ASSESSMENT OF CRITICAL

**THIN FILM RESOURCES**

**RAF-9-29609**

**TELLURIUM**

**[Introduction]{.underline}**

On April 4, 1999 NREL commissioned an assessment of the availability of
tellurium resources in relation to the potential substantial increase of
tellurium use in photo voltaic (PV) solar cells. The tasks to be
accomplished in this study consist of the following:

-   Provide general background information on tellurium.

-   Identify current suppliers (distributors and producers) of
    tellurium.

-   Describe production methods for tellurium.

-   Determine production capacity and output potential

-   Quantify solar cell industry tellurium demand

-   Identify current and potential tellurium resources.

-   Quantify ability of producers to scale up production for tellurium.

-   Determine likelihood of new market entrants for tellurium should
    demand and or price increase.

-   Analysis of tellurium market stability at various pricing scenarios
    (2,4,8 times increase over current price).

**[Background]{.underline}**

Tellurium was discovered in 1782 in a complex group of gold telluride
minerals in the ores of Transylvania (Romania) by Austrian chemist
Joseph Franz Mueller von Reichenstein. The element was named after the
Latin word "tellus" meaning earth. The discovery of the Seebeck effect
(conversion of heat to electricity) in 1822 and the Peltier effect
(conversion of electricity to heat) in 1834 opened the way for the
utilization of tellurium in thermoelectric devices (Ageton, 1969).

Tellurium is one of the least abundant elements and tends mostly to form
its own elements in metallic sulfide deposits. Widely distributed in
nature, tellurium is a constituent in over 40 minerals. The most
significant associations are with sulfide minerals of copper, lead, zinc
and iron. Other less common associations are with precious metals and
platinum group metals. Tellurium is a nonmetallic element; its atomic
number is 52 and atomic weight is 127.6; and it exists in eight stable
isotopes. The specific gravity of tellurium is 6.24 and melts at 452 C°.
(Davidson, Lakin, 1973)

As of 1997 tellurium was used primarily as free machining additives to
steel. Other uses included catalysts, chemical uses, nonferrous alloys,
photoreceptors and thermoelectric devices.(Brown, 1997)

**[Production Methods]{.underline}**

The concentration of tellurium in copper, lead, massive sulfides
(complexes primarily of copper/lead/zinc) gold and platinum group ores
is overall very low. The estimated tellurium content shown in Table 1 is
per refined ton of metal from these deposits or regions. It should be
noted that the tellurium values in the table are averages and that
individual deposits in the different regions may have substantially more
or less tellurium than the average.

**[Table 1]{.underline}**

**Tellurium Concentration**

**Deposit/Region Pounds Per Refined Ton Of Metal**

U.S. Porphyry Copper Deposits 0.4

Sudbury Canada Massive Sulfide Deposits 0.06

World Wide Lead Ore Deposits 0.1

Peru Porphyry Copper Deposits 0.2

Chile Porphyry Copper Deposits 0.4

Congo Copper Deposits 0.4

Zambia Copper Deposits 0.4

Russian/CIS Copper Nickel-Copper, Massive Sulfide

Deposits 0.4

Mexican Copper and Massive Sulfide Deposits 0.4

Australia/New Guinea Copper Deposits 0.4

Japan/Philippines/Chinese Copper and Massive Sulfide

Deposits 0.4

European Copper and Massive Sulfide Deposits 0.4

The majority of tellurium produced comes from the precious-metals-rich
anode slimes that accumulate during the electrolytic refining of
copper.(Jensen, 1985) Lesser amounts of tellurium are also recovered
from soda slag skimmings generated in lead refining (Brown, 1997) ;
nickel/copper leach solutions generated in platinum group metals
refining (Mining Journal, 1998); and flotation concentrates generated
from gold milling (Suttill, 1991).

There are several different methods for recovering tellurium from the
various refining processes. Basic recovery methods are detailed in the
descriptions to follow. Refinements and modifications of these methods
by the operators have taken place and are considered proprietary.

[Electrolytic Copper Refining-Anode Slime Processing]{.underline}

[Recovery Method 1]{.underline}- Slimes are roasted at high temperatures
with sodium bisulfate. Sulfuric acid is used to oxidize copper minerals
and to volatilize selenium from the slimes. Copper is then leached from
the crushed slime residue with water and a subsequent leach with sodium
hydroxide dissolves the tellurium. The insoluble slime residue is
smelted in a dore´ furnace to recover the precious metals.(Jensen, 1985)

[Recovery Method 2]{.underline} - An alternative method is to oxidize
both selenium and tellurium in concentrated sulfuric acid to the soluble
plus VI valence state. The tellurium is then precipitated by adjusting
the pH to 7 with sodium hydroxide.(Jensen, 1985)

[Lead Refining-Soda Slag Processing]{.underline}

Tellurium and selenium obtained from furnace soda slag are leached with
water and sent to neutralization tanks where tellurium is precipitated
from the selenium solution.(Jensen, 1985)

[Platinum Group Metals Refining - Nickel/Copper Leaching]{.underline}

Copper-nickel rich matte is leached in a series of pressure leach
autoclaves and atmospheric leach tanks which leach the nickel, copper,
other associated base metals, selenium and tellurium. A copper cement
rich in selenium and tellurium is produced from this process. (Mining
Journal, 1998)

[Gold Milling-Gold/Telluride Processing]{.underline}

Tellurides are refractory to cyanidation and must be removed and treated
separately. Ore is crushed and the telluride is floated to produce a
concentrate. The concentrate is leached with a 5% solution of calcium
oxychloride and a 5% solution of sodium hydroxide to dissolve and
precipitate the tellurium as calcium tellurate. (Suttill, 1991)

For all of the processing methods described, approximately 0.17 pounds
(43%) to 0.14 pounds (35%) of the 0.4 pounds (average content) of
contained tellurium is recovered (Davidson, Lakin, 1973). The main focus
of all of the processing methods is to maximize the recoveries of
precious metals. If sufficient price and demand incentives were in place
for tellurium, recovery percentages could increase.

The final product derived from all of the processing methods is a
tellurium oxide of variable purity. Generally, this tellurium sludge or
precipitate is sent to specialized refining facilities for final
processing into high purity tellurium products. Tellurium and tellurium
dioxide sludges or precipitates are purified to commercial grades by
repeated dissolution and selective precipitation or by thermal reduction
or electrolysis. Commercial grade tellurium is 99.7% tellurium, 0.003%
lead, 0.02% selenium, 0.004% silica and 0.015% copper. The high purity
tellurium is prepared by distillation and sublimation procedures under
vacuum and further purified by a series of zone melting and refining
steps. High purity tellurium is 99.9% to 99.9999% pure and is sold as
ingots, sticks, granules, powder or lumps. (Jensen, 1985), (Ageton,
1969).

