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Are the big boys about to come snacking on minor metals?

Forty years after the MMTA was conceived in an English Pub over a few pints of warm beer in 1973, the announcement that Noble Group had applied for MMTA Membership and that, giants, Anglo American and Glencore, have set up minor metals trading desks, ought to give ordinary minor metals merchants mixed feelings of pride and fear.

Of course, it all makes eminently good sense. It has puzzled me no end that some of the main generators of minor metals by-products from their huge mining operations have shown so little interest in what, to MMTA people, is our interesting world of extraordinary applications, peculiarly dislocated routes to market, tiny supply-demand balances, and illiquidity. What’s not to like?

Although all metal people, broadly, belong to the same industry, whether it is steel, pig iron, copper, aluminium, ferro-alloys, platinum group, precious metals and, finally, all the rest – minor metals – we have mainly kept ourselves to ourselves. I usually tell my trainees – when trying to explain where we fit in – that they have to think of metal sectors as a kind of inverted pyramid, with steel at one end of the scale at 1.3 bln tons per year of shipments, and rhenium at 50mt supply-demand at the other. In between we have large non-ferrous markets such as copper at 20 mln tons or aluminium at 40 mln tons which are small in volume in relation to steel while nickel, once a minor metal, at 1.9 mln tons is rather small in comparison to copper. But getting down into the alkalis, refractories, transitions, lanthanides, and lower echelons of the platinum group, you are getting involved with a multitude of elements that are sometimes better moved around in a suitcase than a container or a container rather than a barge, and a barge rather than a Panamax.  Until you tell the young student with a rhenium pellet in his hand that, at a density of 21 gms per cubic centimetre, one cubic metre’s worth (i.e. a metric ton volume of water) would be equivalent to 21 mt of rhenium, which in turn is just under 50% of the entire world’s output, scale does not really sink in. I wonder if it has sunk in at the desk of Glencore?

And pure rhenium is just one out of hundreds of permutations of elements, alloys, compounds, scraps, residues that we, as minor metal merchants, trade. How about the 700 mtpy of Indium, the 200 mtpy of Gallium, 30 mtpy of Ruthenium, 3000 mtpy of Tantalum, 2mtpy of Thallium – all no more than a packet of crisps in the public house trough of metals, or Cobalt at 100,000 mt, not much more than a Big Mac. None of it amounting to a square meal when compared to a line of shiny aluminium T-bars, sows and ingots in an LME warehouse.

But I miss the point, I know. In fact the move by Glencore et al, does them credit. Why should some of the most important and rare elements that lie behind much of what we understand to be the modern world go ignored and un-traded by the best? It never made sense before, and it doesn’t make sense now. So the move by Glencore and others completes a trend that started when the LME adopted Molybdenum and Cobalt and put them on their exchange – the move to commoditise minor metals.

But commoditization is not really – with respect – the right direction. What is the right direction is not to waste elements that in only a few years’ time – we can all see – will be even rarer and more costly to extract than today. The sense in making the recovery of these metals more efficient and their marketing more reasoned can only be to the common good, not just financially but also environmentally. Whether the demands upon listed corporations for immediate results will allow for the long gestation periods required to overcome the picky nature of minor metals businesses to develop, or rather lose patience, is another matter. Until that happens I rather welcome the whole idea even though I think it is not clear how the large companies plan to handle the matter. Those who occasionally peer into our minor metal world and marvel at its apparent profitability often do not realise how un-scaleable it is. You just can’t throw more money at it and make more. That’s why it lends itself, I would modestly say, to owner-occupier private companies like my own. But it is certainly possible to build up professionalism in the industry through the study of the incredible applications of these diverse elements and have a fun time.  And, by doing so, a PLC can at least maximise the return on elements they already own, but may be presently wasting.

So if this is the aim, I wish the participants the best of British luck, as we say. It’s always nice to enjoy some pork scratchings with a pint of beer.

Anthony Lipmann 4.11.2013

Posted on MetalPrices.com