Time to reach for the tin hats. City talk is returning, as it does every few years, to the idea of reopening the tin mines that once made locals rich. South Crofty, first mined in the 17th century, is making plans for a comeback, and hardly for the first time. The tin miner, owned by Cornish Metals since 2016, has had several attempted rebirths over the years.
Pshaw, say the tin bulls. Tin prices, like those of other commodities, are at an all-time high. Ian Hannam, aka “the King of Mining”, is back in at the rock face. The prominent ex-JPMorgan banker is backing Tungsten West in neighbouring Devon. Together with Moneysupermarket cofounder Simon Nixon, he plans to have the Drakelands mine back up and running by next year.
Drakelands boasts tungsten, used in everything from saws to golf clubs, alongside tin. Pandemic-shuttered tin mines crimped supply, while demand from electronics manufacturers continues apace. Last year’s supply gap of 5,200 tonnes has halved but a deficit remains. Tungsten prices, meanwhile, remain subdued, below the peaks of 2013 and 2018.
Heightened trade tension with China, the world’s largest tungsten producer, would bode well for Drakelands, the fourth-largest tungsten deposit in the world. Tungsten West is chasing a £100m valuation through a £20m initial public offering on Aim, tapping rich veins of retail investors.
But, like Crofty, there is some horrid history to overcome. Previous owner Wolf Minerals presided over poor-quality ores and low utilisation rates that failed to meet contractual obligations. Investors in the shares, also listed on Aim, watched their value track tungsten prices lower in 2014 and 2015 until Wolf pulled the listing a few years later. Wolf Minerals reportedly sank £200m into Drakelands before calling time.
Undeterred, Tungsten West is counting on X-ray sorting technology to produce higher-quality ores. That, it reckons, will help it run an efficient and profitable operation. It may be raising just a tenth of the money Wolf sank in, but view that as a first stab. This flotation will only be for investors with deep pockets and a willingness to keep digging into them.