Tight Supplies, Tantalums & 2011

The squeeze on tantalum capacitors will continue into 2011, global distributors say, but there's no expectation that parts will be any more difficult to get next year than they are now. However, because of ongoing concerns about the availability of the raw material tantalum, buyers can expect to see prices continue to increase into the foreseeable future.

“In terms of how hard or easy it is to get [tantalum] parts, things are starting to settle down,” says Michael Knight, vice president, corporate product management, for interconnect, passives, and electromechanical (IP&E) specialty distributor {complink 12888|TTI Inc.} “In the smaller case sizes, lead times are long and supply is tight — and even in some of the large case sizes it's tight — but you can get parts. We have plenty of inventory, and the channel is in a pretty good position. Demand and capacity have stabilized, and there will be enough to service demand.”

{complink 577|Avnet Inc.} electronics marketing global president Harley Feldberg voices a similar opinion. “I don't feel there's a severe shortage in tantalums,” he says. “There has been talk within the channel that makes the [supply situation] seem more dire, but in the research I have done and in with talking to our [product] experts, what they tell me is lead times are still extended and continued price increases are plausible.”

From the tenor in the industry, it seems that price increases are more than plausible. Tantalum is a key material to be affected by a new requirement that manufacturers declare they are not using “conflict minerals” — materials mined in the Democratic Republic of Congo (DRC) — in their products. Human rights violations are occurring in the DRC mining operations, and profits from the operations are believed to be fueling the ongoing conflict in the region. The DRC is one of the world's largest sources of tantalum, so the shift to conflict-free sources makes the material more scarce and therefore drives up prices.

“There have been prices increases due to raw material,” says Feldberg, “but our experts believe we can cope with the supply/demand situation by increasing the [components] pipeline and by not going through an over-reactionary mode.”

Knight and others put those price increases in the following perspective: Prices of tantalum capacitors are just now beginning to reach the levels they maintained in the pre-bubble period of 1999-2000. Prices have been eroding steadily for a decade, and only now are regaining lost ground. However, that 60-percent-plus price increase is significant to buyers that have become accustomed to paying much less.

“There may be a point where tantalum price points become so unattractive that it will no longer be viable, and buyers will look to other technologies,” says Knight.

11 comments on “Tight Supplies, Tantalums & 2011

  1. DataCrunch
    December 21, 2010

    The Dodd-Frank bill or more popularly known The Wall Street Reform bill includes provisions that deal with “conflict minerals”, specifically tin, tantalum , tungsten or gold mined in the DRC and now also in neighboring countries.  This new law requires public companies to verify where these minerals were mined and that they did not financially benefit rebel groups in the region

    According to Global Witness (the same group that exposed “blood diamonds”), “conflict minerals” used in electronics can pass through approximately 7 middlemen before they are actually used by the manufacturer, so it may be difficult for companies to verify whether or not they are using “conflict minerals”.      

    The new law doesn’t stop companies from selling their products if they can’t verify their sources, but may face embarrassment.  Products that can verify their sources through the entire supply chain that are not “conflict minerals” can have a “DRC Conflict-Free” label.

    The hope is that the new law will stop or at least significantly decrease the violence in the DRC.  Let’s see how 2011 works out for seeing products labeled “DRC Conflict-Free”. 

  2. Hawk
    December 21, 2010

    Another hurdle legitimate electronic companies must scale in the difficult task of ensuring their supply chain is flexible, adaptive and corruption-free. It's not enough that companies must manage a tight enough schedule now they have to police their raw material supply chain. Governments are supposed to scrub the system, not companies. It is when governments fail in their responsibilities or believe their counterparts in other parts of the globe are not doing their duties that the task of policing the supply chain is passed on to companies. But are these companies really up to the task?

  3. Paumanok Publications, Inc.
    December 21, 2010

    Tantalum from now until June 2011 is a key topic for any THREAT slide in a SWOT analysis.  Any of you who read this who work with me know that.  The supply chain for processed tantalite as a whole (electronics, wear parts, curring tools, superalloys, targets, medical implants) is placing great emphasis on its survival past June 2011 based upon the actions of one mine.  Dont play it down.  Its important because its all connected.  Its just a matter of time before one of these rare earth elements messes up the high tech supply chain.  And people smarter than me know this as well- financial types who trade in the new palladium and platinum ETFs; and what's this? REE ETFs Australia- how interesting; and fundamentally dangerous to the industry.  Tantalum, neodymium and many of the PGMs and lanthacides need close monitoring by the supply chain; and a concerted effort to make sure enough exists for the all the industries and nations that need it.  Anything else would be remiss. Id suggest that any senior level guys who read this throw a firecracker in their senior supply chain manager's office and then ask what their take on the while REE thing is and how it might impact the company over the next decade.  Oce they give you an answer, ask what the guys at NASA ask- “What's your plan “B” Gordo, what's your plan “B?”

