HardAssetsInvestor

Written by Tom Vulcan  |

June 23, 2009

Tellurium And Garlic

Details

In the latest installment of our minor-metals series, we dig into No. 52.

• The electronics connection
• A coming demand crunch
• Investor opportunities

 

What Is Tellurium?

Tellurium is a silvery-white metal with the atomic No. 52. It's closely associated with selenium, its periodic table neighbor, and the two metals are often found together.

 

 

Tellurium was discovered in 1782 by the Austrian aristocrat Baron Franz Joseph Müller von Reichenstein, as he was examining samples of gold mined in Hungary's Börzsöny Mountains. But it wasn't until almost 20 years later that a German chemist named Martin Heinrich Klaproth confirmed his discovery, naming the metal "tellurium," after the Latin word for earth - tellus.

Rarely found in its pure state, tellurium is most often found as a compound in ores of bismuth, copper, gold, lead, mercury, nickel, silver and zinc. The metal itself is also quite rare: Some research has found it to be even less common in the earth's crust than gold, platinum or silver.

When ingested, tellurium can be harmful, causing drowsiness, constipation, vomiting and even damage to the central nervous system. It will also make you reek of garlic - even the smallest amount will make your breath, your sweat, even your urine stink. And it's not worth trying to drink the smell away, as the alcohol tends to increase the formation of ethyl telluride, making bad breath even worse! Perhaps this was the reason behind one of tellurium's older names: "metallum problematum."

However, unless you're a jewelry maker and get careless with the oxidizing solution that creates a black patina on bronze, silver and gold, it's unlikely you'll ever knowingly encounter tellurium in your daily life.

 

Finding Tellurium

The vast majority (around 80%) of the tellurium produced today is a by-product of copper smelting and electrolytic refining; the metal is recovered from the anode slimes. The remaining 20% comes mostly from the ground as a by-product from bismuth, gold, lead, nickel and zinc mining, both from current operations and the refining of tailings from past mining activities.

But of all the minor metals, tellurium is one of the most difficult about which to find any really reliable production or consumption data. In its most recent profile of the metal, even the U.S. Geological Survey (USGS) can only provide refinery production figures for Canada and Peru - 8 tonnes and 30 tonnes, respectively, in 2008 - with an undisclosed amount for the U.S. It also notes production in other countries, including Australia, Belgium, China, Germany, Kazakhstan, the Philippines and Russia, but offers no output or production numbers. (It doesn't even include Colombia, Mexico and Poland, countries that also produce refined tellurium.)

 

Uses Of Tellurium

As with a number of the minor metals, tellurium's main use is as an alloy, particularly in steel. According to the USGS, the metal is used as a "free-machining additive," improving vibration and fatigue resistance in copper, controlling the depth of chill in cast iron, and acting as a carbide stabilizer in malleable iron.

Tellurium has a range of applications: It's used in blasting caps and rubber processing; it makes a good vulcanizing agent and catalyst in synthetic fiber production; and it acts as a colorant both in ceramics and glass.

Tellurium is also increasingly used in electronics, where the metal is employed in a variety of devices, including phase change memory, Blu-Ray discs, Peltier and thermoelectric coolers in thermal imagers and solar cells.

It's this last application that has, over the last couple of years, given the metal an important place in the imagination of certain investors. Some have even started to wonder how and where solar cell producers like First Solar Inc (NASDAQ: FSLR) source their supplies of tellurium.

 

Tellurium Producers

In the U.S., the largest commercial-grade tellurium producer by far is Arizona-based ASARCO, which operates a refinery in Amarillo, Texas. Perhaps not surprisingly, ASARCO also happens to be the country's third-largest copper producer.

ASARCO has operated in bankruptcy since August 2005, but Sterlite Industries (India) Limited - a subsidiary of Vedanta Resources plc (L: VED) - announced earlier this year that it planned to purchase ASARCO's operating assets. However, with a number of other interested parties now in the picture, there could well be a bidding war for the company assets.

For many U.S. copper producers, however, tellurium is considered a contaminant, not an asset, and the metal is certainly not something they are going to go out of their way either to recover or to refine themselves.

Other tellurium producers exist in the U.S., but they further refine commercial-grade tellurium and tellurium dioxide, rather than recover the raw metal from anode slime and skimmings. To find companies specifically involved in tellurium production, you have to look internationally.