**[Current Suppliers (Producers, Distributors)]{.underline}**

Throughout the world there are numerous processing facilities who
produce tellurium products in three categories:

-   Tellurium Dioxides - Sludges and precipitates of variable purity
    around 35%.

-   Commercial Grade Tellurium - 99.7% purity

-   High Purity Tellurium - 99.9% to 99.9999%+

The organizations who produce tellurium products of variable quality;
commercial grade; and high purity are profiled in the following list.
Research has indicated that, because of current low demand, several of
the facilities listed no longer recover tellurium. If improving market
conditions would warrant, these facilities could again recover tellurium
with a minimum amount of effort.

Company : **Phelps Dodge**

Facility Location : El Paso, Texas

Phone : 800-223-8567

Type Operation : Refinery

Tellurium Product Output : Variable grade tellurium dioxide

Tellurium Source : Trace amounts of Te contained in porphyry copper

deposits

Company : **Asarco**

Facility Locations : Amarillo, Texas

Denver, Colorado

Phone : 806-383-2201 Amarillo

303-296-5900 Denver

Type Operations : Refinery - Amarillo

High Purity Metals Processing-Globe Plant - Denver

Tellurium Product Output : Amarillo - Commercial grade tellurium

Tellurium dioxide

Denver - High purity Tellurium

Tellurium Source : Trace amounts of Te contained in porphyry copper

deposits and potentially other types of deposits.

Company : **Dowa**

Facility Locations : Japan

Phone : 03-3201-1062

Type Operation : Refinery

Tellurium Product Output : Tellurium Dioxide

Commercial grade tellurium?

Tellurium Source : Copper and massive sulfide ores and concentrates from

Australia and other parts of the world including some

Japanese production.

Company : **Pacific Rare Metals Industries Inc. (Subsidiary of**

**Lewer Corporation)**

Facility Location : Manila, Philippines

Phone : 612-9363-9741 (Sydney Australia Office)

Tellurium Product Output : Commercial Grade Tellurium

High Purity Tellurium

Tellurium Source : Copper and massive sulfide slimes and sludges from

refineries around the world.

Company : **Noranda Metallurgy Inc. (Subsidiary of Noranda Inc.)**

Facility Locations : Montreal, Quebec, Canada - CCR Refinery

Saint Laurent, Quebec

Phone : 416-982-7423 (Toronto Office)

Type Operations : Refinery - Montreal

High Purity Metals Processing Plant - Saint Laurent

Tellurium Product Output : CCR Refinery - Tellurium dioxide

Saint Laurent - High Purity Tellurium

Tellurium Source : Base metal and massive sulfide deposits controlled by

Noranda and possibly other sources

Company : **Inco**

Facility Location : Copper Cliff, Ontario, Canada

Phone : 705-682-4211

Type Operation : Smelter and Refinery

Tellurium Product Output : Tellurium dioxide - variable purity

Tellurium Source : Copper-nickel deposits controlled by Inco

Company : **Alamalyk Mining and Metallurgical Combine**

**(AMMC is a Government run company)**

Facility Location : Uzbekistan - Various locations

Phone : 988-261-43-03-03

Type operation : Smelter and refinery

Tellurium Product Output : Tellurium Oxide - variable purity

Tellurium Source : Copper-gold- molybdenum mine in Uzbekistan

Company : **Kazakh Polymetals**

Facility Location : Kazakhstan

Phone : 49-10-00 (Additionally requires intln. access #'s)

Type Operation : Smelter, refinery, metal processing

Tellurium Product Output : Commercial grade tellurium

Tellurium Source : Various complex sulfide deposits in Kazakhstan

Company : **Balkhash Integrated Mining and Metallurgical Works**

Facility Location : Kazakhstan

Phone : 2-20-35 (Additionally requires intln. access #'s)

Type Operation : Smelter, refinery, metal processing

Tellurium Product Output : Commercial grade tellurium

Tellurium Source : Copper-molybdenum, copper-nickel and massive sulfide

deposits in Kazakhstan

Company : **Chimkent Lead Works**

Facility Location : Kazakhstan

Phone : 12-39-35 (Additionally requires intln. access #'s)

Type Operation : Smelter, refinery

Tellurium Product Output : Tellurium oxide concentrates

Tellurium Source : Lead zinc deposits in Kazakhstan

Company : **Norilsk Mining and Metallurgical Combine**

Facility Location : Russia-Krasnoyarsk Region

Phone : No listed number

Type Operation : Smelter, Refinery

Tellurium Product Output : Tellurium oxide

Commercial grade tellurium?

Tellurium Source : Nickel-copper, gold, platinum deposits in the Norilsk

District.

Company : **Krastsvtmet Plant**

Facility Location : Russia

Phone : No listed number

Type Operation : Smelter, Refinery

Tellurium Product Output : Tellurium Oxide

Commercial grade Tellurium?

Tellurium Source : Copper and base metal mineral deposits in Russia.

Company : **Uralelectromed Combine**

Facility Location : Russia - Urals

Phone : No listed number

Type Operation : Smelter, Refinery

Tellurium Product Output : Tellurium Oxide

Commercial grade tellurium

Telllurium Source : Copper and base metal deposits in Russia

Company : **Kyshtym Electrolytic Copper Plant**

Facility Location : Russia

Phone : No listed number

Type Operation : Smelter, Refinery

Tellurium Product Output : Tellurium Oxide

Tellurium Source : Copper deposits in Russia

Company : **Centromin (Government Company)**

Facility Location : Central Peru

Phone :511-476-9264

Type Operation : Smelter, Refinery

Tellurium Product Output : Tellurium Dioxide

Commercial Grade Tellurium

Tellurium Source : Copper; lead-zinc deposits in Peru

Company : **Southern Peru Copper Corp (Subsidary of a JV in**

**which Asarco is a majority owner**

Facility Location : West central Peru - Ilo

Phone :212-510-2147 (Asarco Home Office)

Type Operation : Refinery

Tellurium Product Output : Tellurium Dioxide

Tellurium Source : Asarco controlled copper mines in Peru plus possibly
some

other non company controlled sources

Company : **Metallurgie Hoboken Overpelt (Sogem?)**

(Believed to have commercial tie in to Union Miniere)

Facility Location : Belgium

Phone : 32-2-227-77-77 (Sogem)