  4. stochastic excursion
    December 21, 2010

    Tantalum has unique properties that makes it very economical as a basis for certain passive components in power supplies.  That said, IMHO product managers are asking for trouble when they depend on a material with such limited abundance.  This is especially so when the material comes from trouble spots in the global south.

    Unavailability of tantalum means bigger power supplies that are more expensive and less energy-efficient to make.  It's possible that new technology, e.g. semiconductor or composites, could step up to the plate (har, that's capacitive plate). 

    Coordinated trade barriers could take the pressure off companies who wish to stay out of what is looking like the blood tantalum market. 

  5. mfbertozzi
    December 22, 2010

    @Stochastic Execursion: one of the key points is exactly what you have mentioned. Anyway it seems in the short term there are not strong alternatives to tantalum for the facts several manifactures have to customize their production chains to new materials and it could not easy (think of for example to aircraft engines, one of the most important tantalum application) and quite expensive.

    @Barbara: due to extreme important needs satisfied by tantalum and political concerns on DCR, it seems biggest player on the segment is coming; Cina is acquiring across the globe huge % of tantalum production. Whole brasilian production is owned by them right now. Rhodia (leader in the development and production of specialty chemicals) appointed Mr Hua Du as executive, does it ring a bell?

  6. Barbara Jorgensen
    December 22, 2010

    Hi mfbertozzi,

    The gentleman's name doesn't ring a bell (clue me in!), but the trend you mentioned does. Although tantalum is not an REE, it is covered in a DOE report just released on REEs. China has slowly, and up until quietly, been buying up struggling mining operations around the world. According to the DOE, China controls something like 95% of REEs, so it's not a stretch to imagine they saw the tantalum trend coming as well.

  7. mfbertozzi
    December 23, 2010

    Here we are. Since few years ago thanks to large volume on the market, Chinese finance reached very high positive cash flow; it has allowed to Chinese economy to invest a lot in REEs and then to realize huge profits. Take in consideration that based on reports ( tantalum's price boosted 120% in one year and this process are going to support new investments (from their side) in other segments. Furthermore it has started a new “indirect” process: western firms are going to appoint chinese executives with the purpose to better promote and enable business relationships between West and China. Will benefits be fifty-fifty just to balance profits for each other?

  8. Ms. Daisy
    December 27, 2010

    You are right about China's silent move on rare elements. Cote d’Ivoire, Sao Tome and Principe, Gambia,Malawi, and Tanzania (un familiar countries?), all have Tantalum ores in sizable amounts, and guess who is already their mining or funding mining – China!

    DRC may be the obvious and the most unstable country for mining, but China has a nack for finding the less beaten path and the money to explore new resources before others know what's happening. I won't be supprised to hear that China controls (directly or indrectly) the Tantalum mining too.

  9. jbond
    December 29, 2010

    All of these are very valid points. Obviously the main use of Tantalum is making capacitors and high power resistors but its also an additive in many metals to increase strength and corrosion resistance.

    This is also used in dental and surgical instruments and implants because there is no immune exposure.

    So the increase in cost and availability has a wide spread affect on many global products. While semiconductor parts can help replace tantalum with the capacitors and resistors (the availability and cost is becoming much more prevalent), the other issue at hand is what can be done to offset the rising cost of using this element as an additive.


  10. Ms. Daisy
    December 29, 2010

    I agree these metals are used in almost all areas of our lives. As consumers we need to find ways to use less of the products which translates to less use of these materials, recycle what we take, and manufacturers to continue to research and develop other more efficient parts that are not using rare metals for electronics.

    I hope I am not sounding like Al Gore's spokes person!


  11. Barbara Jorgensen
    December 30, 2010

    Great discussion! From what I understand, there is not a perfect replacement for tantalum, at least for capacitors. Until prices went up it was the most efficienct and least expensive element for the technology.

    Michael Kirschner made a point in a recent Webinar that might be applicable: efforts by the electronics industry to replace lead in solders has been a decades-long and expensive project and the replacements still don't work as leaded solders. It is very difficult to make substitutions, particularly when something works.

    If there was a way to make the politics around tantalum less explosive–and I'm not saying there is, or that the electronics industry should spearhead the effort–the material itself is still a good solution.

Leave a Reply

This site uses Akismet to reduce spam. Learn how your comment data is processed.