Tin market forecast to remain 'tight'

The tin market looks set to remain "tight" as the industry struggles to keep up with rising demand from the energy, infrastructure and chemical sectors, a senior mining executive said.

Global tin stocks are at an all-time low, while few major projects are in the pipeline, said Juan Luis Kruger, CEO of Peruvian tin miner Minsur. About 50% of global tin production comes from small-scale producers in Indonesia and China, who are unable to increase output in response to demand, while the Bisie project in the Democratic Republic of Congo is expected to produce just 6,000-8,000t/y, he said.

Tin prices rose 6% to US$20,103/t in the first quarter as renewable energy and infrastructure industries boosted demand for the metal by 2-3%, according to Minsur.

"It's a supply constraint industry with a very fragmented and atomized supply base," Kruger said in a conference call to discuss financial results. "Everything indicates the industry will be tight from a supply perspective in the coming years. With low stocks and no significant new supply coming into the industry, we expect some pressure on prices."

Minsur, which has operations in Peru and Brazil, completed the ramp-up in April of the ore sorting plant at its San Rafael tin mine in Peru, which is now fully operational, Kruger said. The company's US$140-190mn, 5,000t/y B2 tailings treatment project at San Rafael remains on track to start production next year, he said.

The company, Peru's only tin producer, also expects to close a US$800-900mn structured financing deal with a group of lenders at the start of Q3 for its US$1.6bn, 100,000t/y Mina Justa copper project, Kruger said.

Engineering is on track and most critical equipment purchase orders have been placed, with the project scheduled to start production by late 2020, he said. Minsur last month raised US$200mn from the sale of a 40% stake in Mina Justa to a unit of Chile's Copec.

In addition, Minsur expects to complete by the end of the year a conceptual study for its Nazareth tin exploration project, where the company has identified inferred resources containing 150,000t fine tin, which will extend the life of San Rafael by eight years, Kruger said.

EARNINGS

Minsur posted a US$23.1mn first quarter profit compared with US$13.6mn a year earlier as sales rose 8% to US$169mn from US$156mn, the company reported Wednesday in its consolidated earnings statement.

The company's tin production was little changed at 4,983t in Q1, while that of gold fell 17% to 24,159oz and niobium-tantalum output at its Pitinga mine in Brazil jumped 66% to 900t.

"Minsur's top line surpassed our estimates on higher-than expected volume sold of tin," Credicorp Capital analyst Héctor Collantes wrote in a report. . "Likewise, profits beat estimates due to higher operating results and positive contributions from subsidiaries and associates."