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Markets // Market Analysis

Pitinga outlook positive after record year

Monday, 06 March 2017

Minsur's consolidated results, released last week, report that tin output from the Pitinga mine in Brazil rose by 20% year-on-year to 6,875 tonnes, a record high since the mine's acquisition by Minsur in 2008, while refined tin produced at the Pirapora smelter in Brazil rose 6% to 5,873 tonnes. Refined tin production by Minsur's operations in Peru and Brazil totalled 25,445 last year, down 1% from 2015, but in line with official guidance.

The company's Brazilian operations, which are run by its local subsidiary, Taboca, saw a 17% increase in ore treated to 6.3 Mt in 2016 compared to the previous year, while average tin head grades remained stable at 0.20% Sn. Cash costs net of by-product revenues rose 16% to US$17,604 per tonne, explained by intensive use of diesel generators during hydroelectric plant repairs. Niobium and tantalum ferroalloy production at Pirapora fell 15% to 1,840 tonnes in 2016. As a result of a major breakthrough, both ferroniobium and ferrotantalum can now be produced, rather than one alloy as was previously the case. Total ferroalloy production is expected to grow to 3,000 to 3,500 tonnes in 2017, with the company anticipating a profit from Brazilian tin operations in 2017.

In 2017, $29M-$35M will be spent on expansions to tailings capacity at both the Pitinga and San Rafael mines, while $9M-$12M will be spent on a feasibility study for the B2 tailings project near San Rafael, due for completion in Q3 2017. Minsur expects B2 to enter execution phase by the end of 2017, with commissioning targeted in 2018 and production ramping up to design capacity by mid-to-late-2019.

ITRI View: Official guidance provided by Minsur for 2017 anticipates 6,500 to 7,500 tonnes of refined tin production from operations in Brazil and 16,500 to 17,500 tonnes in Peru, or 23,000 - 25,000 tonnes overall. Rising output from operations in Brazil is offsetting declines in Peru, due to long-term falling head grades at the San Rafael mine and support to refined tin output in recent years from reprocessing of ore and slag stockpiles at the mine and smelter respectively.

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