The Tellurium Supernova 65 comments
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Tellurium, one of the rarest elements on earth, was once not thought to be very useful. According to USGS and a Mining Journal Review article, half of its traditional use is as an alloying agent in iron and steel to improve machinability; 25% of it is in catalysts and chemical use; 10% of it in alloying with non-ferrous metals like copper and lead; 8% of it is in electronic application and the remaining 7% in other applications, including as pigment agent in ceramics.
Annual global tellurium production is about 170 tons to 200 tons, based on various different estimates. It's mainly produced from the anode slime accumulated during electrolytic process of copper refining. According to this detailed analysis, copper produced from different places contain vastly different tellurium content. Typically, one ton of copper contains 100 grams of tellurium and only 33 grams are extracted and produced using existing technology. That caps the current global tellurium production at no more than 400 tons, without major investment to improve the tellurium extraction efficiency, assuming globally 12.4 million tons of copper is produced using electrolytic process per year. Because of the low quantity and thin revenue of tellurium in comparison to the revenue from main copper product, copper refineries are UNLIKELY to invest money, time and effort to improve the tellurium extraction rate, unless tellurium price goes up a lot from here, approaching gold price levels.
According to USGS, tellurium price started 2004 at $10 a pound. By the year-end it reached $22.50 a pound. In 2005 the price quickly rallied to $130-$180 a pound in mid year, then flat down to $100-$130 a pound. In 2006, it once again ran up to $155 a pound and then settled for the year at $50-$75 a pound.
So what prompted the rapid price raise? First Solar's (FSLR) CdTe solar panel was one of the demand factors. FSLR produced 60 MW in 2006 and about 20 MW in 2005. At 8 grams of tellurium per panel and 60 watts per panel, that's 8 tons tellurium consumed in 2006 and 2.7 tons in 2005. That's barely 4% and 1.4% of the supply. It's a factor in demand increase, but not the major factor.
The main Te demand increase was from other applications. CD-RW discs use tellurium, as do DVD-RW discs. And even later, ReWritable Blu-Ray DVD discs were developed by Panasonic, using a material called tellurium-suboxide-palladium.
Recently, Intel (INTC) announced a new type of phase change memory chips to start mass production in later 2007. This also uses tellurium. To understand the background of this break through, you need to read an old article: A 30-year memory problem solved?
All those electronic applications mentioned above, CD, DVD and memory chips, relate to the same phase change material called chalcogenide, which contains tellurium. Chalcogenide, the material used in ovonics, is really the cultimation of decades of scientific research on amorphous materials, which was once considered of very little practical use, but of academic interest only.
I originally connected these dots from an article I read entitled "Is There a Tellurium Rush in the Making?". Kudos to Sergio Garcia de Alba for submitting the article Energy Conversion Devices: An Amorphous Gem, which finally allowed me to connect the dots. It's all related to tellurium. Energy Conversion Devices Inc. (ENER) was funded by Stanford Ovshinsky, who invented the amorphous semiconductor materials and coined the name Ovonics. He has numerous important inventions. Chalcogenide, which is a tellurium containing material, is one of them.
Today, after many decades of quiet research and perfection, chalcogenide has suddenly become a very very useful material, having revolutionized and is continuely revolutionizing the whole electronic industry. I like to compare the precious element tellurium to a supernova. It's been quiet and ignored for so long, but all of a sudden it erupts into an extremely bright superstar. The tellurium supernova shines so brightly that it could KILL.
Let's follow the ENER article a little bit:
...a little company called Ovonyx...licensed its memory technology to semiconductor giants like Intel (which is a partner in Ovonyx), Samsung, Elpida, Hynix, Qimonda, and ST Microelectronics. The memory technology is based on chalcogenidephase change memory. It is expected to replace NOR flash memory, and could also eventually replace DRAM and NAND flash. Samsung has announced production of a 512Mbit part in 2008, and Intel a 128Mbit part that could arrive as soon as the end of this year or early 2008 (Intel's part codename is Alverstone). ...What's interesting for investors is that phase change memory could become a $40 billion+ market in a few years.
This phase change material thing is really HUGE! $40B+ market just in memory chips and we have not even included all the rewritable CDs, DVDs and Blu-Ray DVDs. And it ultimately could also replace the hard disk drives so future computers would no longer need a hard disk drive.
If you are not shocked so far, then read this article about phase change memory. Let me quote from page 2:
A person using a computer with PRAM could turn it off and back on and pick up right where he left off -- and he could do so immediately or 10 years later. Such computers would not lose critical data in a system crash or when the power went out unexpectedly. 'Instant-on' would become a reality, and users would no longer have to wait for a system to boot up and load DRAM. PRAM memory could also significantly increase battery life for portable devices.
How wonderful it would be!
Needless to say, this whole new chalcogenide based electronic industry will consume a lot of tellurium, probably all the global tellurium production and then some more. It will drive the price of tellurium to a crazily high level, maybe at gold price, maybe at platinum price, and in doing so, it will kill a lot of trivial, low added value industry users of tellurium.
