Increased demand from the aerospace and defence industries, alongside reduced supply from Brazil, has underpinned a steady increase in niobium columbite prices over the past two years, although further rises could face resistance from smelters switching to ferro-niobium when columbite becomes too costly.
Defence and aerospace demand supported prices across the niobium complex throughout last year and are set to continue driving demand this year, owing to continued geopolitical tensions across all regions.
Total military spending globally rose to $2.4 trillion in 2023, up by about 6.8pc in real terms from 2022, data from the Stockholm International Peace Research Institute show. And figures for last year are expected to increase further as Russia's continued war in Ukraine spurred greater NATO spending, conflict escalated in the Middle East and the Red Sea, and China ramped up military drills around Taiwan.
Niobium metal is used in a range of high-temperature alloys in aerospace and defence applications, thanks to its high strength at extreme temperatures. In September last year, the US Department of Defense awarded a $26.4mn grant to major tantalum and niobium producer Global Advanced Metals through the Defense Production Act programme to support the production of high-purity niobium oxides at the company's Pennsylvania plant.
One key alloy to which niobium metal is crucial is C-103, used in hypersonic missiles, jet engine afterburners and satellite components. C-103 is made up of 89pc niobium, 10pc hafnium and 1pc titanium.
Firm demand for niobium metal has been keenly felt by the columbite market — the raw material — in which prices averaged $18.20/lb cif main port from January-mid-December last year, compared with an overall average of $14.50/lb in the past five years.
Columbite prices began to trend higher from late 2022 — before the sustained increase in defence and aerospace demand — bolstered instead by tightened supply.
The election of Brazilian president Lula de Silva in October 2022 brought with it a government crackdown on artisanal mining on indigenous lands in the Amazon. While this crackdown has focused chiefly on illegal gold and zinc mining on indigenous lands, niobium columbite market participants have also noted tightened supply and higher prices from the region since the Lula government took office.
Furthermore, conflict in the eastern part of the Democratic Republic of the Congo has decreased the supply of tantalite from key mining areas this year. Tantalite and columbite materially are similar, making tantalite a useful source of niobium concentrates to many Chinese smelters. But this lower supply has raised the prices of tantalite with higher niobium content, even while tantalum demand has been slow this year.
Looking ahead, market participants expect columbite prices to remain firm throughout this year, supported by a continuation of the fundamentals of the past two years. But further price increases could face resistance from consumers, as smelters could switch to ferro-niobium to avoid higher columbite costs. In the past, smelters in China have made the switch to ferro-niobium when columbite prices climb above $18/lb, often causing increases beyond this level to be short-lived.
