Demand for critical mineral tin is rising — but new deposits are scarce

As investors rush to put their money into nickel, lithium and other metals set to benefit from the transition to cleaner sources of energy, is another critical mineral being left behind? 

Through its primary application as solder, tin plays a critical role in the electronics found in every kind of technology. 

The volumes are small. An electric car may only contain a few grams of tin compared to 80 kg of copper and 8 kg of lithium. But through the metal’s omnipresence in every form of electronics, from cell phones and televisions to airplanes and datacentres, the grams soon add up. 

“Tin is everywhere,” says Jeremy Pearce of the International Tin Association. “Even in the screen you’re looking at now… without it, we’d be in a lot of difficulty.” 

And in use for thousands of years, the metal looks unlikely to be replaced. 

“You would have to change completely how electronics are made,” Pearce notes. “It’s a relatively expensive material so if it could have substituted, it almost certainly would have been.” 

Aware of its importance, many industrialized nations, including the U.S., Japan, and the U.K., have added the element to their list of critical minerals. 

Consumption had been relatively stable, growing by around 2% annually, as the miniaturization of electronics (reducing the volume of tin required per item) partly offset the growing demand for electronics around the world. 

But the rise of electric vehicles, the roll-out of 5G cell phone technology (which requires much greater density of infrastructure) and the drive to remove lead from solder are set to significantly increase tin demand over the coming decade. 

A further boost will come from new uses such as the strip used in photovoltaic solar panels. Demand from the solar industry is expected to reach 25,000 tonnes this year, up from almost nothing a decade ago and could double by 2030. 

According to a study by the Massachusetts Institute of Technology, tin will be the metal most impacted by the rise of new technologies, such as electric vehicles, robotics and renewable energy, ahead of lithium, cobalt and silver.  

With tin demand set to accelerate to 3-4% annually, the ITA predicts demand could reach 500,000 tonnes by 2030, up from 400,000 tonnes last year.  

There is a big question about how the mining industry will step up to the challenge. New projects remain relatively scarce. 

“Geologically, it’s one of the rarest elements, much rarer than other base metals,” says Joe David, Managing Director of Elementos (ASX: ELT), a prospective investor. 

Despite its importance, tin has not grabbed investors as much as other minerals set to benefit from the global energy transition, such as nickel and lithium.  

The volumes are too small to interest any of the world’s major mining companies while volatile pricing has scared off smaller investors. In March last year, tin prices soared to over US$50,000 a tonne on the London Metals Exchange before crashing to just US$17,000 a tonne a few months later.  

It has since recovered, driven by the withdrawal of lockdown rules in China and the closure of Peru’s San Rafael mine amid widespread unrest. 

In some ways, the tin market is still emerging from the shadow of the 1985 tin crash when the International Tin Council, a cartel backed by producer countries, suddenly ran out of money causing prices to plummet. The resulting maelstrom shuttered mines from Bolivia to Cornwall and threatened to bring down the London Metals Exchange. 

Since then, the tin industry has easily been able to keep up with demand using metal sourced from artisanal miners in Africa and Asia, and the U.S’s strategic reserves of the metal when prices rose too high. A decade ago, as demand was beginning to take off, supply received a major boost with the unexpected entry of Myanmar into the tin market. It became one of the world’s largest producers.  

But the market is changing. 

Strategic reserves in the U.S. have dwindled and greater scrutiny from consumers has constrained small-scale producers. 

Meanwhile, with around 90% of tin smelting capacity located in Southeast Asia, western governments and companies are concerned about security of supply. After banning exports of nickel ore to promote a domestic battery industry, there is speculation that Indonesia could do the same for tin. 

Several companies are now racing to that fill the gap. 

Exploration rising 

Alphamin Resources (TSXV: AFM) is working to expand production from its operations in the Democratic Republic of the Congo to 20,000 tonnes annually from next year. 

Former Xstrata CEO Mick Davies is trying to resurrect the historic South Crofty mine in Cornwall. But his company Cornish Metals (TSXV: CUSN; LSE: CUSN) reckons it will take two years to pump out enough water from the mine to restart production. 

After trying to bring the Cleveland tin mine in Tasmania back into production, Australia-listed Elementos acquired the Oropesa tin project in southern Spain in 2020 and is now working on permitting and engineering with the aim of reaching production by the end of 2025. The project was last year selected for a fast-track approval system by the regional government, notes managing director David. 

Tin’s recent volatility has caused headaches for would-be investors. Elementos’s share price has fallen almost two-thirds since tin prices peaked last year while the spot price is now below the US$30,000 per tonne price (around US$13.61 per lb.) used in its recent studies.  

But even these are unlikely to be sufficient to meet the additional demand expected by the end of the decade. Including mines likely to be developed over the coming years, the ITA still sees a shortfall of around 50,000 tonnes by the end of the decade. 

Several exploration firms are now searching for new resources.  

One prospective source of tin is Bolivia, once the world’s largest producer of the metal whose prominence declined in the wake of the tin crash. But the geological potential is huge, says Gordon Neal, CEO of Whitehorse Gold (TSXV: WHG). 

“Bolivia is one of the least explored countries in South America despite a massive mineral endowment… and there’s tin all over,” he said. 

Originally focused on a gold project in southern Yukon, the company plans to change its name to Tincorp after acquiring two greenfield tin projects in the South American country. Drilling is set to begin in the coming weeks.  

But with new mine projects taking at least eight to 10 years to be developed, it is unlikely that any new discoveries will reach production by the end of the decade. Tin’s volatility looks set to continue.