Alphamin had clear advantages even in the exploration phase
Although Alphamin undertook extensive exploration drilling at the Mpama North deposit before they started developing this prolific mine, historic artisanal mining activities in the area made it easier for them to target the low-hanging fruit first and to follow the high-grade seams thereafter. At an average grade of 4.5% tin, Bisie is one of the highest-grade tin mines in the world.
Exploration drilling is a costly undertaking and if the ore body is not close to the surface, it’s almost like trying to find a needle in a haystack. Alphamin didn’t have to look for the needle and hit the high grades on a regular basis very soon after arriving as exploration drilling intensified and mining got underway.
Tin fundamentals remain strong
As demand for tin continues to surge and fundamentals remain strong, greenfield tin projects in Africa and across the globe are being fast-tracked. The ITA projects an additional 50,000t every year will be needed for the ‘technology supercycle’ by 2030, with a big investment in smelter diversification and over US$1 billion of new investment needed to reach 2030 tin demand. Where that will come from remains to be seen.
The risk is that new outfits are not drilling enough exploration holes and basing their findings on historical data or making assumptions about ore body extensions, grades or depth based on current knowledge in the public domain.
Alphamin had a clear advantage when they discovered the historic workings close to the surface. When Alphamin initially developed Bisie they only drilled out a deposit of five million tonnes, even though they knew there was a tin monster lurking beneath the surface.
The Bisie mine was designed to be a “staged rollout”, where sufficient Resources were identified to support an initial operation with an adequate Life of Mine and acceptable returns. Once operating, further drilling would be carried out with internally generated cash flow.
The result was that Alphamin discontinued the exploration program with only 40,000m drilled. The lure of Bisie was the grade, which measured an average of close to 4.5%. In some holes, the geologists measured up to 7% Sn, which was unheard of. In the global context, that puts Bisie in a class of its own.
At that stage, the highest-grade tin mine in the world was believed to be San Raphael in Peru, which mined tin at close to 2%. Since then, the average tin grade at San Raphael has dropped to well below 1.8%.
Fuel to the fire
That there is an urgency to bring new tin projects online is not surprising. With a supply deficit looming and demand for tin expected to soar, the problems in China and Myanmar are adding fuel to the fire as medium to long-term demand prospects remain extremely positive.
According to the International Tin Association (ITA), tin projects totaling 50,000 tonnes of annual tin-in-concentrate production are scheduled to enter the tin market by 2025. However, many are in the early stages of development, while others could be shelved when tin prices drop. If one considers the fact that these projects need to update feasibility studies, reprice, source financing and ultimately do detailed engineering to break ground, it means that the vast majority of this 50kt potential is a minimum of five years away. The issue in the tin market in particular is that it is a small market with a history of extreme price volatility- hence financiers of new greenfield projects see risk in price volatility. For the tin market to actually deliver the tonanges needed, it needs consistently higher tin projects for several years before financiers start to take a bite at the apple.
Therefore, the refined tin market could in fact enter a significant deficit from early next year. For those companies still in exploration mode, it might be too-little-too-late though, especially if they have not deployed enough drill rigs yet. Developing a greenfield project from scratch can take up to 10 years from exploration to mining after proving a viable resource.
Alphamin, on the other hand, has done substantial exploration work over the last few years to prove up their second deposit at Mpama South and expand their Mpama North deposit. The company is well positioned to take advantage of a glaring gap in the market caused by geopolitics and operational and regulatory uncertainties in major tin-producing countries China and Myanmar.
Narrowing the deficits
The ITA expects geopolitical factors to continue disrupting global supply chains while trade barriers imposed on refined tin or tin products, especially involving China, will make the market less efficient.
Recent news from China and Myanmar has not done much to put to bed anxieties about an imminent tin supply cliff.
Inner Mongolia halts production
In the second week of June 2023, Yinman Mining, a subsidiary of Inner Mongolia Xingye Mining Co. put its Chinese operations on ice in order to implement technological upgrades. According to the mine, the exact resumption time will depend on the progress of the transformation.
Yinman expects that these upgrades will enhance production efficiency and recovery rates. The company produced around 1,200t – and 2,800t of tin metal in 2021 and 2022, respectively. Following the transformation, Yinman projects a production increase to approximately 6,200t in 2023, a jump of over 120% from the previous year. Similarly, the output of secondary tin metals is also predicted to rise by over 120% year-on-year.
Globe’s 6th largest producer extends its maintenance period
Meanwhile, the world’s sixth-largest tin producer, Guangxi China Tin Group announced an extended maintenance period for its Laibin smelter. This decision is set to impact China’s tin production industry significantly.
According to the ITA, China’s total refined tin production was estimated at 14,400t in May 2023, representing an 8.3% month-on-month (MoM) decrease and a 12.2% year-on-year (YoY) decline. “This downturn in production, observed across the provinces of Yunnan, Jiangxi, and Guangxi, has been attributed to the tightening of raw materials required for smelting. Guangxi China Tin Group, with an average monthly output of 1,000t, significantly contributes to this production landscape.”
Myanmar suspends all mining operations
In Myanmar, the government of Wa State released a comprehensive implementation plan for the planned suspension of all mining activities from August 1, 2023. This document dated May 20 further underscores the government’s commitment to halt unsustainable mining practices that have led to resource wastage, environmental pollution, and worker safety concerns. It is unlikely that mining will get underway before the end of the year again.
Alphamin’s proportion of the globe’s tin supply continues to rise
While the rest of the world continues to grapple with these issues, Alphamin is expecting that the Mpama South mine should be commissioned in December 2023. This would mean less than two years from declaring a maiden resource at Mpama South – a stand-out scenario. This is a lot faster than most greenfield mines, which, in some cases, can take up to 10 years to reach full production after a maiden resource estimate. At total capacity, Mpama South will produce some 7,232t of tin-in-concentrate annually and both North and South complexes will produce around 20,000t of contained tin annually – that will be 7% of world mined production.
