Mining Weekly: Supply-constrained tin a compelling market story – Menell

18 October 2011, Martin Creamer

With supply constrained and demand robust, tin is currently a compelling market story, says Tinco CEO Brian Menell.

The unlisted Tinco has five producing mines in the Rutongo concession area of Rwanda, Central Africa.

Its 5 000 Rwanda mine employees produce more than 100 t/m of 72%-tin concentrate, all of which is exported to the Malaysian Tin Corporation.

Tin traded at a $33 000/t peak two months ago, fell dramatically and then came back to $23 000/t, which is double what it was 18 months ago.

It is seen as a key strategic metal for the fuelling of economic growth, primarily as a solder for electronic circuit boards in consumer electronics and microelectronics, and as a material in food packaging and float glass.

Old mines with declining production or limited scope to increase production dominate the tin-mining sector, in which there are few promising new developments.

“The demand outlook is very robust and the supply outlook is very constrained. Hence our view that tin has very a compelling and exciting market demographic,” Menell tells Mining Weekly Online from London.

Tinco’s current operations are all former Belgian colonial tin mines that were nationalised in the mid-eighties and closed in the mid-nineties.

After taking them over a couple of years ago, Tinco cleaned them up and re-established production from existing underground infrastructure.

Besides a couple of declines to 30 m, development involves mainly the building of adits into hillsides, with nothing at a depth below the base of the hills.

Shallowness and quality ore are combining to allow Tinco to operate in the lowest quartile of tin production costs globally.

Major producer Indonesia accounts for 30% of world tin production, all of which is in the high-cost quartile and which is also highly problematic from both environmental and political points of view, involving the onshore and offshore dredging of low-grade alluvial deposits.

The second-largest producer is China, with Indonesia and China accounting for more than 60% of world production.

Besides mining, Tinco is also developing a new resource in the Rutonga area beneath and beyond the historical Belgian underground infrastructure.

Historical data is being digitised and a programme of resurveying and remapping, as well as blast-sampling and drilling, is under way.

Beyond that, Tinco is seeking to acquire and develop certain other tin exploration developments and mining assets elsewhere in Rwanda and also elsewhere in Africa, in order to turn the company into a sizeable and sustainable integrated tin vehicle.

Meanwhile, Rwandan legislation is reducing conflict tin. The International Tin Research Institute and Rwanda have put in place a tagging and certification-of-origin scheme, which Menell says is curbing the abuse of Rwanda as a channel for illegitimate and tarnished Democratic Republic of Congo material.

“Tagging is quite tedious and expensive. We have 300 to 400 tags a day,” he says.

Every single sack coming out of every single tunnel has to be tagged.

The rationale for Tinco’s recent £8-million capital raising was to broaden the company’s existing shareholder base and to introduce a number of new investors to the company.

Kemet, a private vehicle that Menell manages, is Tinco’s controlling shareholder.