Venture Minerals Says Market Can Sustain Record Tin Prices on High Demand

Venture Minerals Ltd., building a tin mine in Australia’s Tasmania state, said shortages that helped push prices of the metal to a record today will endure for at least five years because of a dearth of new projects. 

“The market can handle these sorts of prices,” Managing Director Hamish Halliday said in an interview in Perth. “The catch-up that’s required on the exploration side is quite vast. You’ve had virtually no greenfield exploration for a quarter of a century. There will be a major supply gap going forward.” 

Tin climbed 55 percent this year, the most of the six main metals on the London Metal Exchange, as reduced stockpiles and mining disruptions heightened speculation supplies won’t be adequate. Demand for the metal, mainly used to solder metals together in electrical gadgets such as BlackBerry phones, is expected to increase 13 percent this year, according to MF Global analyst Edward Meir. 

“There’s more solder-dominated demand which can handle higher prices, whereas in foodstuff containerization, substitution kicks in earlier when prices rise,” Halliday said in yesterday’s interview. “Although it’s still used to make tin cans, it’s effectively transformed from an old-world metal into a new-world metal.” 

Tin for three-month delivery rose as much as 1.3 percent to $26,251 a metric ton as of 12:16 p.m. in Singapore. 

Production in China, the world’s largest producer, may be restricted through the end of the year because of limitations on power, tin industry group ITRI Ltd. said on Sept. 29. In August, shipments from Indonesia, the second-largest producer, dropped to 7,974 tons from 8,870 tons in July. 

Mt Lindsay

Prices have also been bolstered by disruptions to production in the Democratic Republic of Congo and Indonesia. 

“Demand is rising across the board,” Halliday said. “A lot of the Chinese operations have relatively high costs. Indonesia has had a dramatic drop in production since 2005. There’s a broad play on securing supply and there’s been a general rundown in LME stockpiles due to pure demand.” 

Venture’s Mt Lindsay tin and tungsten project in Tasmania, an island state off Australia’s southeast coast, is expected to start operating in 2013’s first half, Halliday said. A pre- feasibility study will be completed next month, with the project initially estimated to cost A$130 million ($126 million). It has an initial resource base of 100,000 tons of tin and tungsten. 

Trading in Venture was halted yesterday on the Australian stock exchange ahead of a statement on capital raising, due latest by the start of trading tomorrow. Halliday declined to discuss the fundraising. The stock closed 7 percent higher on Oct. 4 at 53.5 cents, giving the Perth-based company a market value of A$90 million, up 45 percent this year. Source: Bloomberg