MELBOURNE, Nov 3 (Reuters) - After years of hard times, tin miners say they are starting to see interest from investors as global inventories fall and expectations grow that a wave of new mine supply from Myanmar will tail off, tightening supply.
Private equity, funds and trade houses have begun to show interest in small scale tin miners, industry sources said in Melbourne this week. London Metal Exchange tin prices have surged by more than 40 percent so far this year.
"Private equity is starting to appear in tin. They're all starting to buy the stock drawdown, the lack of long term supply," Peter Cook of Australian mid-tier miner Metals X MLX.AX said on the sidelines of a tin industry conference.
Metals X has a tin mine in the southern Australian state of Tasmania and plans to raise output by 70 percent to 12,000 tonnes a year in early 2018. It has a long term offtake deal with the world's biggest tin producer, China's Yunnan Tin, for half of its annual supply.
"We've been approached a number of times (by private equity)," Cook said, adding that interest across the sector was picking up. "They see that the tin price can explode from the upside and they want a part of it."
In August, Canadian-listed Asian Mineral Resources ASN.V agreed to acquire Australia's Kasbah Resources KAS.AX , which has a large undeveloped tin resource in Morocco. Swiss private equity house Pala Investments will be a cornerstone investor.
The global tin market has been disrupted by a surge in production from a tin mine in Myanmar, but investors are banking on a shortfall as production drops sharply and on reports that deposits may be depleted in two to three years. Metal Exchange tin stocks have slumped to the lowest since 2004, at less than 3,000 tonnes, while LME tin prices CMSN3 hit $20,895 a tonne this week, the most expensive since Sept 2014.
Already, Australian miner Elementos Ltd ELT.AX is negotiating an offtake with Thailand's Thaisarco for concentrate from its Cleveland tin project.
"Suddenly there is interest," Christopher Dunks, Elementos executive director, told Reuters.
"It's still a really hard environment to get financing, but there are a handful of companies in the world that are seeing an opportunity."
Metals X has funded its own expansion plans, including a copper acqusition and expansion in gold. While it has eschewed private equity for now, it hasn't ruled out a sale in future.
"There's always people showing interest. When commodities get attractive people are always looking for the undervalued opportunity."