Viewpoint: No quick fix for semiconductor shortage

  • Market: Metals
  • 05/02/21

The past two months have seen semiconductors suddenly become mainstream news as multiple automakers raised concerns about supply shortages while trying to ramp production back up.

Manufacturers across multiple industries — not just automotive — are now seeking to clarify the scale and potential longevity of a bottleneck emanating from a highly technical supply chain that has historically been little understood except by those close to it, with some analysts estimating that it might take several months for the shortage to ease significantly.

In the near term, some large consumers may well succeed in securing enough chips to meet their requirements, with certain automakers understood to be in talks with various potential suppliers — in some cases, going directly to the chip manufacturers rather than a third party.

Several semiconductor producers are trying to help companies find ways forward, and [Taiwan Semiconductor Manufacturing (TSMC) has more than doubled](TSMC) its capital expenditure budget for 2021 compared with 2016-19 as it strives to meet soaring demand.

"In view of dynamic ordering momentum and manufacturing plants running at good utilisation rates in the majority of product areas, we are making a slight upward adjustment to our outlook for the full year. We are increasing our investments in manufacturing capacity and bringing forward the starting date for the new power semiconductor plant in Villach to the last quarter of the current fiscal year," chief executive of Germany's Infineon, Reinhard Ploss, said yesterday.

But there will be no quick fix. "The semiconductor industry has worked to ramp up production to meet the steep jump in demand, but this supply-demand imbalance cannot be remedied with the flip of a switch," said Falan Yinug, director of industry statistics and economic policy at the Semiconductor Industry Association (SIA). "Semiconductor manufacturing is not suited to rapid and large shifts in demand, since it takes time to ramp up semiconductor production. Making a semiconductor is one of the most complex manufacturing processes. Lead times of up to 26 weeks are the norm in the industry to produce a finished chip," he said.

Last year's Covid-19 restrictions presented challenges for semiconductor manufacturers, along with their customers, who encountered lockdowns and supply chain issues. But overall the sector had another strong year, with global semiconductor sales rising to $439bn in 2020 from $412.3bn in 2019, according to the SIA, as strong demand from the electronics industry offset the drop in consumption by automakers.

And the underlying roots of the shortage run deeper than Covid, with the market for 200mm wafers in particular having already been tight before the outbreak of the virus. They are structural and likely to be fixed only through long-term investment and political will, not least because the semiconductor manufacturing chain — from raw materials such as silicon, gallium and germanium to the finished product — is global and will remain reliant for some time on collaboration between countries.

The significance of political will for this supply chain is clearly visible in the cases of TSMC and China's SMIC — two chipmakers that have spent the past year trying to carefully navigate the trade tensions between China and the US that restrict their access to customers and equipment.

Industry groups and lobbyists have long lamented the lack of investment and innovation in semiconductor manufacturing outside Asia, with bipartisan bills on the subject having struggled to gain momentum in the US in recent years. The US accounts for just 12pc of global chip production, down from 37pc in 1990 — although it is still dominant in design and research and development. Some progress towards increasing US federal incentives was made early this year, and industry participants hope that the current crisis will spur a fresh wave of interest from the private sector as it comes face to face with the implications of wanting ever-more-sophisticated electronics without the manufacturing capacity to match.

"I think this will drive the automotive market to see how important semiconductor technology is to their interests," US-based GlobalFoundries' chief executive, Mike Hogan, said last week, adding that he expects that the crisis will result in the automotive sector working more closely with foundries.

Of further note is the fact that the semiconductor industry is going through a period of rapid innovation — in addition to the pressures of just ramping up volumes — as increased electrification and the advent of 5G and the Internet of Things continue to push the demands placed on electronic components and their performance. Scaling up production of newer chips and wafers economically is challenging and takes time, as evidenced by efforts made in the past two years to cut production costs for gallium-nitride semiconductors.

And the long-term demand outlook appears increasingly bullish with the evolution of technologies such as self-driving cars. China's Sinolink Securities estimates that the value of semiconductors used in each level 5 self-driving electric vehicle will be more than 10 times the value of semiconductors in regular gasoline cars of 2020, signalling that investment in new chip manufacturing capacity will be required to cater to the soaring requirements projected for the years ahead.