The kill of this tellurium supernova will probably include FSLR. This company is most vulnerable because it uses a lot of tellurium in its solar panels, any dramatic tellurium price will increase its cost to the level that it can no longer have a profit margin. When a business no longer has a profit margin, it cannot survive. But the tellurium kill probably will go behind that. Tellurium as an alloying agent will probably have to end, as will tellurium used in portable electronic beverage coolers.
My advice to people would be to buy and hoard some tellurium metal ingots if you can still find anything at decent price. If you have FSLR long positions, I recommend that you sell them before it is too late. Tellurium, such a scarce and precious natural resource, is one of nature's best gifts to human kind, and it was never meant to be used on trivial things like generating a few watts of solar electricity; rather, it should only be used in high value added and far more useful things like advanced computer memory chips.
FSLR started on the wrong technology using the wrong material, the extremely toxic cadmium plus the extremely rare tellurium, a deadly combination leading this otherwise aggressively growing company onto a death march. It's a tragedy of nature's making, not the management's fault. But the FSLR management really need to wise up and realize that their sole CdTe product will lead them to nowhere. They must diversify into other technologies, or they may have to shut down business just a few years down the road.
Full disclosure: I currently do not have any ENER position but is looking for opportunity to buy some. I have short positions in FSLR and am planning to short more when it starts the eventual collapse. I am also actively buying physical tellurium metal ingots as investment.
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I am happy you finally start to look at tellurium. No, I do not have paid access to AsianMetals. But I can see the front page on tellurium and it shows the price chart. I can't get much beyond that:
www.asianmetal.cn/Meta...
Some folks claim they could not see the chart. Maybe you need to allow your PC computer to automatically install some Chinese font to be able to see the chart.
Go to First Solar web site and search for their job openings. Looks like there are two related to tellurium. I get the impression they are trying to extract residue tellurium from the dump of waste tail material of mining companies. Good luck with that. Extract residue tellurium from waste dump was considered impossible by the original NREL study because it is simply not economical.
so where exactly can you buy tellurium ingots?????
FSLR is paying a price way much higher than the going spot price of tellurium. They buy the high purity CdTe from VNP, 5N Plus, and are now paying more than $500 per kilogram for CdTe from VNP, based on recent VNP earnings conference.
Further, do you notice the latest 10Q just filed, compare with previous 10Q, the keyword tellurium has GONE, only the keyword cadmium telluride remains. This may imply they no longer have a tellurium supplier themselves and have to rely on VNP itself to get tellurium. Also dedicated wording change now virtually confirms VNP, as I suspected, is now their SOLE CdTe supplier.
On top of that, FSLR's recent tellurium job posting, dated April 8, 2008, is CONCLUSIVE evidence that they have run into an acute tellurium shortage and have to resort to extreme measures to try to get some tellurium.
May12, 2008
CompanyAnnouncements Office
Australian Securities Exchange Limited
DearSir/ Madam,
TELLURIUM POTENTIAL INVESTIGATED FOR FIRST SOLAR Inc USA
High values for tellurium of up to 59g/t were recorded from drilling results at Capital Mining’s
100% owned Stonehenge North Prospect, Chakola, near Cooma NSW as announced to the ASX on
January3,2008.
We are delighted to announce that after analysing a digital data package of the Chakola results, the
Senior Geologist from World Industrial Minerals, Denver, Colorado USA has now arrived at our
Canberra exploration office to conduct further investigations and field visits into the potential of
Capital’s tellurium deposits on behalfoftheirclient,Fi... Solar IncPhoenix,ArizonaUSA.
First Solar Inc (Nasdaq:FSLR) is the worlds largest consumer of Tellurium (Te). First Solar uses
Tellurium, a rare precious metal, in the production of its Cadmium-Telluride (CdTe) Solar Cells.
First Solar’s market capitalisation has grown from around US$5Billion to more than US$20Billion
overthepast 12months.
Notwithstanding the fact that the analysis of Capital’s Tellurium potential is ongoing, negotiations
are only at an early stage regarding any possible offtake agreement or joint development proposal.
We are very encouraged by the results and progress to date and we will continue to inform the
market ofoutcomes as perourcontinuous disclosureobligations.
Great article. Reading up about Te is rapidly becoming one of my favourite hobbies. I'd like to get some physical but was wondering if you can recommend a good source. Goodfellows sell for $848 per kilo - is this a good price. From what I can tell from the Asianmetals site the current spot is about $262 per kilo after a slight fall recently so Goodfellows seem to be making a good mark up and we'd need to see a fair increase before I'd see any return. Americanelements.com sell a massive range of Tellurium products including coins, ingots, bars etc but I'm still waiting for them to come back to me with a quote (maybe not a good sign) - they also offer to store your metals if you don't want to risk the BO issue.
I'm heavily invested in junior miners and own GOZ Gold Ore as well as KNB - Kinbauri Gold Corp who've also identified significant Te deposits in their ore. This webcast agoracom.com/executive... includes the Pres & CEO discussing how he's been contacted by a research consultancy who are hunting Te reserves globally - based on the comments about the Australian junior above do you think FSLR might be sending out scouts to gold mines with significant deposits in the hope of securing some reserves. They'll be in production by 2010 and the President doesn't know that much about Te at the moment. He was unsure about finding a smelter to extract his Te. I look forward to your comments.