Type Operation : Refinery

Tellurium Product Output : Tellurium Dioxide

Tellurium Source : European lead-zinc deposits and others world wide

Company : **Nippon Mining Co. Ltd.**

Facility Location : Japan

Phone : 8-135573-7332

Type Operation : Smelter, Refinery

Tellurium Product Output : Tellurium Dioxide

Tellurium Source : Copper and base metal concentrates from around the
world

Company : **Mitsubishi Metal Corp.**

Facility Location : Japan

Phone : 3-5800-9373

Type Operation : Smelter, Refinery

Tellurium Product Output : Tellurium Dioxide

Tellurium Source : Copper and base metal concentrates from around the
world

Company : **Mitsui Mining and Smelting**

Facility Location : Japan

Phone : 8-133778-6029

Type Operation : Smelter, Refinery

Tellurium Product Output : Tellurium Dioxide

Tellurium Source : Copper and base metal concentrates from around the
world

Company : **Sumitomo Metal Mining**

Facility Location : Japan

Phone : 8-133436-7801

Type Operation : Smelter, Refinery

Tellurium Product Output : Tellurium Dioxide

Tellurium Source : Copper and base metal concentrates from around the
world

Company : **China Nonferrous Metal Industry Corp.**

**(Government Controlled)**

Facility Locations : Throughout China

Phone : No listed number

Type Operations : Smelters, Refineries

Tellurium Product Output : Tellurium Dioxide

Commercial grade tellurium

Tellurium Source : Copper; lead-zinc deposits throughout china

Comment : The Chinese mineral and processing industry is in a

state of flux with some operations being privatized

and new non government controlled mines and smelters

being developed. The sources for the tellurium coming

from China today are overall not well documented.

Company : **Outokumpu Harjavalta Metals Oy**

Facility Location : Finland

Phone : 358-2-626-5240

Type Operation : Refinery

Tellurium Product Output : Tellurium Dioxide

Tellurium Source : Smelter products from copper and massive sulfide
deposits located throughout the world

Company : **Atomergic Chemetals Corp.**

Facility Locations : Farmingdale, New York

Moscow, Russia

Phone : 516-694-9000

Type Operation : High Purity Metals Processing

Tellurium Product Output : High Purity Tellurium

Tellurium Source : Purchased from a variety of sources

Company : **All-Chemie Ltd.**

Facility Location : Mount Pleasant, South Carolina

Phone : 843-884-4400

Type Operation : High Purity Metals Procesing

Tellurium Product Output : High Purity Tellurium

Tellurium Source : Purchased from China and other sources

Company : **Cabot Performance Materials**

Facility Location : Boyertown, Pennsylvania

Phone : 800-531-3676

Type Operation : High Purity Metals Processing

Tellurium Product Output : High Purity Tellurium

Tellurium Source : Purchased from a variety of sources

Company : **Metaleurop Group**

Facility Location : Langelsheim, Germany

Phone : 49-0-5326-507-410

Type Operation : High Purity Metals Processing

Tellurium Product Output : High Purity Tellurium

Tellurium Source : Company controlled lead-zinc and copper deposits in

Europe

Company : **Johnson Matthey Electronics/Alfa Aesar**

Facility Locations : Royston, United Kingdom

Brimsdown, United Kingdom

West Deptford, United States

Phone : 702-896-3773

Type Operation : High Purity Metals Processing

Tellurium Product Output : High Purity Tellurium

Tellurium Source : Purchased from a supplier

Company : **MCP Group**

Facility Location : United Kingdom

Phone : 203-384-0331

Type Operation : High Purity Metals Processing

Tellurium Product Output : High Purity Tellurium

Tellurium Sources : Open market purchase from a variety of sources

In the United States four companies purchase and resell tellurium with
no additional processing and are listed as follows:

-   Stanford Metals - San Mateo, California - 650-348-3482

-   Goodfellow Corp. - Berwyn, Pennsylvania - 800-821-2870

-   Atlantic Equipment Engineers - Bergenfield, New Jersey -

    201-384-5606

-   Belmont Metals - Brooklyn, New York - 718-342-4900

**[Production Capacity/Output Potential]{.underline}**

The yearly production of tellurium ranged between 200 and 300 metric
tons per year in 1997 and did not significantly change in 1998.(Bokovay,
1999). Currently, there is a substantial under utilization of capacity
for the production of tellurium. If there was sufficient demand
approximately 50% of all tellurium contained in refined copper and lead
could be recovered (the 50% recovery rate assumes process efficiencies
over the standard 35 % recovery rates of 15 years ago). Shown in the
tables to follow are tons of refined copper (Edelstein, 1997) and lead
(Smith, 1997) for the world for 1997. Only countries with production
over 100,000 tons of refined copper and 50,000 tons of refined lead are
considered in this tellurium content and recovery estimate. Assuming an
average tellurium content of 0.4 pounds per refined ton of copper
(Davidson, Lankin, 1973) and 0.1 pounds per refined ton of lead (Jensen,
1985) plus a 50% recovery rate; an estimate can be made of total
possible tellurium output per year.

**[Table 2]{.underline}**

**Total Possible**

**Tons Production Contained Contained Te Production/Yr.**

**Country Electrolytic Copper Te (Pounds) Metric Tons (50% Rec.)
M/Tons**

United States 1,730,000 548,000 249 124

Australia 490,000 196,000 89 44

Canada 654,700 261,880 118 59

Chile 2,511,000 1,004,400 455 227

China 414,000 165,600 75 37

Bulgaria 100,000 40,000 18 9

Indonesia 529,000 211,648 96 48

Iran 108,000 43,200 20 10

Kazakhstan 316,000 126,400 57 28

Mexico 342,319 136,928 62 31

Mongolia 125,300 50,120 23 11

Paupa New Guinea 111,700 44,680 20 10

Peru 391,265 78,253 35 17

Poland 414,000 165,600 75 37

Portugal 106,500 42,600 19 9

Russia 505,000 202,000 92 46

South Africa 186,000 74,400 34 17

Zambia 287,000 114,800 52 26

**TOTAL 9,321,784 1,589 795**

Note: Tellurium tonnage calculations rounded.

**[Table 3]{.underline}**

**Total Possible**

**Tons Production Contained Contained Te Production/Yr.**

**Country Refined Lead Te (Pounds) Metric Tons (50% Rec.) M/Tons**

United States 343,000 34,300 16 8

Australia 204,000 20,400 9 4.5

Belgium 84,400 8,440 4 2

Bulgaria 60,000 6,000 3 1.5

Canada 162,000 16,200 7 3.5

China 506,000 50,600 23 11.5

France 115,000 11,500 5 2.5

Germany 90,000 9,000 4 2

India 69.000 6,900 3 1.5

Italy 115,000 11,500 5 2.5

Japan 142,326 14,233 6 3

Kazakhstan 65,000 6,500 3 1.5

Korea(North) 75,000 7,500 3 1.5

Korea(Republic) 121,296 12,130 6 3

Mexico 168,164 16,816 8 4

Morocco 64,200 6,420 3 1.5

Peru 86,105 8,611 4 2

Poland 50,000 5,000 2 1

Sweden 50,000 5,000 2 1

United Kingdom 215,000 21,524 11 5.5

**TOTAL 2,785,491 127 64**

Note: Tellurium tonnage calculations rounded.

