastic bottles and aluminium have been eroding the demand for tin cans for many years. In 2016, 90% of cans for both food and beverages were made from aluminium, the rest from tinplate. However, with as many as 80bn cans made annually, tinplate is still used in 8bn of them.
Where is tin sourced from?
Only one tin ore, cassiterite, is economically extractable. The majority (54%) of cassiterite is found in China and the Southeast Asia Tin Belt, running from Myanmar and Thailand to Malaysia and Indonesia. Other sizeable deposits are found in Latin America (Peru, Bolivia and Brazil), Northwest Europe, the Democratic Republic of the Congo (DRC) and Australia.
Since around 2000, supply–demand fundamentals had been moving into deficit due to mine depletion and the shift to lead-free solders. The International Tin Association (ITA) had expressed concerns of significant deficits from 2010. However, this challenge was avoided by ore supplied from Myanmar. Myanmar, which recorded almost no tin ore mining in the years to 2009, ramped up output to become the third-largest miner by 2015.
With no domestic production, the US has championed recycling to reduce its import dependence. This also brings environmental benefits and so is also attractive to the European Union. In 2020, recycling returned approximately 24% of tin back into the US supply chain. Volumes from recycling are expected to increase as processes for breaking down electronics and batteries are further developed.
How is supply threatened?
Tin supply is a major concern. Of the five London Metal Exchange (LME) base metals – lead is not covered – the OECD assessed tin as having the highest supply risk, the highest political risk rating and the second-lowest recycling rate.
The first worry is falling output from Myanmar. In 2016, the country accounted for 19% of global production, but this had fallen to 14% in 2019 and 11% in 2020. Without this supply, deficits are likely, which has already lifted prices. Supply will tighten as mine depletion continues, demand strengthens and any new facilities take time to ramp up, with some level of deficit expected for the next three to five years.
Secondly, a significant part of mining is from the unregulated, informal sector. That is, by artisan miners with little in the way of tools. This is prevalent in Myanmar and the DRC. As the proceeds from tin mining could be used to fund armed groups, it was included in ‘3TG’ – tungsten, tantalum, tin and gold – conflict mineral legislation. Both the United States’ 2010 Dodd Frank legislation and the EU’s 2017 Conflict Minerals Regulation (applying from 1 January 2021) require companies to conduct due diligence on sources of tin ores. This could effectively cut out artisanal sourced material to companies working in regions affected by these regulations, and so reduce usable supply availability.
The EU has so far not classified tin as a critical mineral because supply risk is reduced by domestic producer Metallo of Belgium. However, for the US the concerns are more acute as it has no domestic production, and reduced supply would have an impact on many industries, especially those in the value-adding, high-tech sector. The US includes tin on its critical minerals register and maintains a strategic reserve of 4,000 metric tons, although this is equivalent to just 35 days of 2020 consumption.
How are fundamentals driving the price?
Fundamentals are the key driver of tin’s price.
The relatively low annual production (296,000 metric tons of tin compared to copper’s 18m metric tons) and low levels of exchange inventories means that any slowing in supply feeds straight into market tightness and higher prices. This has kept tin in backwardation for extended periods over the past five years.
However, previous levels of backwardation are paltry compared to recent levels. Resurgent demand, supply tightness and inventories depleted by stopped mines over 2020 saw the cash-to-three-month spread reach $4,895/metric ton in March 2021, and prices hit levels not seen since 2011. This is testament to the inflexibility of tin’s production base and its importance to global industries.
The other driver is the cost of production. Ore body grade depletion and the move away from artisanal mining has pushed up the cost at which many mines are economic. The ITA models mines’ all-in sustaining costs (AISC) as a ‘cost curve’. This analysis highlights the benefits of larger operations, demonstrated by mines in South-East Asia, or high-grade ore bodies, such as in the DRC, where the tin content may be as much as 15 times that of the weighted, global average.
A cost curve also indicates the ‘equilibrium price’, the level that prices typically fluctuate around. This is taken as the AISC of the mine at 90% of capacity. If supply is tight, then prices rise above this level, making even the highest cost producers economic, which brings extra supply to the market. However, this balances the fundamentals, suppressing prices and the highest cost producers become uneconomic again and exit until prices recover.
Tin’s equilibrium price in 2020 was around $25,000/metric ton. The COVID-19 pandemic depressed all base metal prices in the first half of 2020, but with the 2020 average cash price of $17,159/metric ton many of the smaller producers are uneconomic, and many projects will not move forward until prices rise.
Which companies produce tin?
Four out of the five largest companies producing tin are based in South-East Asia. Chinese, Malaysian and Indonesian companies, such as Yunnan Tin (China), PT Timah (Indonesia) and Malaysia Smelting (Malaysia), collectively mine 50% of global ore each year. Peru, Bolivia and Brazil, led by Minsur (Peru) and EM Vinto (Bolivia), account for another 20% of mining.
Smelting of cassiterite into tin is more concentrated, with China also responsible for processing the artisanal supply from Myanmar. China, Malaysia and Indonesia collectively smelt 70% of tin ore, with Latin America responsible for another 20%.
The dominance of Chinese supply and increasing trade frictions have supported the case for sourcing ore and metal from countries outside of the Asian Tin Belt. Alphamin’s Bisie mine in North Kivu, DRC, started production in 2019 and is ramping up to the goal of 12,000–13,000 metric tons per year of tin contained in concentrate. Historically, mining around Bisie’s deposit was artisanal, with the ore shipped to China, but today it is fully mechanised with the ore sent to a range of smelters both in and out of China.