Commodity Trading – Niobium and Tantalum

Trading commodities can carry great risks, especially when ensuring that no part of the trade supply chain is involved in any illegal or unlawful activity.  Guaranteeing this can be more complicated than one thinks, and this article is about the problems of ensuring that commodities such as Niobium and Tantalum are traded in a lawful manner.

Introduction
A major challenge in commodity trading is ensuring with each and every trade that the supply of the commodity is legal.  It must not be linked in any way with terrorist, criminal or proceeds of war activities since, in the UK at least, any such dealings can be unlawful under a number of different Acts such as the Money Laundering Act and Proceeds of Crime Act.  In addition, it is the responsibility of each party in the supply chain to ensure that they are aware (and can prove), without any doubt whatsoever, that not only is the supply legal, but so is the end-use.

Ensuring that a supply chain is completely legal at all times can be difficult and expensive, not only at the initial set-up stage, but also with each and every following contract.  But maintaining close and secure procedures is an absolute must, since commodity trading has traditionally been sensitive to fraudulent practice.

Problems with mined commodities
Commodities that are mined are at particular risk.  The provenance of a number of products, such as precious stones and metals is often difficult to authenticate.  This problem is most associated with commodities mined through ASM – artisonal and small scale mining.  Unlike surface and underground mining activities, which are normally under strict government supervision and licenced, ASM is difficult to police because it is so small scale and dispersed. This is labour intensive mining, but often lacking any real capital outlay or mechanical and technological assistance.  Consequently, ASM has poor safety and environmental records, inadequate training regimes and inefficient systems.  Yet it is estimated that ASM provides a livelihood for some 100 million people worldwide.

Unfortunately, some of this work is forced under conditions of armed conflict and human rights violations and commodities mined under this type of regime are usually referred to as “conflict” minerals. This type of illicit mining is often organised by armed groups who use the profits for their own ends and to finance further fighting.  It was reported, for example, that rebel groups in the Democratic Republic of Congo made in excess of US$ 1 billion in 2009 through conflict trading.

Such mining activities tend to be concentrated in areas which are unstable politically and for commodities where the demand outstrips the supply due to a scarcity value and because they are vitally important to the manufacturing processes in numerous technological industries. For example, Indium is a vital component required in the manufacture of thin layer photovoltaics and without Germanium very few of todays IR optical technologies would be possible.

Consequently, any trading in these commodities can carry serious risks, mainly because they are not so well known and, more importantly, because they are not traded on any metal exchange.  This means that there are no official prices for many of these metals and price is usually determined solely by negotiation between buyer and seller.

Two of the most important rare metals in use today are Niobium and Tantalum.  They are both used in a wide variety of industries but little information is available about the supply because of the secrecy that usually surrounds such negotiations.  This can make it rather difficult to police the origin of these metals with any degree of accuracy.  In addition, Niobium and Tantalum ore tends to be processed and smelted in countries other than those in which they are mined.  The problem is that once the ore is crushed, milled, screened and processed, it is often impossible to determine the origin of the metal.

Niobium
Niobium (Nb) is a shiny, ductile metal with a white lustre and is sometimes mined with Tantalum (Ta) in a Niobium-Tantalum ore known as Colton.  The separation of Niobium from Tantalum does require a number of complicated steps however.  Both occur naturally as free metals, but are usually found as essential components in a range of mineral species, generally oxide minerals such as columbite, tantalite, wodginite and pyrocholore groups. These deposits are most commonly associated with igneous rocks.  In addition, both Niobium and Tantalum occur as a by-product of tin smelter waste, although generally only 2% of Niobium annual production is obtained in this way compared to 14% of Tantalum annual production.

Both Niobium and Tantalum are rare transition metals which have very similar physical and chemical properties and both play an essential role in the manufacture of certain types of steel and electronic capacitors.  They have unique properties including super-conductivity, corrosion resistance, very high melting temperatures, shape memory properties, high co-efficient of capacitance and bio-compatibility.  Because they are hard to substitute, rare (Niobium only found in 8 parts/million and Tantalum in 7 parts/million) and are deemed to be critical metals this, unfortunately, means that mining them under any circumstance is a profitable venture.

Niobium resources are mainly located in Brazil (93%) and Canada (7%).  There are unverified reports that some resources have also been found in Egypt, Malawi and Greenland.  It is estimated that there is about 485 million tonnes of Niobium available to mine.

Uses of Niobium
Presently, 89% of the global niobium production is used to produce ferro-niobium, which is used in high strength low alloy (HSLA) steel.  11% is used in the manufacture of niobium alloys, chemicals and carbides, high-purity ferro-niobium and other niobium metal products. The addition of Niobium to steel increases the strength of the steel and reduces its weight and grain boundary definition.  HSLA steel is used in the manufacture of vehicle bodies, jet and rocket engines, ship hulls, railway tracks and oil and gas pipelines.  It is also used in large steel structures such as oil platforms.

