Tantalum capacitor supply could tighten because of mining cutbacks
Sharp cutbacks in tantalum ore mining could lead to supply tightness in tantalum capacitors in 2011 and 2012
By James Carbone -- Purchasing, 11/19/2009 2:00:00 AM
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It might be harder to source tantalum capacitors in the next couple years. Sharp cutbacks in tantalum ore mining could lead to supply tightness in tantalum capacitors in 2011 and 2012, according to a new report.
The problem is that a lot of tantalum production has ceased because of low prices for tantalum ore, says Patrick Stratton, an analyst with United Kingdom-based market researcher Roskill, who authored a recent report called The Economics of Tantalum.
"Capacitors are obviously a major user of tantalum," says Stratton. "There is a strong possibility there could be a supply crunch of primary tantalum in 2012 and possibly as early as 2011," he says. A supply crunch resulted in a severe shortage of tantalum capacitors in 2001.
Talison Minerals, which is a major producer of tantalum in Australia, ceased production because of weak demand and falling prices. Since Talison cut production last December, prices have fallen about $48/lb to $36, according to website metal-pages.com.
Other tantalum production operations in Mozambique and Canada have ceased operations and tantalum production fell by two-thirds this year and tantalum consumption fell by about 50% in the first half of the year, says metal-pages.com
Talison has said it won't resume tantalum ore production until the price increases, but it has not said what the price needs to be.
Right now, cutbacks in tantalum production do not pose a problem because there are large inventories of tantalum which were built up since the last tantalum crisis. However, now "those inventories are being draw down" and it is not known how long the inventories will last, says Stratton.
Capacitor manufacturers don't seem to be overly concerned about tantalum ore supply.
If there is a tantalum shortage "it won't be a huge one," says Dave Valletta, executive vice-president for worldwide sales at Vishay Intertechnology, based in Malvern, Pa. "The capacity is there, but it may mean there needs to be a certain price level to be established before that capacity comes back online," he says.
A key question is how strong tantalum capacitor demand will be in the next few years. Researcher DECISION, based in Paris, says the global market for tantalum capacitors will decline from $2.3 billion in 2008 to $2.1 billion by 2010, but then increase to $2.3 billion by 2013.
How significant the impact of reduction of tantalum ore production on capacitor supply remains to be seen. Suppliers say there are high inventories levels of tantalum powder.
"Most manufacturers have a stockpile of tantalum powder built up and some of them have multiple years of inventory of powder on hand," says Jim Wright, vice president of technology and marketing at NIC Components in Melville, N.Y.
In addition, demand for tantalum capacitors is weak due to the overall industry downturn and because more electronics equipment is using ceramic capacitors over tantalum. Some suppliers say the tantalum capacitor business is down 20–30% this year.
Tantalum's share of the capacitor market is eroding because more OEMs are designing in ceramic capacitors into their products. Tantalums were traditionally used where high capacitance was needed because they provide higher capacitance values than ceramic caps. However, capacitor suppliers have been improving the capacitance values in ceramic capacitors as well.
Gaming systems will use tantalum capacitors because they support low equivalent series resistance (ESR). Tantalums are also used in notebook computers because they offer high capacitance and a low profile, says Wright.
"Tantalum's advantage is you get much higher capacitance and stability with voltage where multilayer ceramic capacitors may be may be comparable in capacitance values but they don't have stability with voltage," says Wright. Voltage stability means the capacitor does not leak voltage.
He says in some instances tantalum and ceramics are used side-by-side on a board.
Leadtimes for high capacitance multilayer ceramic capacitors are long and ironically "tantalums may be a good alternative," Wright says.
"That is a reverse. Years ago when tantalums were in shortage and people were looking to ceramic as an alternative," he notes.
A lot of tantalum capacitors were designed out of equipment following the 2001 tantalum capacitor shortage.
Tantalum has a disadvantage. While Wright says tantalum's strength is that it provides "a lot of capacitance in a small package," tantalum capacitors are polarized and are intolerant of voltage spikes and will fail or even explode if exposed to surges above their voltage rating.
"That means you have to buffer them to protect them from any type of surge," he says. "If they fail, they fail catastrophically. When that happens they are designed out of a product or designed with a failsafe of backup circuitry that take them out of a circuit."
Suppliers say they have been improving the robustness of tantalum capacitors, but they "still have an Achille's heel because you are cramming a lot of capacitance into a thin dielectric layer," Wright says. "It is inevitable it will be weak."
Valletta of Vishay says demand has picked up to the point where "we are wrestling with capacity issues." The industry slashed production earlier in the year and is now "scrambling to bring it back up" to the level that is needed. "You have to find people. It's a big issue for the industry."
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