The combined production potential from copper and lead refining totals
859 metric tons of tellurium for 1997. The actual production of
tellurium for 1997 ranges between 200 and 300 metric tons (250 metric
tons average). The capacity utilization is estimated to be 29%. It has
been indicated that tellurium producers are capable of achieving higher
recovery rates if the demand was present. Because of the proprietary
nature of the various tellurium recovery processes it is not possible to
determine the ultimate recovery efficiencies. With current refining
practices for copper and lead coupled with generally consistent yearly
metal product output, it is estimated that 859 metric tons to 1,716
metric tons of tellurium could be produced per year if demand warranted.

**[Solar Cell Industry/Tellurium Demand]{.underline}**

Discussions were held with industry and government (NREL) officials
concerning the current and estimated future demand of tellurium for use
in solar panels. Because solar powered electrical generation is an
emerging industry, future demand for tellurium in this application can
only be roughly estimated. Considering current and expected
efficiencies, it has been estimated that between 130 and 90 kg of
tellurium is necessary for each Mw of generated power. Solar cell
materials utilization efficiencies in which less tellurium per Mw is
used has been factored into the demand estimate. Manufacturing
efficiencies have also been considered in this consumption estimate.
Current manufacturing techniques result in tellurium losses of around
40% (Zweibel, 1999). As manufacturing techniques improve these losses
could drop to approximately 10%. For the purpose of this tellurium
demand estimate, no recovery of tellurium lost in the manufacturing
process or tellurium potentially recoverable from recycled solar panels
is considered. Table 4 shows NREL's tellurium demand estimate for a
slow, medium and fast track solar generated electrical power. Table 5
shows the range of private industry estimates of potential tellurium
demand.

**[Table 4]{.underline}**

**Development Rate**

**Year Item Slow Medium Fast**

2000

Mw PV Generated Power 1 5 10

Consumption of Te (Kg/Mw) 130 130 130

\% Manufacturing Loss 40 40 40

Consumption of Te in Metric Tons **0.2** **1** **2**

2005 Mw PV Generated Power 5 25 100

Consumption of Te (Kg/Mw) 130 130 130

\% Manufacturing Loss 30 30 30

Consumption of Te in Metric Tons **1 5 19**

2010 Mw PV Generated Power 25 100 1,000

Consumption of Te (Kg/Mw) 90 90 90

\% Manufacturing Loss 20 20 20

Consumption of Te in Metric Tons **3 11 112**

2020 Mw PV Generated Power 100 500 10,000

Consumption of Te (Kg/Mw) 90 90 90

\% Manufacturing Loss 10 10 10

Consumption of Te in Metric Tons **10 50 1,000**

2030 Mw Pv Generated Power 500 2,000 30,000

Consumption of Te (Kg/Mw) 90 90 90

\% Manufacturing Loss 10 10 10

Consumption of Te in Metric Tons **50 200 3,000**

Note: Tellurium Tonnage calculations rounded

**[Table 5]{.underline}**

**Development Rate**

**Year Item Slow Medium Fast**

2000 Mw Generated Power 2 5 10

Consumption of Te (Kg/Mw) 130 130 130

\% Manufacturing Loss 40 40 40

Consumption of Te in Metric Tons **0.4 1 2**

2005 Mw Generated Power 10 25 500

Consumption of Te (Kg/Mw) 130 130 130

\% Manufacturing Loss 20 20 20

Consumption of Te in Metric Tons **1 3 82**

2010 Mw Generated Power 25 40 3,000

Consumption of Te (Kg/Mw) 90 90 90

\% Manufacturing Loss 10 10 10

Consumption of Te in Metric Tons **2.5 4 300**

Note: Tellurium tonnage calculations rounded

If the most optimistic PV industry development is considered,
approximately 300 metric tons of tellurium per year will be required by
the year 2010. With current minimum potential production capacity per
year at 859 metric tons and non PV tellurium usage estimated at 400
metric tons per year there does not appear to be a short fall of
production. The current tellurium sources will be adequate to meet
increased demand. By the year 2020 (considering the most optimistic
scenario) PV demand per year is estimated to be 1,000 metric tons and
non PV tellurium demand is estimated to be 600 metric tons. The 1,600
total metric tons is greater than the 859 metric tons that can be
produced at a 50% recovery rate but still within the possible tellurium
recovery range (assuming greater recovery efficiencies) of 1,716 metric
tons. Beyond the year 2020 new sources of tellurium will have to be
developed in order to meet any increasing demand by the PV industry.

**[Current Tellurium Resources]{.underline}**

Currently, the source of over 80% of the tellurium produced comes from
copper mining with most of the remainder coming from lead, lead-zinc and
massive sulfide (copper-lead-zinc- precious metals) mining. These active
mines world wide have the capability to produce at least 859 metric tons
of tellurium per year and most likely an ability to produce closer to
the maximum potential of 1,716 metric tons per year if demand was
sufficient.

Under current practices, generally only enough tellurium is recovered
from the mineral processing in a given year to meet demand. Tellurium
not recovered is permanently lost. No economic process exists today for
recovering the tellurium that is not initially captured.

Since the majority of tellurium produced comes from copper mining, an
estimate of total contained tellurium from this source has been made. It
is believed that copper mining will continue to be the primary source of
tellurium because of the in-place tellurium recovery infrastructure.
Until tellurium demand exceeds the ability of the copper industry to
recover tellurium, no significant changes in this business structure is
expected to take place. Shown in Table 6 are the copper reserves
estimated by countries. These copper reserve and reserve base estimates
were derived from the 1996 USGS Mineral Commodity Summary for copper.

**[Table 6]{.underline}**

**Reserves Reserve Base ^1^ Total**

**Contained Cu Contained Te Contained Cu Contained Te Contained Te**

**Country Metric Tons Metric Tons Metric Tons Metric Tons Metric Tons**

United States 41,000,000 **8,200** 82,000,000 **16,000 24,200**

Australia 6,000,000 **1,300** 21,000,000 **4,200 5,500**

Canada 10,000,000 **2,000** 21,000,000 **4,200 6,200**

Chile 80,000,000 **16,000** 148,000,000 **30,000 46,000**

China 3,000,000 **500** 7,000,000 **1,500 2,000**

Indonesia 10,000,000 **2,000** 14,000,000 **2,700 4,700**

Kazakhstan 13,000,000 **2,500** 18,000,000 **3,600 6,100**

Peru 6,000,000 **700** 22,000,000 **2,200 2,900**

Philippines 6,000,000 **1,300** 10,000,000 **2,000 3,300**

Poland 18,000,000 **3,600** 33,000,000 **6,500 10,100**

Russia 18,000,000 **3,600** 27,000,000 **5,400 9,000**

Zaire 9,000,000 **1,800** 27,000,000 **5,400 7,200**

Zambia 11,000,000 **2,200** 34,000,000 **6,200 8,400**

Other Countries 50,000,000 **10,000** 91,000,000 **18,000 28,000**

**Total** 281,000,000 **55,700** 549,000,000 **107,900 163,600**

Note: All Figures Rounded

1\. Reserve base is the in-place demonstrated (measured + indicated)
resource from which reserves are estimated. At some time, depending upon
economics, technological changes etc. some or all of the reserve base
may be reclassified as reserves.

