The evolution in energy gives tin a chance to shine

Which metal stands to gain most from the coming electric vehicle and energy storage revolution? Lithium? Cobalt? Nickel? All have strong claims to future fame in the evolving battery technology race that is driving the first phase of what might be called the “technology supercycle”.

The answer, though, according to researchers at the Massachusetts Institute of Technology, is actually tin.

MIT’s analysis, originally commissioned by Rio Tinto, is based on the fact that tin is the glue, quite literally in the form of solder, that binds circuit boards together. That puts it centre stage as the world moves beyond electric vehicles to advanced robotics and the Internet of Things. The findings are surprising. Even the International Tin Association seems to have been caught offguard and is now researching further tin’s potential applications in the next wave of technological innovation.

Moreover, no one seems to have told the tin market, which at a current $18,700 per tonne on the London Metal Exchange, is close to July’s two-year low of $18,300.

Apathy has been the defining feature of tin so far this year, which has at least cushioned the market from the macro selling that has hit the rest of the LME complex.

That may be about to change, however. Not because of any potential future step-change in usage but because of two very immediate supply events.

One of the reasons tin has been so becalmed this year is because of a relatively stable supply picture, particularly in Indonesia, the world’s largest exporter. Indonesian exports in the first nine months of this year totalled 63,000 tonnes, up 13 per cent on 2017. October exports, however, slumped to 5,109 tonnes, the lowest monthly total since April, and could fall further over the remainder of this year.

The cause has been a breakdown in the certification process used to ensure the cluster of independent miners and smelters operating from the tin-rich islands of Bangka and Belitung are adhering to environmental and permitting regulations.

State-owned PT Surveyor Indonesia is being investigated by police for allegedly “accommodating, utilising, processing and refining, transporting [and] selling” minerals from sources without permits. That in turn has led the Indonesia Commodity and Derivatives Exchange to suspend trading of any tin that has passed through Surveyor Indonesia’s books. Since exports have to be pre-traded on the ICDX, the collapse in tin trading on the ICDX indicates a hiatus in exports.

It is a throwback to the past, when the Indonesian government’s attempts to tighten its grip on the country’s independent tin sector regularly disrupted export flows. And based on past experience, the impact will be dislocation of availability, several months of low exports followed by accelerated

MIT’s analysis is based on the fact that tin is the glue, quite literally in the form of solder, that binds circuit boards together

flows as and when the export registration logjam is cleared.

However, short-term hits to Indonesian supply are set to coincide with a significant downturn in production in China, the world’s other tin production powerhouse.

Here the issue is the supply of tin raw materials from Myanmar, which has emerged as a major source of concentrates for China’s tin smelters.

Electric vehicles are only the first potential demand kicker as researchers experiment with tin in lithium ion batteries.

The secondary and tertiary demand impulses will, according to MIT, come from advanced robotics, computation and the IoT.

For now, tin’s fortunes will, once again, be beholden to what happens in the world’s two largest producers.