Following the annual dinner of the Minor Metals Trade Association (MMTA), HardAssetsInvestor.com was fortunate to have the opportunity to talk with its chairman, Charles Swindon, about both the association and minor metals themselves.

HardAssetsInvestor (HAI): What exactly is the MMTA?

Charles Swindon (Swindon): The MMTA, or Minor Metals Trade Association, was originally set up to facilitate trade in minor metals and ferro-alloys between all sections of the minor metals business. The main components of our membership, at the moment, are traders, producers, consumers, financiers and warehouse people. All these people, and the assayers, are critical in making up the whole process of how the minor metals trade works, and each one of them is an important type of category to our membership.

HAI: How would you define a minor metal?

Swindon: Perhaps you could describe a minor metal as any metal which is not traded on the London Metal Exchange. There are the six major metals and, now, the two steel contracts, which are traded on the London Metal Exchange. But the minor metals are key metals which are enjoying massive growth in demand for various strategic and nonstrategic reasons.

HAI: Do you actually think we might see migration of, say, something like cobalt, from having been a minor metal, to actually being traded on the LME?

Swindon: It's interesting to see that the board of the LME appointed, for the first time, someone to look into just this area. Certainly, at the MMTA, we are very much involved and aware of what is going on in all those directions. They are looking at cobalt, molybdenum, and probably ferro-chrome, as possibilities.

HAI: How are minor metals traded if they're not traded on an exchange?

Swindon: Some of the minor metals are traded on long-term contracts between producers and directly with the consumers. And perhaps that is the majority of the business: on six- or twelve-month long-term contracts.

The rest of the business is contracted on a spot basis or on a short-term basis: two sides enter into negotiations with one another and frequently, with our increasing numbers, all the specifications of our minor metals contracts are usually adhered to and everything is referred to.

We have very strict specifications for all the different impurities, sizing and packing, warehousing and transportation for all the metals and, more recently, even the rare earths that the MMTA has started to move into (as well as ferro-alloys). Because we are very strict and tight in those areas, people are already seeing us as the standard bearer as to what makes up a minor metals contract.

HAI: What are the most well-known, and least well-known, minor metals?

Swindon: The large ones - of the minor metals produced and traded in large quantities - would be magnesium, manganese and silicon. And I suppose I have to mention the ferro-chrome and the ferro-vanadium and the ferro-moly [molybdenum]. Those three are vital for so many parts of the steel business.

HAI: And the least well-known?

Swindon: Maybe niobium, gallium and rhenium.

HAI: Are some of these metals strategic because of where they come from, in addition to what they are used for and, often, the very small amounts of them that are actually produced?

Swindon: Certainly! The geographic location, or very few geographic locations where these metals come from, make their supply very risky. If we're relying on exotic geographic locations with shaky political regimes and the ability for governments or the major producer in these places to withhold a supply of these metals for various political or economic reasons, and the West, in particular, desperately needs these metals for some of the final component parts of high-specification engines, or whatever it is, we are somewhat beholden to them.

So, in some cases, the prices will shoot up and that might redress the balance and some slightly greater flow of this metal might come into the West, but they are strategic for exactly the reasons you've mentioned.

HAI: Why do you think they're termed minor metals, when, in fact, so many of them are strategic?

Swindon: I totally agree with you that the term "minor" is detrimental and it doesn't give true respect to the fact that so many of these metals are strategic in so many ways. It's a misnomer from the past and it may well be that the importance of these metals, and the greater demands, and even the higher prices we have, make this term "minor" look more and more ridiculous...

HAI: Has there been asset inflation in minor metals?

Swindon: There has been large asset inflation in virtually all of the minor metals for the last two-to-three years.

This has gone along with the fact that many other commodities - including the nonferrous metals traded on the LME - and the gold price, and oil prices, have all shot up so much.

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