In 1997 close to 10 million metric tons of electrolytic copper was
produced world wide. If the assumption is made that this yearly
production rate will remain relatively steady for the foreseeable
future, the currently defined copper reserve and associated tellurium
will be mined out in approximately 28 years. Assuming conditions will
warrant mining the reserve base an additional 55 years of
copper/tellurium production is possible. Considering both the copper
reserve and the reserve base, a total of 83 years of copper production
at a rate of 10 million metric tons per year is considered a reasonable
scenario. Since the contained tellurium can only be recovered by mining
the copper, the yearly possible recovery of tellurium from copper
refining (at current production rates) can approach 1,600 metric tons
(see Table 2).

The reserve and reserve base for lead, lead-zinc and massive sulfide
mineral deposits is similar to that of copper. If current production and
refining rates are maintained for these reserves an additional 100 to
200 metric tons of tellurium could be most likely be produced.

As previously indicated in the Solar Cell Industry/Tellurium Demand
section of this report, the combination of solar cell industry demand
and traditional (non solar) demand is estimated to result in a short
fall of tellurium production by the year 2020.

**[Potential Tellurium Resources]{.underline}**

A world wide review has been made of potential new sources of tellurium
production and include the following categories of occurrences:

-   Potential byproduct tellurium recovery from platinum group metals
    refining.

-   Precious metals deposits with variable tellurium content.

-   Primary tellurium deposits.

-   Mineral Exploration Projects.

-   Copper and other complex base metal occurrences not included in the
    "Current Tellurium Resources" section.

-   Miscellaneous other mineral deposits with associated tellurium.

Overall, the current tellurium resources (copper, lead-zinc, etc.) do
not overlap the potential tellurium resources. Because of the sparse
amount of available data in China, Russia and the CIS countries; some
deposits may be considered in both resource categories. Table 7 is a
compilation of deposits, districts or regions located throughout the
world that are known to contain some variable quantity of tellurium. The
heading "Associated Minerals" indicates the dominate minerals in the
deposit or occurrence. It must be emphasized that there is no
implication of economic viability in any potential recovery of tellurium
from the listed deposits. The listing of occurrences serves as an
indicator of potential sources of tellurium that could be considered for
detailed evaluation should demand necessitate development of new
resources.

**[Table 7]{.underline}**

> **Associated**

**Country Deposit/District/Region Location Minerals**

**Argentina** Cerro Negro District La Rioja Province Ag

**Armenia** Ankadzor Northern Armenia Cu, sulfides

**Australia** Kalgoorlie Western Australia Gold

Kingsgate New South Wales Polymetallic

Lucky Draw-Bathurst District New South Wales Au, Bi

**[Table 7 Continued]{.underline}**

**Associated**

**Country Deposit/District/Region Location Minerals**

**Australia** Mammoth Region NW Queensland Sulfides

Mount Morgan Queensland Polymetallic

**Azerbaijan** Bitti Bulakh Lesser Caucasus Mtns. Cu, As

Kyzylbulag Lesser Caucasus Mtns. Cu

Paragachay Lesser Caucasus Mtns. Cu, Mo

Vejnalinsk Lesser Caucasus Mtns. Cu

**Brazil** Cerrito do Pires Rio Grande do Sul State Au, As, Sb, Bi, Se

Corrego Criminoso District Goias State Au

**Bulgaria** Kamilski Dol Region Eastern Rhodopes Bi

Madan District Southern Bulgaria? Polymetallic

Rossen District Carpatho-Balken Region Cu, Mo

**Canada** Atlin District British Columbia Polymetallic

Beaver Dam Nova Scotia Ag, W

Bigstone Bay Region Ontario Au, Ag

Donaldson West Quebec Ni, Cu

Flin Flon Area Manitoba Polymetallic

Geordie Lake Ontario Sulfides

Great Bear Lake Northwest Territories Ag

Kirkland Lake District Ontario Au, Ag

Red Lake Ontario Au, Ag

Revelstoke Area British Columbia Polymetallic

Rouyn District Quebec Polymetallic

Sudbury District Ontario Polymetallic

**Chile** El Indio NE Chile Au, Ag, Cu

**China** Antimony Ore Belt S. Anhui Province Sb

Chinkuashih Northern China? Sulfides

Coastal Region Southern China Au, Ag

Dashuigou W. Sichuan (Shimian) **Primary Te Dep.**

Guantian Guangdong Province Cu, Sulfides

Guilaizhuang Shandong (Pingyi County) Au

Hadamengou(Wulasham Dist.) Inner Mongolia Au, Sulfides

Heti Northern China? Se

Jinchangyu Inner Mongolia Mo, Ag, Sb, Py.