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23/05/24

RE monazite demand shifts mineral sands supply chain

RE monazite demand shifts mineral sands supply chain

London, 23 May (Argus) — Interest in monazite as a feedstock for rare earth (RE) processing is rising as producers look for sources outside China, bringing mineral sands projects into the RE supply chain. Deposits of RE elements are typically found in rock formations including carbonatites and granites, in calc-silicate sequences and ionic adsorption clay deposits — primarily in China and surrounding countries. But as downstream consumers and governments increasingly look to diversify their supply chains, monazite is becoming attractive as an alternative source. Monazite is a phosphate mineral that contains about 55-60pc RE oxides. It contains 17 RE elements, including cerium, neodymium, lanthanum, thorium and yttrium. Reflecting this, US-based uranium and rare earths producer Energy Fuels is acquiring Australia-based mineral sands developer Base Resources to gain access to the monazite stream from its Toliara project in Africa as an RE feedstock. The Toliara heavy mineral sands project in Madagascar plans to produce monazite as a by-product of its primary titanium and zirconium output. The acquisition marks Energy Fuels' entry into the mineral sands business as it invests in operations in Australia, Brazil and Madagascar to supply RE concentrate. Toliara's monazite stream will provide the feedstock Energy Fuels needs for RE oxide production at its White Mesa uranium and vanadium mill in Utah. The facility will also process the uranium content from the feed and if needed, it can recover thorium. The mill has been processing monazite to produce a mixed RE carbonate, which it has been selling commercially since 2021. "We're putting together two pieces of the puzzle that nobody has put together," Energy Fuels president and chief executive Mark Chalmers said at the recent Metal Events Rare Earths conference in Singapore. "We're putting together the physical metallurgy and the hydrometallurgy." White Mesa has been processing monazite supplied by US titanium dioxide producer Chemours. But its output has been limited as there is not enough monazite in the feed, Chalmers said, whereas Toliara contains more than 1mn t of monazite and has about 1.5mn t of existing tailings capacity. Energy Fuels is in the process of commissioning its Phase 1 neodymium-praseodymium (NdPr) separation facility, which is scheduled to start production by the end of the first half of 2024. It plans to produce 35t of NdPr oxalate in 2024. Phase 1 will have the capacity to process 8,000-10,000 t/yr of monazite to produce up to 800-1,000 t/yr of NdPr oxide. The company plans to increase its NdPr capacity to 3,000 t/yr in 2026-27 and add heavy RE processing in 2027-28. It is starting to pilot heavy RE separation and is exploring moving downstream into metal and alloy production. The first stage of Base's Toliara project, scheduled for September 2027, aims to produce an average of 17,400 t/yr of monazite. The second stage would ramp up to 26,100 t/yr. Energy Fuels also owns the Bahia project in Brazil, which could supply 4,000-5,000 t/yr of monazite to White Mesa Mill to produce 400-500 t/yr of NdPr oxide and 20-25 t/yr of dysprosium and terbium oxides. Energy Fuels has the potential to produce 4,000-6,000 t/yr of NdPr oxide, 150-225 t/yr of dysprosium oxide and 50-75 t/yr of terbium oxide, which would supply enough magnetic RE oxides to supply 3mn-6mn electric vehicles (EVs) per year. RE oxides are in demand from US, European and Asian EV, wind energy and other clean energy manufacturers, as well as emerging commercial metal-making, alloying and magnet-making facilities that are under development in the US. The US defence industry could include offtake of other non-magnetic oxides contained in monazite. Developments at other mineral sands producers outside China also indicate that demand for concentrate for its monazite content rather than zircon or titanium is on the rise. Indonesia-focused zircon producer PYX Resources said last week that it has made its first shipment of monazite-rich zircon concentrate to a customer in Hainan, China, exporting 750t. PYX expects to report further exports in the future. Mineral sands producer Iluka is also moving into the RE market using its monazite by-product. The company has stockpiled monazite since the 1990s at its Narngulu Mineral Separation Plant in Eneabba, Western Australia. Iluka is now developing RE production at Eneabba, commissioning a concentrator plant to process the stockpiled material. It will separate the monazite and additional zircon to produce a 90pc concentrate to feed its RE refinery. The company aims to produce neodymium, praseodymium, dysprosium and terbium oxides from 2026. It holds other mineral sands deposits that could feed the RE refinery, and it will be able to handle third-party deposits if it requires additional feedstock. Companies had stopped processing monazite owing to the high cost of disposing radioactive thorium. But thorium is now becoming attractive for advanced nuclear reactor design and medical isotopes, which could drive offtake. By Nicole Willing Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

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Record-high EU antimony prices in 'uncharted territory'


23/05/24
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23/05/24

Record-high EU antimony prices in 'uncharted territory'

