Myanmar: The Black Swan of Global Tin?

Dr Nicholas J Gardiner1 & John P Sykes2,3,4

1Department of Earth Sciences, University of Oxford, UK 2Director, Greenfields Research, UK

3Department of Mineral & Energy Economics, Curtin University, Australia 4Centre for Exploration Targeting, University of Western Australia

Collaborators:

Cui Lin, ITRI, China Allan Trench, Department of Mineral & Energy Economics, Curtin University and Centre for Exploration

Targeting, University of Western Australia

What is a Black Swan?

An unpredictable, rare, but nevertheless high impact event

“a rare bird in the lands, and very much like a black swan”

Juvenal, 1st Cent AD

Improbable but high impact

-1000%

0%

1000%

2000%

3000%

4000%

5000%

0

20000

40000

60000

80000

100000

120000

Global Tin Production 2014 (t) and % Change from 2009

Source: Kettle et al., 2014, 2015 (ITRI)

How does Myanmar fit into the global tin industry?

Tin prices are at 30-year highs Long term tin price history

0

10000

20000

30000

40000

50000

60000

19

00

19

10

19

20

19

30

19

40

19

50

19

60

19

70

19

80

19

90

20

00

20

10

2014 Inflation Adjusted Tin Price (US$/t)

Long term tin price histogram

0

5

10

15

20

25

30

35

40

45

50

0 to 5 5 to 10 10 to15

15 to20

20 to25

25 to30

30 to35

35 to40

Price range, $000/tonne, 2010 real terms

Prices at 30 year highs

Number of years in each price band

Recent prices mainly is this

range

Source: DiFrancesco et al., 2014 (USGS), Crawford et al., 2014 (USBOL), Kettle et al., 2015 (ITRI)

Initially due to electronics…

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

2002 2003 2004 2005 2006 2007 2008 2009 2010 2011

Lead-free solder Lead solder

24th July 2014 The Case for Tin Exploration Slide 7 of 18

Lead-free solder as a % of global shipments

Conversion to tin

solder drove tin

prices

Source: ITRI

…and Chinese demand

Tinplate: 54,500t (16%)

Chemicals: 54,200t (16%)

Brass/Bronze: 18,600t (5%)

Glass: 7,000t (2%)

Others: 37,500t (11%)

China: 102,900t (30% of tin & 58%

of solder)

ROW: 73,600t (21% of tin & 42% of

solder)

Solder: 176,500t (51%)

Tin Consumption (2013e)

24th July 2014 The Case for Tin Exploration Slide 8 of 18 Source: Kettle et al., 2014 (ITRI)

But weak supply now the driver

250.0

275.0

300.0

325.0

350.0

375.0

2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013

Tin Supply-Demand Growth (Kt)

Refined Supply Mine Supply Refined Demand

24th July 2014 The Case for Tin Exploration Slide 9 of 18

Demand strength

driving prices

Mine supply weakness

driving prices

Source: Kettle et al., 2014 (ITRI)

Current supply faces many problems

© Greenfields Research & ITRI; Images: Greenfields Research &

Shutterstock

Informal mining

Ageing mines

Conflict Minerals

High political risk

24th July 2014 The Case for Tin Exploration Slide 10 of 18

With few advanced tin projects

0 5 10 15 20 25 30

Early exploration

Advanced exploration

Scoping

Pre-feasibility

Feasibility

Permitting

Financing

Construction

Commissioning

No. Projects

Tin projects at different stages

24th July 2014 The Case for Tin Exploration Slide 11 of 18 Source: Sykes et al., 2014 (Greenfields Research & ITRI)

Myanmar and the future of tin • Tin prices are at their highest levels since the 1980s.

– Tin has become a China-focused ‘electronic metal’ helping drive consumption.

– Tin mine supply is struggling to keep up with demand growth.

• Tin is suffering from underinvestment in mine project development and exploration.

• Myanmar has previously been highlighted as a source of uncertainty.

– Myanmar has since been confirmed as a disruptive force.

– Myanmar could now provide both the needed short term and long term tin mine supply growth

24th July 2014 The Case for Tin Exploration Slide 12 of 18

Myanmar (Burma)

Myanmar

• 2nd largest SE Asian country by area – Pop 52M (est)

• Significant economic decline over past 60 years – 1940: 2nd wealthiest

country in SE Asia – 2012: now the poorest

• Huge potential – Geographically strategic – Natural resources

www.dbam.com

Shan Plateau:

Lead,

Zinc,

and

Silver

Orogenic

Gold

World-

class

Rubies,

skarn-type

gold

Jade

Belt

Magmatic

Arc: Copper

& Gold

porphyry

Slate Belt:

Tin

Tungsten

granites

Myanmar – opening up?

