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SMALL CAP IDEA: Will the British tin industry return to glory again?


SMALL CAP IDEA: Will the British tin industry return to glory again?

Tin is the metal upon which the British mining industry was founded.

Decades and centuries before the British started mining coal for the industrial revolution, Cornishmen were pulling tin out of the ground to feed the cities and markets of an ever-expanding mercantile world.

And where British tin went round the world, so the miners that dug it up followed it, hawking their expertise and know-how in new locations and establishing a host of new mining operations in jurisdictions far and wide.

These days, though, tin doesn’t often show up on the radars of those with an interest in investing in mining.

The biggest pure-play tin producers are not names you’ve heard of, unless you are in pretty deep – they include Chinese companies like Yunnan Tin, Yunnan Chengfeng, Minsur and PT Timah.

Revival: Many Cornish people have become enthused by the apparent ongoing renaissance in tin, one of their most traditional of industries 

The European and Australian mining companies do have some tin operations, but there are very few pure-play tin companies around.

Or at least, there weren’t.

The situation is beginning to change, as tin begins to establish itself as a key constituent of future technological development.

The first clarion call of the resurgence of tin was sounded by the Massachusetts Institute of Technology back in 2018 when, in a presentation cited by Rio Tinto, the argument was made that of all metals – including lithium, zinc and cobalt – the one most likely to benefit from technological advancement was tin.

In the years that followed, the tin price went up to US$50,000 per tonne or thereabouts, and MIT appeared vindicated.

That tin subsequently fell back quite substantially to current levels of around US$25,000 is perhaps a good illustration of the need for caution against overexuberance in commodities investing, but nevertheless the bull case that MIT laid out remains in place.

Recent corrections have been related more to immediate black swan events – like Ukraine and Covid – and less to the long-term outlook. And tin still remains some way higher than where it was when MIT made its prediction.

During these times of varying prices miners with fixed cost bases have been watching margins widen and contract. But on the whole, for those producing companies who’ve been able to keep the pressures of inflation to a minimum, companies like Andrada Mining, times have been pretty good.

And shares in Andrada (4.2p), which until recently was known as AfriTin, have nearly doubled in value since 2021, as tin production from its Uis mine in Namibia has begun to get underway in earnest. The fact that it’s also developing a production line for lithium has also helped.

But other companies with less well advanced tin projects and operations have also been finding favour with investors.

Broker SP Angel has been recommending Cornish Metals (13.3p) to investors in recent market updates, as the company continues in its efforts to revitalise the tin mining industry here.

Cornish Metals recently raised a sizeable sum to de-water the famous South Crofty mine, and has also been turning up attractive tin grades from newly explored areas on the southern portion of the landholding there.

‘Discovering a new high-grade zone of tin mineralisation in the middle of a historic mining district is a tremendous outcome, and again demonstrates the exploration potential of the region,’ Cornish Metals chief Richard Williams said, following the most recent set of drill results.

Certainly, the British government would be only too delighted if significant new production of what looks to be becoming an increasingly strategic metal could be established locally.

A privately-held company, Cornish Tin, is also making good progress in working up both old and new ground, while all around the hunt for lithium is creating the sense of an impending local renaissance in mining.

Will it happen?

It remains to be seen, of course.

But if the MIT analysis proves right in the longer-term, and the tin price begins to move upwards once again, then the odds will be much in favour.

The difference, though, is in the scarcity of junior miners with exposure to tin. It’s not like gold or copper, where the juniors are ten-a-penny.

On the contrary, when the next big upward run does come, there will only be a handful of choice for the speculative money to run into.

This in itself can cause the types of risks inherent in any speculative bubble. Which is why the few, already-established names like Andrada, Cornish Metals and Cornish Tin will be the go-to destinations for seasoned investors.

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