Tin and silver - the new electric metals

Record high prices for tin and silver are on the cards between now and 2018, as demand for the two metals in solder used in the electronics industry continues to climb and supply fails to keep pace, according to Jon Hykawy, head of global research at Byron Capital Markets, spesking at an April conference on electric metals sponsored by the investment dealer in Toronto and reported in Canadian Mining Journal.

Prices for the two metals started to climb sharply six years ago after the European Union banned the use  of lead in all products sold in Europe after July 2006. The reasoning behind the Restriction on  Hazardous Substances Directive (RoHS) is that a large percentage of electronic waste is never  recycled and that the metals and other materials in electronic devices will simply dissipate into the  environment.




The directive means that the formulation of conventional solder - made up of 63% Sn and 37% Pb -  has had to be reconfigured. The result is that the de facto standard in the electronics industry became  solder that typically is made up of about 96% Sn, 3.5% Ag, and 0.5% Cu, by weight. It may also contain  very small quantities of manganese or zinc.

The problem is that supply of the two metals, primarily of tin but also for silver (which is also used as a  conductive paste in the solar industry), is not keeping up with demand. The compound average  growth rate (CAGR) for silver production between 2001 and 2010 was about 2% and that for tin was about  1%, he says.

As a result, prices for tin rose from US$7,385 per tonne in 2005 to US$8,755 in 2006 and by 2011 had  reached US$26,051 per tonne. Silver prices demonstrated a similar trajectory rising from US$7.32 per  ounce in 2005 to US$11.55 per ounce in 2006 and by 2011 had climbed to US$35.12 per ounce.

Hykawy predicts silver prices will move from US$35 per ounce to as high as US$68 per ounce by 2018  and tin will surge from US$26 per kilogram to about US$59 per kilogram during the same period.

And he forecasts major tin shortages by 2018. “We found that even with all the projects that we could identify globally that desire to come to market by  then, the world will be in tin shortfall,” he concludes. “At that point we have a serious problem with respect  to tin supply. We have a serious problem with respect to the provisioning of solders that will meet RoHS  requirements.

“Tin and silver and especially tin are likely to come into shorter and shorter supply and that’s going to put  a squeeze on prices in the near term [and] it’s going to be potentially disruptive in the longer term,” he  cautions. “The reasons that we’re going to have higher prices is that most of the really good deposits are  gone. We have been mining tin and silver for a very, very long time. And the best grades, the easiest  deposits to find, the most metallurgically amenable deposits — our grandparents and our great  grandparents got those.”

Recent discussions with one solder company have confirmed Hykawy’s suspicions that the electronics  industry isn’t prepared for the impending tin shortages. The company admitted that there were issues  with future tin supply but said they were looking into substituting tin with materials like bismuth. When  Hykawy told the company that production of bismuth was 1,500 tonnes per year compared with 150,000  tonnes of tin, and that bismuth was only marginally less toxic than arsenic, the response was that they  "were working on it."