As metal prices plunged on the eve of the financial crisis in September 2008, Peru's billionaire Brescia family paid about $400 million to buy the world's largest tin deposit in the Amazon jungle.
Now their mining company Minsur SA sits alone among mostly Asian rivals as the only major producer in 2014 that can raise output of a metal increasingly in demand because it's mixed into solder for circuitry in smartphones. Tin is one of only two industrial metals that became more expensive this year.
"The only company on a good footing to expand is Minsur," said Cesar Perez, head of research at BTG Pactual in Santiago. "The Brescia family is very good at timing."
Tin producers can't keep up with demand growth, a claim the copper and gold industries can't make. The case was different back in 2008, when Executive Director Fortunato Brescia and Chairman Pedro Brescia led the company in a deal to buy Pitinga in the Amazon against the backdrop of a 54 percent price slump in the metal from May to October that year.
Thanks to acquisitions, the banking and industrial group founded in the 19th century by Fortunato's immigrant grandfather of the same name has become the world's largest tin producer after China's Yunnan Tin Co. and Malaysia Smelting Corp.
The Brescias bought Lima-based Minsur in the 1970s. Their San Rafael mine in Peru is the world's largest, while Pitinga has the most known resources, a company presentation shows.
Now Minsur is gearing up to supply a market forecast to have a global shortfall, according to producer group ITRI Ltd.
"The fundamentals of the global industry are second to none," Chief Executive Officer Juan Luis Kruger said in a telephone interview from Lima, forecasting demand to keep growing at 3 percent to 4 percent a year while supply remains constrained. "We will keep consolidating our leadership."
Suppliers to Apple Inc. and Samsung Electronics Co. have been forced to look elsewhere for tin since Indonesia, the top producing nation, restricted sales from illegal mining on the island of Bangka in September. Indonesian exports will plummet by about one-third to as little as 60,000 tons this year, Sukrisno, president of PT Timah, that nation's largest producer, said March 24 in Jakarta.
Minsur plans to boost Pitinga's production by 25 percent this year, while stabilizing output declines at San Rafael, Kruger, a former executive vice president of Gold Fields Ltd., said. Output from the Amazon mine has grown to 4,200 tons in 2013, compared with 1,100 tons in 2010, he said. The San Rafael underground mine has about seven years of supply left and Minsur plans to keep drilling sites near the deposit to discover a year's reserves each year.
Tin traded at about $17,000 a ton when Minsur bought Pitinga from Paranapanema SA six years ago. The metal for delivery in three months is now at $23,000. Timah's Sukrisno predicts prices will rise to $26,000 this year. LME stockpiles have shrunk to about 9,555 tons, or about 11 days of global demand, from about 15,000 tons, or 17 days six months ago, as inventories fell to a five-year low.
Tin prices have tripled in the past decade as the European Union banned the use of lead in electrical appliances. Demand is also increasing for food packaging, tin's second-biggest end- market, according to London-based mining consultancy CRU. Barclays Plc forecasts a shortage of 5,000 tons this year.
Foxconn Technology Group, Apple's biggest contractor, uses thousands of tons of the metal melted into tiny blobs used to fix components onto circuitry boards on iPhones and iPads. Samsung, Sony Corp. and LG Electronics Inc. all used tin procured from Bangka.
Minsur's Asian rivals are constrained by the problems at smaller-scale miners they buy their material from while manufacturers are coming under greater scrutiny to buy material from operations with adequate safety standards, Kruger said.
"We won't expand tin mining capacity quickly just because the price is good," said Yang Jiawei, securities affairs representative at Yunnan Tin. The company aims to produce 71,600 metric tons of tin in metal this year, "slightly changed" from a year ago, he said without giving year-earlier numbers.
Chan Yaw Phang, investor relations manager at Malaysia Smelting, couldn't immediately provide any comment.
Miners can only make up for a small portion of the production lost from Indonesia because of the ban on illegal mines, CRU said.
The Pitinga deposit 300 kilometers (186 miles) north of the Amazon River port of Manaus also contains rare earths such as niobium and tantalum, an ingredient used in transistors and capacitors for electronic equipment. Paranapanema also sold a tin smelter to Minsur in Sao Paulo state.
With resources that total about 420,000 tons, Pitinga is the world's largest undeveloped deposit, according to ITRI research manager Peter Kettle.
Minsur is digging down to a "mother-lode" of tin contained in hard rock, under the alluvial deposit that Paranapanema mined at Pitinga in the 1980s, Kettle said.
The Brescia family has ridden cycles of booms and bust in Peru's economy to build up an empire that includes banking, fishmeal, mining and property assets.
Fortunato's grandfather arrived in Peru in 1889 and built a farming business. After losing their holdings during the land redistribution program of the 1960s, his sons diversified into fishmeal. In the 1990s, the family turned its hand to banking, operating BBVA Banco Continental SA in partnership with Banco Bilbao Vizcaya Argentaria SA of Spain.
The global tin market will have a fifth year of deficit in 2014, Barclays said in a Jan. 13 report. Global demand was 344,000 tons in 2013, beating production of 341,000 tons, according to Barclays.
"In the massive oversupply of tin in the 1980s lots of mines went out of business," Kettle said. "Over a very long period stock levels have been trending downwards. We may not be too far off the point where things start getting very tight."