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When Teck Cominco announced that it would restart zinc production at the 44,000-tpy Pend Oreille mine, it didn’t cause too many ructions in the 14 million-tonne zinc market.
But for the germanium market, the announcement from Teck this week could mean another 5-10% will soon be added to global supply.
The closure of the mine in 2009, combined with consolidation in China and purchasing by the State Reserve Bureau, sent the germanium price rocketing, leaving the market keen to assess any impact the restart could have on the supply and demand balance.
The reopening of Pend Oreille could add another 6-8 tonnes of germanium metal to world supply, market participants estimated. Global annual production of germanium stood at 115 tonnes last year, according to the USGS, meaning the mine could add another 7% to global production.
But market participants are betting that germanium will fare better than tellurium market did after Boliden and Nyrstar announced major increases to global production just as demand from the world’s largest consumer was starting to collapse.
The mine could take another two years to reopen by which time demand is likely to have increased enough to mop up the added production, some sources said.
And others pointed that another 5-8 tonnes was unlikely to unseat Chinese producers’ control over germanium supply.
Yunnan Germanium, the world’s largest producer, has come to dominate the germanium market since Pend Orielle was last in operation, and its control on supply only looks set to increase: Over the last year, the company purchased the mining rights for four mines and taken a 60% stake in a fifth deposit, boosting the company’s reserves by 250 tonnes.
And if the increase in supply does start to affect prices, would the SRB lend some support to the market once again?