Tertiary Minerals hit by metal price slump

MINERAL exploration company Tertiary Minerals has made little progress on reducing its full year losses, as metal prices collapse and demand slows.

The Macclesfield-based company made a pre-tax loss £791,965 for the year to the end of September 2008, a 9% improvement on its loss of £871,964 a year earlier. 

It said its progress during the year has been eclipsed by the financial crisis and the resulting stock market crash and added that many metal prices have collapsed as demand slows and financial institutions deleverage their commodity related financial instruments.

It said steps had been taken to reduce its already low cost base further still.

In January 2008, the company acquired the Storuman fluorspar deposit in Sweden.  Fluorspar is, among other things, used as a flux in steel manufacture.

According to the company, fluorspar is in critically short supply following years of oversupply from China, as Chinese sources become depleted and reserved for domestic use.

The company expects the price of fluorspar and other commodities it has an involvement with – tantalum, niobium, and rare-earths – to be less affected by price fluctuations, as they are not speculatively traded.

Executive Chairman Patrick Cheetham said: “Even allowing for the deepening recession, financial deleveraging has caused the prices of many metals to fall below the limits of sustainable economic production suggesting that medium term outlook should be positive.

“Amongst the current market gloom and uncertain outlook it is worth remembering that it is in such financial environments, when mines are closed and production lost, that the seeds of the next mining boom are being sown.”

He added that, depending on their view of the dependence of China on western world demand for its exports, commentators are divided on the future level of real commodity demand.