• 2008 – new constitution

• 2011 – start of reforms…

– EU, North American & Canadian sanctions temporarily lifted 2012

• Elections late 2015

– But democracy still a work in progress

Hall, 2012

Geological Background

CORNWALL

NIGERIA

GERMANY

THAILAND +

MYANMAR

USSR (FAR EAST)

SOUTH CHINA

QUEENSLAND

TASMANIA

MALAYSIA

INDONESIA

CONGO

SOUTH AFRICA

BRAZIL

BOLIVIA/PERU

SPAIN/

PORTUGAL

Lehmann, 1990

95% of historic Sn prod from 3 main jurisdictions; of which Southeast Asia responsible for half

Tin Mineralization

Tin Mineralization

• Related to emplacement of peraluminous “S-type” granites

• Sn, W, U, Li, In, Ta-Nb, REE’s are all co-genetic

• Principally found as quartz-vein or pegmatite-hosted cassiterite (SnO2) – resilient hence placer deposits

Fluid exsolution

SE Asia Tectonics: Collage of micro tectonic plates that converged over ca. 100Ma

Metcalfe, 2011

260Ma

210Ma

Myanmar

Closure of Palaeo-Tethys ca. 220Ma

Metcalfe, 2011

Myanmar

Closure of Neo-Tethys ca. 50Ma

India collides with Asia

Neo-Tethys

Gardiner et al., 2015

EARLY- MIDDLE PERMIAN

LATE PERMIAN 260 MA

LATE TRIASSIC- EARLY JURASSIC 230-200 MA

LATE CRETACEOUS 70 MA

Sibumasu

Palaeo-Tethys Back-ArcBasin

Shelf Carbonates

SUKHOTHAI

ARC

Palaeo-Tethys

Palaeo-Tethys Sediments

Neo-Tethys

SUKHOTHAI

ARC

Sibumasu

Sibumasu

Gondwana Indochina

India

Indochina

Indochina

Indochina

Nan Suture

Chiang Rai Line

PALAEO-TETHYS SUTURE

SUKHOTHAIARC

MAINRANGE

PROVINCE

MAINRANGE

PROVINCE

Shelf Carbonates

W E

Nan Suture

Chiang Rai Line

PALAEO-TETHYS SUTURE

Back-arccollapse

I-Type S-Type

WUNTHO-

POPA

ARC

MMM

BELT

S-Type

SUKHOTHAIARC

Tin granite belts of SE Asia

Ranong F

ault

Sag

ain

g F

au

lt

Three Pagodas

Fault

Ma

e Y

ua

m F

au

lt

Khlo

ng M

aru

i Fault

Mae Ping

Fault

NO

TN

EB

G-

ER

UT

US

BU

AR

CH

IAN

G R

AI LIN

E

LA

NC

AN

GJIA

NG

ZO

NE

GRANITE PROVINCES

Eastern (I-type)

Main Range (S-type)

Northern Thailand

Migmatitic Complex

Mogok-Mandalay-Mergui Belt

Wuntho-Popa Arc

(S-type)

400 km

National boundary

Approximate limits of the

main granite provinces

12°

4°

110°106°102°98°

PENINSULARMALAYSIA

CAMBODIA

THAILAND

LAOS

VIETNAM

CHINA

MYANMAR(BURMA)

Bangkok

Mogok

Yangon

DI

CMS

ukhoth

ai A

rc

SUMATRA

TIN ISLANDS

BORNEO

KualaLumpur

Phuket

Singapore

TiomanIsland

Myeik

NA

N S

UT

UR

E

• Magmatic expressions of the Mesozoic-Cenozoic tectonic history

Primary tin deposits are

directly related to these granite

belts

Gardiner et al., 2014

Ranong F

ault

Sa

ga

ing

Fa

ult

Three Pagodas

Fault

Mae

Yu

am

Fa

ult

Khlo

ng M

aru

i Fault

Mae Ping

Fault

NO

TN

EB

G-

ER

UT

US

BU

AR

CH

IAN

G R

AI LIN

E

LA

NC

AN

GJIA

NG

ZO

NE

GRANITE PROVINCES

Eastern (I-type)

Main Range (S-type)

Northern Thailand

Migmatitic Complex

Mogok-Mandalay-Mergui Belt

Wuntho-Popa Arc

(S-type)

400 km

National boundary

Approximate limits of the

main granite provinces

12°

4°

110°106°102°98°

PENINSULARMALAYSIA

CAMBODIA

THAILAND

LAOS

VIETNAM

CHINA

MYANMAR(BURMA)