Li Shui Jiangsu Province Au

Qibaoshan Hunan Province Polymetallic

Xiaoyinpan Inner Mongolia Au, Sulfides

Xiong'er Hunan Province Sulfides

Zhongshangou Inner Mongolia Au, Bi, Sulfides

**Congo (Zaire)** Kinshasa Western Congo Cu

**[Table 7 Continued]{.underline}**

**Associated**

**Country Deposit/District/Region Location Minerals**

**Czech Republic** Bohemian Massif W. Czech Republic Polymetallic

Petkovic Orahovac Massif Co, Ni, Cu

Smolotely Pribram Area Bi

**Egypt** Eastern Desert Region Eastern Egypt Cu, PGM's

**Ethiopia** Legi Dembi Central Ethiopia Au/Ag/Pb/Zn/Cu

**Federated**

**States of**

**Micronesia** Yap Yap Island Au, Ag

**Fiji** Emperor Viti Levu Island Au, Ag

Vahatala Viti Levu Island Au, Ag

Vatukoula District Viti Levu Island Au, Ag

**Finland** Hattu Schist Belt Eastern Finland Au

Ramepuro Eastern Finland Au

**France** Argentera French-Italian Alps Polymetallic

Vialas SE France? Polymetallic

**Georgia** Misc. Deposits Country Wide Sulfides

**Germany** Central Rhodope Massif Eastern Germany Pb, Zn

Kupferschiefer Harz Area Polymetallic

**Greece** Hellenic Region Central Greece Polymetallic

Macedonia Northern Greece Polymetallic

**Honduras** Misc. Districts Country Wide Polymetallic

**India** Bhandara Maharashtra State Polymetalic

Khetri Northern India? Cu

Nagpur Maharashtra State Polymetallic

Rakha Northern India? Polymetallic

**Indonesia** Misc Districts Irian Jaya Polymetallic

> Salida Sumatra? Au, Ag

**Italy** Several Districts Sardinia Polymetallic

**Japan** Date Mine Hokkaido, Island Au

Honshu Honshu Island Cu/Pb/Zn/Fe

Iriki Mine Kagoshima Pref. Cu/Ag/Mo/Sb

Kawazu Mine Shizuoka Pref. NK

Kinkie Mine Hokkaido, Island NK

**[Table 7 Continued]{.underline}**

**Associated**

**Country Deposit/District/Region Location Minerals**

**Japan** Kobetsuzawa Mine Sapporo, Hokkaido Nk

Kushikino Mine Kagoshima Pref. Ag, Au

Nojiri Mine Iwate Pref. Au, Ag

Okuyama Mine Izu Peninsula NK

Suttsu Mine Hokkaido, Island Ag/Bi/Se/S

Suzaki Mine Izu Peninsula Au

Takeno Mine Hokkaido, Island NK

Teine Mine Hokkaido, Island NK

Tsuomo Mine SW Japan NK

**Kazakhstan** Aktogay E. Central Kazakhstan NK

Asubulak E. Central Kazakhstan NK

Aydaryl E. Central Kazakhstan NK

Boshchekal E. Central Kazakhstan Cu, Mo

> Copper-Gold Deposits Country Wide Cu, Au
>
> Kalba Altai Mtns. Sulfides
>
> Kosmurun Central Kazakhstan Cu, S, Se
>
> Ognevka E. Central Kazakhstan NK
>
> Ridder-Sokol Altai Mtns. Se
>
> Rudny Altai Mtns. Polymetallics, Se
>
> Tishin Altai Mtns. Se
>
> Zyranovsk Altai Mtns. Ag

**Korea**

**(Republic Of)** Imcheon Mine Western Korea Au, Ag

Tongyoung Western Korea Au, Ag

**Malagasy Rep.** Madagascar -Pegmitite Madagascar Island Cu, Bi

**Mexico** Bambolla Mine Moctezuma Dist., Sonora Au, Ag

Francisco I. Madero Zacatecas State Polymetallic

Moctezuma District Sonora State Au, Ag

Sahuayacan Sonora State Au, Ag

San Francisco Sonora State Au, Ag

San Miguel Moctezuma Dist., Sonora Au, Ag

Sierra Blanca Moctezuma Dist., Sonora Au, Ag

Sierra La Cieneguita Sonora State Polymetallic

**Morocco** Alma-Idouska Western Anti-Atlas Cu

**Norway** Kells Creek Oppdal-Central Norway Polymetallic

Middavarre Northern Norway Cu

North Troms Northern Norway Polymetallic

Vaddas Rieppe Northern Norway Polymetallic

**Palau** Palau District Palau Island Au, Ag

**[Table 7 Continued]{.underline}**

**Associated**

**Country Deposit/District/Region Location Minerals**

**Papua New**

**Guinea** Mt. Kare Central Highlands Au, Ag

Porgera Central Highlands Au, Ag, Cu

**Peru** Ilo Region S. Central Peru Cu

Oroya Region N. Central Peru Cu

Yauricocha Central Peru Au, Ag

**Philippines** Baguio District Negros Occidental? Au, Ag, Cu

Bulawan Negros Occidental Au, Ag

Exciban Negros Occidental? Au, Ag, Cu

**Poland** Fore-Sudetic Deposit Lubin Area Cu

**Romania** Deva Area Transylvania Polymetallic

Musariu Brad Region Metaliferi Mtns. Au, Ag

Nagyag Central Romania? Au, Ag

Scaramb Deposit S. Apuseni Mtns. Au, Ag

Scaramb Region S. Apuseni Mtns. Au, Ag

**Russia** Allarechenskiy District Kola Peninsula Sulfides

Ardino Urals? Ag, Bi

Boshchekul Urals? Cu, Mo, Se

Caucasus Region Southern Russia Polymetallic

Chatkal Region Kurama Mtns. Polymetallic

Eastern Slope Region Southern Urals Polymetallic

Eastern Transbaikalia Urals? Bi, Au

Evanskoe Eastern Siberia NK

Filizchay District Urals? NK

Kamchatka District Eastern Russia Au

Kremnica District Urals? NK

Kuekvun Eastern Siberia NK

Kuranakh Western Russia? Au, Mn

Makanskoge Southern Urals Polymetallic

Monchegorsk District Northern Russia? Cu, Ni, Ag, Pb Northern Caucasus
Region Southern Russia Cu, Pb, Zn

