An Arizona tellurium rush?

As recently as 2000, the price of the element tellurium averaged $3.82 pound, according to the USGS (http://minerals.usgs.gov/minerals/pubs/commodity/selenium/). Last year it went to $96 and this year it hit $100. So, what’s up?

An investment report released last month by Jack Lifton at ResourceInvestor.com says that this fall, Intel and Samsung "will introduce flash memory replacements…that can be used, erased, and used again indefinitely, but, rather than being crystalline silicon technology based, are made from tellurium based glasses composed of germanium, antimony, and tellurium.” They offer the promise of low-cost reliable electronics including smart cell phones, according to Lifton.

Lifton also briefly mentioned the military’s use of tellurium and selenium in solar energy conversion. Coincidentally, Phoenix-based First Solar Inc. which went public last fall, produces photovoltaic solar panels (ie, electricity producing panels) using cadmium tellurium as the absorption layer. First Solar says in their annual report that, “Cadmium tellurium…has the potential to deliver competitive conversion efficiencies with approximately 1% of the semiconductor material used by traditional crystalline silicon solar modules.” This reduces the cost of solar panels, making them more competitive. [Note – in the interest of disclosure - I own stock in First Solar].

Why does all this matter? Well, it turns out there are no primary tellurium mines in the US and perhaps the world. Tellurium is produced mostly as a by-product of copper refining. Los Alamos National Lab says that tellurium "is recovered commercially from anode muds produced during the electrolytic refining of blister copper. The U.S., Canada, Peru, and Japan are the largest Free World producers of the element." A brief survey of my contacts in the copper mining business turned up no one planning on going after tellurium as a product (or at least no one willing to admit it). World production is only about 215 tons.

However, at $100 per pound and the potential for major new demands on the mineral, it seems possible that tellurium could follow in the footsteps of molybdenum, another ‘worthless’ mineral that now is a major contributor to mining company bottom lines and the state's economy.