Thanks again,
On May 02 08:48 PM John from California wrote:
> mark,
>
> so where exactly can you buy tellurium ingots?????
james.xu@njhipower.com
On Dec 04 03:40 PM Augustus wrote:
> Where can someone purchase Tellurium?
in 2007, First Solar produced 200 MW of modules, which is more than 3 times the production of 2006. If the world production of Te did not increase much, this brings the share of FS to more than 15%, which makes it quickly a major demand factor. I dont know how fast the Te Production (or hence the Copper production) can increase but if you consider that FS want to produce 1 GW by 2011, this could easily use up 1/3 of the world Te Production, not mentioning all the new comers in CdTe manufacturing....
Yesterday I E-mailed FS with information about the discovery of some highTellurium numbers on a ground I am prospecting.
They returned my E-mail with a we'll get this information to the right people in the company. As this is a greenfield prospect I don't expect to hear from them, but if I do it might serve as a gage as to their consideration of a darth of suppluy in the future.
On Dec 09 09:21 PM Mark Anthony wrote:
> FSLR Te:
> FSLR meantioned in many occasions they use 3 microns thick CdTe.
> As late as Dec. 6 conference call the CFO re-iterated 3 microns,
> at 00:05:10. So that has not been changed. Using density of CdTe
> being 5.85 grams per CC, and the area of 2x4 feet panel is 0.75 m^2,
> Te is slightly heavier than Cd so it's 53% of the CdTe weight. it's
> easy to calculate. Another clue is in a NREL cadmium fact sheet they
> meantion 3-9 grams for 1 to 3 micron CdTe layer. So for 3 microns
> you have 9 grams Cd per m^2, or 10.3 grams Te per m^2, or about 8
> grams per panel.
>
> My original calculation assumed 60 watts per panel. They now raised
> to 70 watts per panel. That results in about 114 kilograms of Te
> per MW products, or 114 metric tons per GW.
>
> That's about 0.114 gram per watt. If silicon is paying 28 cents per
> watt, to beat silicon, FSLR needs to have tellurium priced below
> $2.46 per gram, or $2460 per kilogram.
>
> Note FSLR does not use pure tellurium, they use high purity CdTe
> compound, which has a big price premium over low purity tellurium.
> As of today, GoodFellow is selling 99.95% pure tellurium for $830
> per kilogram. It has a high premium but it looks like the going price.
>
>
> The economy 101 of supply demand says that when there is a shortage,
> the price must keep going up until there is eitehr increased supply,
> or demand destruction to eliminate the shortage. Demand destruction
> in this case means FSLR going out of business.
>
Wow! That was a very very smart way of probing FSLR! You know in the past people have tried different ways of contacting FSLR to get status on their tellurium supply. It's frustrating you never get any response whatsoever. But here you go, once you claim you are prospecting on some land and maybe you discovered some tellurium on your land, they immediately email back and show interest. As matter of fact if any one at any corner of the world discovered any unusual tellurium concentration, FSLR's people will be on their way immediately. Search for what happened to Capital Mining in Australia. They got a visitor on behave of FSLR!!!
On Apr 25 05:19 PM Rocks wrote:
> In the past few days I've been doing some research on mining companies
> who claim Tellurium mineralization along with primary elements like
> gold and silver. Some have even mentioned FS has visited their properties
> and I assume to investigate a future supply.
> Yesterday I E-mailed FS with information about the discovery of some
> highTellurium numbers on a ground I am prospecting.
> They returned my E-mail with a we'll get this information to the
> right people in the company. As this is a greenfield prospect I don't
> expect to hear from them, but if I do it might serve as a gage as
> to their consideration of a darth of suppluy in the future.
Where can I find a daily quote on tellurium?
They heap leach with cyanide for the gold, and don't electrowinnow to my knowledge. Their tailing piles are huge, and they might even pay someone to take the piles and environmental liability away-LOL. Someone should investigate this potential source.
Tellurium is a thinly traded rare metal. There is no daily quote available, nor is there a commodity exchange for you to find a standard price quote. The price is basically decided by buyers and sellers ask around to get a feel of what is the "going" price.
I am not willing to disclose where I bought my tellurium. Doing so could instantly destroy First Solar's tellurium supply and subject me to un-necessary trouble. But do your research it is not hard to find out at all. It's a US copper company which went bankrupt in 2004/2005.
Daveddawg:
Sure there are waste dump piles in Colorado as you mentioned. But there will be no incentive to try to extract tellurium from such mining waste dump pile. Tellurium will have to reach gold price for such extraction to be worth while, economically.
FSLR's Tellurium Initiative Department, according to their job description, is probably such an attempt to extract residue tellurium from mining waste and hopefully improve the technology so it can be done at reasonable cost. Good luck but I don't think they can achieve their goal. They never publicly discuss what their Tellurium Initiative Department is doing, or even acknowledge existence of such a department.
home.slac.stanford.edu...
It will take time to come to fruition.But tellurium-based phase change memory is now in small scale commercial production already.
How long before First Solar runs into tellurium supply bottleneck?