Bangkok

Mogok

Yangon

DI

CM

Sukhoth

ai A

rc

SUMATRA

TIN ISLANDS

BORNEO

KualaLumpur

Phuket

Singapore

TiomanIsland

Myeik

NA

N S

UT

UR

E

The Myanmar tin industry

Tin mining: potted history

• 14th C: artisanal mining (Burmese/Chinese)

• 19th Century: The Europeans

– 1839: JW Helfer discovered tin near Tavoy

– 1862: Mawchi Mine discovered by O’Riley

– 1888-1892: Indian Geological Survey

– Early 20th C: major mine development

• 1942-44: Japanese occupation

• 1946: Burmese Independence

– 1962: All mines nationalized; start of decline

Mawchi

Dawei area

Tin Mining in Myanmar • Main areas historically in the south,

around Dawei (Tavoy) and Myeik (Mergui)

• Important areas of mixed deposits, primary and alluvial deposits – Unlike rest of SE Asia still relatively

untapped – Placer-type deposits ideal for

small-scale artisanal mining • Tin-tungsten mixed concentrates

– Problem for artisanal producers

Dawei (Tavoy)

• Historic tin mining district

• Over 50 major primary and placer mines – Hermyingyi

– Heinda

– Pagaye

Myanmar - The Black Swan?

• In 2014 Myanma emerged to become World’s 3rd biggest tin producer

• But…most of this production increase is from the Man Maw mining district, Wa State

– not the traditional tin producing areas

Wa State

• Autonomous, unrecognized state

– Outside the control of Nay Pyi Daw

• Pop ca. 560k

• Ethnically Chinese

• Run by UWSA

Man Maw Mine Site, Wa State

• 90km from Pangkham

• 100km2 mine site, multiple producers

• Exclusively primary deposit

– Annual prod 20,000t

– 1-2% grade open pit, higher underground

• Sell crushed ore (10% Sn) and partially refined conc (20% Sn) direct to China

Man Maw mine site

Road conditions are extremely bad

Man Maw – future unclear

• No geological data

– Reserves unknown

– Mine lifetimes unknown

• Infrastructure poor

– Bad roads!

– Some new investment, e.g. new power station

• Security issues on the border

So – can this benefit Myanmar?

Myanmar – the future

• In 2013 mining represented ca. 0.1% GDP

– This represents a hugely underdeveloped industry

– Value of 2014 tin production: 30,000t x $20,000 is only $600 million (in a $53 Billion GDP economy)

• New mining law?

• 2015 Elections

• Transparency (EITI candidate country)

• Environmental issues

Myanmar: summary

• Surprise emergence as 3rd biggest tin producer – Majority of new production outside traditional tin-

producing area

• Still a high-risk jurisdiction – Political uncertainty

– 2015 Elections & Mining Law

• But huge untapped minerals reserves remain – “Traditional” tin producing area retains great potential

– Mining could significantly help Myanmar’s economic redevelopment

For more information:

• ITRI Ltd: www.itri.co.uk

• Greenfields Research: www.greenfieldsresearch.com

• Centre for Exploration Targeting: www.cet.edu.au

• Nick Gardiner: http://www.earth.ox.ac.uk/people/profiles/research/nickg

Contact details:

• Nicholas J. Gardiner: nick.gardiner@earth.ox.ac.uk

• John P. Sykes: john.sykes@greenfieldsresearch.com

Thank you

• Collier, P, (2010), The Plundered Planet: How to Reconcile Prosperity with Nature, Penguin Group: London

• Crawford, M., Church, J., & Akin, B., (Feb. 2015), CPI Detailed Report, USBLS.

• DiFrancesco, C.A., Carlin, Jr., J.F., & Tolcin, A.C., (1 Apr. 2014), Tin Statistics, USGS.

• Gardiner, N.J., Robb, L.J., Searle, M.P. 2014. Applied Earth Science.

• Gardiner, N.J., Searle, M.P., Robb, L.J., Morley, C.K. 2015. Journal Asian Earth Sciences

• Kettle, P., Lin, C., Tianhua, R., Mulqueen, T., & Davidson, V., (Feb. 2015), Tin Monitor, CRU & ITRI.

• Kettle, P., Pearce, J., Lin, C., & Sykes, J.P., (2014). Tin Industry Review, ITRI

• Sykes, J.P., (2013). Structural changes in mine supply: Case studies in tin and tantalum, Metal Pages Electronic & Specialty Metals (Shanghai, China), 11 September.

• Sykes, J.P., Kettle, P., Staffurth, N., & Davies, R.S., (2014). New Tin Supply, Greenfields Research & ITRI

• Other data referenced as ‘ITRI’ provided on an ad hoc basis.

References

Dawei Beach, Tanintharyi Region