Smelting metal in a steel mill – Photo courtesy of Can stock photos

It is also a vital element in various superconductivity materials.  For example, alloys of Niobium combined with Titanium and Tin are required in the manufacture of superconductivity magnets for MRI scanners

Tantalum
Tantalum is a heavy, hard, grayish-silver metal and because of its high density is one of the heaviest and hardest metals known.  It was originally identified in 1802 as a type of Niobium, but not separated into a pure form until 1907.  It is mainly mined (40%) in Brazil (Araxa and Catalao mines), with the remaining 60% located in Australia (Greenbushes and Wodgina mines) and Canada, but there are also mines in Russia, Finland, Mozambique, Thailand, Portugal, Nigeria, Zaire, Greenland, South Africa, the Gabon and the Democratic Republic of Congo.  It is usually found in tantalite and columbite reserves but, as mentioned above, it is also obtained as a by-product of tin extraction.  The main processing centres for Tantalum are based in Rwanda, Brazil and Argentina.

Uses of Tantalum
Tantalum is often crushed into a power and used in the production of electronic parts.  It forms an oxidised layer around capacitors and high powered resistors, insulating them from damage due to high operating temperatures.  24% of the global production of Tantalum is used in the manufacture of capacitor grade powders, 17% in the manufacture of metallurgical grade powders and 18% is used to product tantium chemicals.

Since Tantalum is resistant to most acids and all bodily fluids, it is an ideal material for the manufacture of radio transmitters, surgical equipment and instruments and rods which are used to repair broken bones and skull plates.  When formed into a wire mesh it can also be used to repair nerves and muscles.  Tantalum is often used in joint replacements and prosthetics because of its durability and strength; in addition, its somewhat porous qualities allow it to merge favourably with the bone it replaces.  It is also used in hearing aids and pacemakers.

Tantalum has good electrical conductivity and a high melting point – 3017ºC.  41% of the global production is used to produce metal alloys (such as tantalum carbide where it is combined with carbon) that take advantage of these properties and are integrated into structures such as nuclear reactors, jet aircraft engine parts and components, cutting equipment and tools, and equipment to process chemicals.Tantalum is also used to manufacture a special glass which has a high index of refraction which is needed for some of the best camera lenses.

It has a number of military applications such as vehicle armour, explosives and missile construction.  Due to its high melting point and density, Tantalum is used in the manufacture of shaped charges and explosive-penetrating devices designed to break vehicle armour. Paradoxically, these characteristics also make it perfect for manufacturing tank armour.

“Critical” Raw Materials
As mentioned above, it is very difficult to obtain trade data for Niobium and Tantalum, partially because it is traded privately but also because these metals are commonly reported under a combined trade code with vanadium and rhenium.  The difficulty is then compounded by the fact that Niobium and Tantalum are both traded in a variety of forms including metallurgical products, ores and concentrates and chemicals.

In 2010 the European Community Commission identified both Niobium and Tantalum as “critical” raw materials along with 12 other economically important raw metals (Antimony, Beryllium, Cobalt, Flurospar, Gallium, Germanium, Graphite, Indium, Magnesium, PGM’s (Platinum Group Metals), Rare Earths and Tungsten).  This label of “critical” was given to any commodity where the European Community considers there to be a potential risk of supply shortage with an associated impact on the European Union economy.  This supply risk may be accentuated by the low political-economic stability of the main supplier(s) as well as the low sustainability and low recycling rates of the raw materials in question.

There is also a time element since a very important factor is the need to estimate consumption requirements based on technological change.  The estimated increased demand for micro-capacitors will  challenge resource requirements for both Niobium and Tantalum, as will the ever-increasing need for ferro alloys (Niobium) and continuing developments in medical technology (Tantalum).

Part of the problem faced by anyone dealing in these metals, as a consequence, is that the demand can be so great, that sometimes commercial decisions might be made about aspects of the supply chain which can contravene various national and international laws.  The legal advice in this circumstance is generally both stark and uncompromising – don’t put yourself in that situation.  Anyone doing so could find themselves charged with various offences, many of which in the UK could come under the Terrorism Act.

 

Maria Narancic from Point to Point Export Services is an independent international trade adviser who assists organisations world wide with their international trade projects, documentation, Documentary Credits and import/export training.  She is based in the United Kingdom.  If you require any further assistance with the subject matter detailed above, please do contact us by e-mail on info@point-point.com or check out our other articles on International Trade at the Point to Point website at www.point-point.com
 
 

 

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