North Onki Murmansk Reion NK

Noril'sk Region Norhtern Russia PGM's, Ni, Cu

Oktyabar Noril'sk PGM's Ni, Cu, Ag

Pelvuntykoinen Eastern Siberia NK

Prasolovskoye Kunashir Island Au, Ag, Se

Priorsk Urals? Se

Sevkar Sarigyukh Region Mn

Shkolny Eastern Siberia NK

Sultanskoe Caucasus Region NK

Talnakh Noril'sk Cu, Ni, Sulfides

Transcaucasia Region Southern Russia Au

Tyrnyauz Southern Russia? Mo, Au, Bi

**[Table 7 Continued]{.underline}**

**Associated**

**Country Deposit/District/Region Location Minerals**

**Russia** Urals Region Centeral Urals Mtns. Au

Uzelginsk Urals? Sulfides

Verkhne-Kolyma Region Northeast Russia Sulfides, Au

**Saudi Arabia** Mahd Adh Dhahab S. Central Saudi Arabia Au, Ag

**Scotland** Ratagan Northwest Scotland Au, Ag

**Slovakia** Kramnica Central Slovakia? Polymetallic

Stivnica-Hodrusa District Central Slovakia Polymetallic

Zlata Bana Region Slanske Vrchy Mtns. Polymetallic

**South Africa** Merenski Reef Region Bushveld Complex-Transvaal PGM's

**Spain** Rodalquilar Southern Spain Au, Ag

**Sweden** Ballek Northern Sweden Polymetallic

> Boliden District North Central Sweden Polymetallic

**Tajikistan** Chashmaniat Central Tajikistan Bi

Maykura Central Tajikistan Sn, W

**Turkey** Murgel District NE Turkey Cu

**Ukraine** Talnov Western Ukraine? As, Bi

**United States** American Eagle Idaho, Cty., ID Au, Ag

Anacortes Group Okanogan Cty., WA Au, Ag

Aniak-Bethl Alaska Au, Ag

Badger King Blaine Cty., MT Au, Ag

Bear Creek San Juan Cty., CO Au, Ag

Bessie G Montezuma Cty., CO Au, Ag

Big Grassy Group Fergus Cty., MT Au, Ag

Black Mtn.-Miners Gulch Hill Cty., MT NK

Bonanza Queen Snohomish Cty., WA Au, Ag

Boulder Cty., Deposits Boulder Cty., CO Au, Ag

Boundary-Red Mtn. Whatcom Cty., WA Au, Ag

Brewer Chesterfield Cty., SC Au, Ag

Bridger Mine Carbon Cty., WY Au, Ag

Bright Star Custer Cty., ID Au, Ag

Bunker Hill Josephine Cty., OR Au, Ag

Calaveras District Calaveras Cty., CA Au, Ag

Circle District Alaska Au, Ag

Cornucopia Baker Cty., OR Au, Ag

Cortez-Buckhorn Eureka Cty., NV Au, Ag

Cripple Creek District Teller Cty., CO Au, Ag

Ely District White Pine Cty., NV Au, Ag

Empire District Clear Creek Cty., CO Au, Ag

**[Table 7 Continued]{.underline}**

**Associated**

**Country Deposit/District/Region Location Minerals**

**United States** Eureka-Hamburg Eureka Cty., NV Au, Ag

Eureka Mine Josephine Cty., OR Au, Ag

Gies Mine Fergus Cty., MT Au, Ag, V

Gold Hill Boulder Cty., CO Au, Ag

Gold Hill Yavapai Cty., AZ Au, Ag

Gold King White Pine Cty., NV Au, Ag

Gold Mint Lyon Cty., NV Au, Ag

Golden Chariot San Diego Cty., CA Au, Ag

Golden Circle Hancock Cty., ME NK

Golden Quail San Bernardino Cty., CA Polymetallic

Golden Shear La Plata Cty., CO Au, Ag

Golden Sunlight Jefferson Cty., MT Au, Ag

Goldfield District Nye Cty., Nevada Au, Ag

Grandview Coconino Cty., AZ Au, Ag

Green Glory La Paz Cty., AZ NK

Greenback Pima Cty., AZ NK

Griffith Clear Creek Cty., CO Au, Ag

Harrison Deerlodge Cty., MT Au, Ag

Hazel Mine Group Montezuma Cty., CO Au, Ag

Holbrook Idaho, Cty., ID Au, Ag

Horseshoe Lode Douglas Cty., OR Au, Ag

Idaho Springs District Clear Creek Cty., CO Au, Ag

Iditarod Alaska NK

Independence Colfax Cty., NM Au, Ag

Irwin Mo Prospect Jackson Cty., OR Mo

Jamestown Tuolumne Cty., CA Au, Ag

Kendall District Fergus Cty., MT Au, Ag

Klondyke Saguache Cty., CO Au, Ag

Kensington Mine Alaska Au, Ag

La Plata Mtns. La Plata Cty., CO Au, Ag

Lake City District Hinsdale Cty., CO Au, Ag

Leadville District Lake Cty., CO Au, Ag

Little Johnny Jackson Cty., OR Au, Ag

Lone Pine Grant Cty, NM Au, Ag

Lone Pine/Wilcox Catron Cty., NM Au, Ag

Lucky Queen Josephine Cty., OR Au, Ag

Mayflower Mine Madison Cty., MT Au, Ag

> McPherson Prospect Josephine Cty., OR Au, Ag
>
> Mill Canyon Eureka/Lander Ctys., NV Au, Ag
>
> Molybdenum Prospect Jackson Cty., OR Mo

Neglected La Plata Cty., CO Au, Ag

North Moccasin District Fergus Cty., MT Au, Ag

North Star Alaska Au, Ag

Nuka Bay-Kenai Alaska Au, Ag

Opp Mine Jackson Cty., OR NK

Organ District Dona Ana Cty., NM Au, Ag, Cu

Oriole Mine Josephine Cty., OR Au, Ag

Petsite Idaho Cty., ID Au, Ag

**[Table 7 Continued]{.underline}**

**Associated**

**Country Deposit/District/Region Location Minerals**

**United States** Plainview Pershing Cty., NV Au, Ag

Porcupine Mine Josephine Cty., OR Au, Ag

Red Top Mine Eureka Cty., NV Au, Ag

Rex-Gold Hill Boulder Cty., CO Au, Ag

San Juan Nat. Forest San Juan Cty., CO Au, Ag

Silver City NW Grant Cty., NM NK

Silver Drip Catron Cty., NM Au, Ag

Spotted Horse Fergus Cty., MT Au, Ag

St. Kevin Boulder Cty., CO Au, Ag

Staten Island Richmond Cty., NY NK

Stillwater Stillwater Cty., MT PGM's

Sugarloaf Boulder Cty., CO Au, Ag

Surprise Mine Blaine Cty., MT Au, Ag

> Telluride District San Miguel Cty., CO Au, Ag
>
> Tellurium Group Valley Cty., ID Au, Ag
>
> Tombstone Cochise Cty., AZ Au, Ag
>
> Tuluksak-Kuskokwim Alaska Au, Ag
>
> Tungsten Reef Cochise Cty., Az W, Au, Ag
>
> Valdez Creek Alaska Au, Ag
>
> Virgin Islands Group Virgin Islands NK
>
> Voght Alaska Au, Ag
>
> Vulcan Gunnison Cty., CO Polymetallic
>
> Washington Idaho Cty., ID Au, Ag
>
> Watchtower Lemhi Cty, ID Au, Ag
>
> Wenatchee District Chelan Cty., WA Au, Ag
>
> Whitehall Virginia Au, Bi
>
> Winters Prospect Josephine Cty., OR Au, Ag
>
> Zortman-Landusky Phillips Cty., MT Au, Ag

**Uzbekistan** Kayragach Eastern Uzbekistan Cu

Kochibulak Eastern Uzbekistan? Polymetallic

Kurama Eastern Uzbekistan? Au

Molodezh Chatkal Subdivision Polymetallic

Rabindzhan Western Uzbekistan W, Se

**Zambia** Zambian Copper Belt Eastern Zambia Cu

**Zimbabwe** Hartley Great Dyke-Central Zimbabwe PGM's

Widespread Gold Districts Countrywide Au, Ag

**[Market Analysis]{.underline}**

[Demand Increase (2X-3X)]{.underline}

One of the major concerns of the PV industry is the availability of
product if demand for tellurium should increase two to three times over
the current demand of approximately 300 metric tons per year to 600 to
900 metric tons per year. As previously indicated, the current capacity
utilization (production capacity actually being utilized) is
approximately 29%. Increases in demand of two to three times would
result in production of tellurium dioxide approaching maximum capacity
of near 100%.

Currently, there are at least nine facilities located around the world
that have the capacity to produce high purity (99.99+) tellurium.
Additionally, there are at least five other facilities with the
capability of producing commercial grade (99.7%) tellurium. It is
understood that most of these operations are working at less than 50%
capacity. (Mike Weddle, Phelps Dodge) If demand should increase at the
rates indicated by the PV industry and NREL (see Tables 4 and 5) these
facilities should be able to scale up and/or upgrade their facilities to
meet this increased 3 to 3 times demand at least for the next twenty
years.

