Because we are in the midst of a property bubble that is supporting unsustainable levels of consumption, its difficult to recommend any industrial materials in the metals sector. One of the new good ones is tantalum.
Tantalum is primarily used in the production of capacitors, important components in the manufacturing of mobile phones, laptops, PDAs, game devices, digital cameras. Since developing markets are critical to growing demand for raw materials, its important to look at the types of products which poor countries will by first. Having spent alot of time in SE Asia, I would suggest to you that the `common human` holds the following values:
1. Food + water + basic clothes
2. Shelter
BASIC JOB - in a shopping mall, etc
3. Mobile phone
3a. Bicycle
4. Nicer clothes + MTB
5. Better mobile phone
6. Scooter
6a. Computer
GOOD JOB - often with foreign company (JV)
7. Motor bike
7a. Laptop
8. Car > They are likely to live at home long term
9. Home (mortgaged)
LANDED WEALTH
10. Home (if family helps to buy or high interest rates)
10. Furnishings
11. Imported foods & branded clothes
Mobile phones are important status symbols - followed by clothes, but they tend to wear rip-offs of branded clothes. Its apparent therefore that the intensity of consumption of tantalum is going to stand up better than copper (construction, electronics), lead (car batteries), zinc (galvanised steel), etc. Whilst tantalum will suffer a slump, we can expect the slack demand to be absorbed quickly. Many countries are developing mobile networks before they develop their land lines.
Another positive for tantalum is that speculative demand is strongly tied to market fundamentals because its difficult for speculators to take large positions, hence the speculation is done by traders taking physical positions, not financial institutions trading derivatives.
One does have to be concerned about too many projects being developed given the illiquidity of the market, however given that these are contracted markets, as opposed to the terminal (LME) markets, project sponsors need to pre-sell at least 70% of their production capacity generally to get financing, so its difficult to conceive of over-capacity on the supply-side, though manufacturers can over-contract on the demand side. Some contracts are just MOU, others have firm take-or-pay contracts.
In the tantalum market, the best entry is Gippsland Ltd (GIP) listed on the Australian Stock Exchange (ASX).
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