London, 23 May (Argus) — European antimony prices hit fresh record highs this week after a prolonged period of supply constraints, and the latest hikes are drawing concern from even the most experienced traders as they navigate an increasingly opaque and speculative spot market. Prices for regulus grade II and trioxide in Europe were assessed at $18,500-19,500/t today, up by 14pc from a week ago and 55pc higher than this time last year, when prices were $12,000-12,400/t. Higher price indications are emerging daily, with some offers heard as high as $20,000/t in Rotterdam this week. The upswing has gathered pace significantly since 9 April, underpinned by depleting domestic resources in China and limited concentrate coming into Europe from various parts of the world. The continuing war in Myanmar (Burma) — a major source of antimony ore, most of which is exported to China — is exacerbating the supply tightness. Meanwhile, Oman-based strategic and precious metals firm SPMP suspended production at its Oman Antimony Roaster plant at the start of 2024 and is still not offering material, chief executive Joel Montgomery told Argus this week. The reasons for the suspension have not been disclosed. The status of Russian producer Polyus remains unclear, but the firm is not delivering as much raw material as in the past, Argus understands. And Tajikstan is currently producing more antimony ingot and selling less ore, according to market participants. "The market is becoming more opaque, with less information on the largest players," consultancy firm Hallgarten's principal and mining strategist, Christopher Ecclestone, told Argus . He added that supply of ore — or concentrate — is inelastic, as artisanal producers are currently operating at maximum capacity. On the demand side, China is directing significant volumes of antimony trioxide and antimony selenide toward its manufacturers of solar photovoltaic glass. With a container to Europe now costing around half a million dollars, traders have largely stepped back from the spot market, waiting for the current volatility to ease, and minimal stocks are available in Rotterdam for spot bookings. A significant volume of antimony arrived in Rotterdam recently and has already been locked into long-term contracts, but this has not stunted the rally, a market source told Argus . "Antimony is becoming a crazy dangerous market," a trader told Argus . It is hurting the industry, causing irreparable damage," he added, noting that consumers are getting hit by the higher prices and reduced availability. Antimony is largely used as a flame retardant in electrical and electronic equipment and textiles, alloys (lead-acid batteries), wires and cables, ceramics, and glass. With prices at record highs, market participants are looking for ways to ease the supply crunch or their consumption rates, but there are no easy options available. On the supply side, recycling streams are already heavily utilised after a major push in 2011, when prices hit their previous record high of around $17,100/t. Around a quarter of global antimony supply is currently produced through the recycling of antimony-bearing metal alloys. On the consumption side, demand from the flame-retardant sector fell by around 20pc in 2023 because of the weak macroeconomic environment, according to one buyer. It is difficult to develop alternative materials that can act as a substitute. Zinc borates and zinc stannates can sometimes substitute antimony trioxide, but only in specific formulations. Antimony substitutes can run into performance issues in various applications, especially in flame retardants because of the weakening of the polymer, sources said. "Antimony could be replaced in solar uses, but that is still a small portion of the market, even though it is growing," Ecclestone said. For now, speculation remains rife as to how high prices are likely to go before hitting a ceiling. "When the increase is supply driven, there is a moment when it falls [...] It cannot stick for too much longer," a trader said. Some sources expect the price rally to run out of steam in July-August because of the summer demand lull. Producers of flame-retardant products typically pause operations in June-July, and there could be a two-week period of maintenance, Argus understands. "The bubble is going to burst once it reaches $20,000/t," another trader estimated. By Cristina Belda Antimony trioxide Europe vs China $/t Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

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Indonesia’s nickel mining quotas fall short of demand


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23/05/24

Indonesia’s nickel mining quotas fall short of demand

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Anglo American rejects BHP’s third takeover proposal


23/05/24
News
23/05/24

Anglo American rejects BHP’s third takeover proposal

Singapore, 23 May (Argus) — UK-South African mining firm Anglo American has rejected a third £38.6bn ($49.1bn) takeover proposal from Australian resources firm BHP, although it gave it until 29 May to make a firm offer. BHP's latest offer represents a total value of around £31.11 per Anglo American ordinary share, including £5.40 in Anglo Platinum shares and £4.23 in Kumba shares, BHP said on 22 May. The takeover proposal also came with the same requirement for Anglo American to complete two separate demergers of its entire shareholdings in Anglo American Platinum and Kumba Iron Ore, its assets in South Africa, to Anglo American shareholders. Anglo American "continues to believe that there are serious concerns with the structure, given that it is likely to result in material completion risk and value impact that disproportionately falls on Anglo American's shareholders", its board of directors said. The complex process proposed by BHP is likely to take at least 18 months to complete and involves significant execution and completion risks, it added. Anglo American said it remains confident in its standalone prospects and believes it had "set out a clear pathway to deliver the acceleration of its strategy detailed on 14 May 2024". It was likely referring to its plans to exit its coal, platinum, nickel and diamond businesses , shortly after rejecting BHP's second £34bn offer on 14 May because it "continues to significantly undervalue Anglo American and its future prospects". Anglo American also rejected BHP's first £31bn all-share offer in April for the same reason. By Tng Yong Li Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

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Alabama Demopolis lock reopens early


22/05/24
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22/05/24

Alabama Demopolis lock reopens early

Houston, 22 May (Argus) — The failed Demopolis Lock, at the intersection of the Tombigbee Waterway and Black Warrior rivers in Alabama, has reopened two weeks earlier than projected. The lock reopened on 16 May, ahead of the scheduled 30 May opening . Vessels carrying commodities such as asphalt, coal, petcoke, metals and fertilizers have been able to pass through the lock without a long queue since the reopening, according to the US Army Corps of Engineers. The lock had been closed since 16 January when the concrete sill underneath the lock doors failed. The lock was largely rebuilt over the ensuing four months Traffic that would typically pass through the lock was rerouted during the closure. Multiple steel mills in Alabama and Mississippi move some of their feedstock and finished product through the Demopolis lock. Those mills have 8.16mn short tons (st)/yr of flat, long, semifinished and pipe steel production capacity. By Meghan Yoyotte Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

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