The tellurium consumption rates in sectors not related to the PV
industry are expected to be flat with little growth. Since the early
1990's tellurium consumption in these sectors has actually dropped. If
tellurium supplies become tight or prices increase there are at least
two more readily available and cheaper substitutes (selenium and
bismuth) that could be used in many applications. It is not anticipated
that these other use sectors will play any significant role in future
demand requirements for tellurium.

[New Market Entrants]{.underline}

If Prices or demand increase it is likely that new market entrants will
consist of the following two types of organizations:

-   Metal mining, smelting and or refining companies (copper, PGM's,
    Lead-Zinc, massive sulfides etc.)

-   Companies currently recovering lower grades of tellurium that could
    expand processing activities into higher grade production lines i.e.
    Commercial Grade tellurium producers expanding into High Purity
    tellurium production.

If tellurium demand by the PV industry progresses as anticipated in the
fast track scenarios shown in Tables 4 and 5; organizations that do not
have producing metal mines or smelters will not attempt to enter the
tellurium recovery market within the next 20 years. Scattered throughout
the world are at least 29 companies who either produce or upgrade and
refine tellurium. New market entrants would have great difficulty
establishing a viable

business with excess production capacity of at least 70% overshadowing
the market.

[Tellurium Market Stability]{.underline}

In discussions with contacts in the PV industry it was learned that the
cost of the tellurium contained in a typical PV panel could represent
approximately 3% of the total manufacturing cost (Personal
Communications: BP Solar, First Solar, ITN; 1999). The PV industry
personnel indicated that tellurium price increases of 2 to 4 times would
not have a significant impact on manufacturing plans. If prices
increased 8 times tellurium content would represent approximately 24% of
the manufacturing cost of a typical PV panel. This magnitude of price
increase would significantly destabilize the PV industry. It is
unlikely, however, that prices could rise to these levels within the
next 20 years because of the under utilization of current capacity.
Dramatic price increases could also be damped by the following factors:

-   Increased recovery from of tellurium from known metal deposit
    resources.

-   Development of primary tellurium deposits that are known to exist in
    China and Mexico (see Table 7).

-   Price driven exploration and development efforts for discovery of
    new tellurium resources.

The mining industry has traditionally responded to mineral price
increases by undertaking aggressive worldwide exploration and
development efforts. To date these efforts have always been successful
and commodity prices have responded to these successes by either
stabilizing or dropping. In mining, as in other industries, the
marketplace responds to excess demand by providing an additional supply
(in this case new deposit discoveries and or technological
breakthroughs).

**EXECUTIVE SUMMARY**

A study was commissioned by the National Renewable Energy Laboratory
(NREL) to assess the world wide tellurium market and its ability to
supply product to the emerging PV industry. Tellurium, discovered in
Transylvania, Romania in 1782, has unique thermoelectric characteristics
(Seebeck effect, Peltier effect) that make it an invaluable component
for the process of generating solar electric power.

The majority (80%+) of tellurium produced today comes from the
processing of anode rich slimes that accumulate during the electrolytic
refining of copper. Other, less important sources of byproduct tellurium
include gold milling, lead refining, and platinum group metals (PGM's)
refining. There are no primary tellurium deposits currently in
production.

There are 29 companies world wide that recover and or process tellurium
into three types of products:

-   Tellurium Dioxides - Sludges and precipitates of variable purity of
    around 35%.

-   Commercial Grade Tellurium - 99.7% average purity

-   High Purity Tellurium - 99.9% to 99.9999%+

In 1997 the total world production of tellurium ranged between 200 and
300 metric tons; the great majority of which was a byproduct of
electrolytic copper refining. Copper, lead, lead-zinc, PGM's and other
related types of deposits contain trace elements of tellurium that can
be recovered if there is sufficient demand. Average yearly world wide
output of refined copper and lead totals approximately 12 million metric
tons. Approximately 1,700 tons of tellurium is accumulated in this
refining process of which only a very small portion is recovered in any
given year. Tellurium not recovered in the process is lost to the
market. Tellurium recovery technology is proprietary but historic data
suggests recoveries of 50 % and more of tellurium per refined ton of
metal is viable.

Tellurium demand by the PV industry has been estimated at a slow, medium
and fast track development rate for the next 30 years. Considering the
most optimistic development rate, the PV industry demand will not exceed
current possible tellurium output until after the year 2020. After the
year 2020 additional sources of tellurium would have to be developed to
meet demand. Review of literature sources indicates a number of mineral
occurrences world wide (including undeveloped primary tellurium
deposits) that contain variable amounts of tellurium that could be
considered for development to meet increased demand.

The current tellurium capacity utilization (current capacity actually
being used) is approximately 29%. With this magnitude of capacity
overhang on the market, the increasing demand by the PV industry over
the next two decades will have essentially no impact on available
supply.

Currently there are 29 companies located throughout the world who either
produce, upgrade and refine tellurium. Considering the excess capacity
situation in the market it is anticipated that few, if any, new market
entrants will become involved the tellurium business. What is expected,
however, that if demand begins to increase, those companies in the
business could expand their product lines i.e. some of the Commercial
Grade tellurium producers expanding into High Purity tellurium
production.

Price increases for tellurium in the range of two to four times will not
have an impact on the PV industry panel manufacturing programs. The
tellurium contained in a PV panel represents approximately 3% of the
total cost of that panel. If tellurium prices were to increase 8 times,
tellurium would represent 24% of the cost of a panel and would
significantly impact manufacturing costs and destabilize the market. A
mitigating factor to this price increase scenario is that the market (in
this case the mining industry) would respond to rising prices by finding
and producing more tellurium deposits and/or by developing technological
breakthroughs that would allow for better recovery of tellurium in
current deposits. Historically, in the mining industry has been
successful in responding to tight mineral supply situations by expanding
production which have resulted in commodity prices stabilizing or
dropping.

**CONCLUSIONS**

A study has been completed of the world wide tellurium market and its
ability to respond to the product demand requirements of the emerging PV
industry. The conclusions reached upon completion of this study indicate
the following:

-   The copper industry is the source of the majority (80%+) of the
    tellurium produced currently.

-   The copper industry will continue to be the source of the majority
    of the world's tellurium supply for decades to come.

-   Because of lack of demand there is currently an excess tellurium
    capacity overhang on the market of approximately 70%.

-   Assuming the most optimistic development scenario by the PV
    industry, it will take approximately 20 years or more for tellurium
    demand to be in balance with supply.

-   Worldwide, there are numerous tellurium enriched mineral occurrences
    that could be developed to meet demand in excess of existing
    supplies.

-   New market entrants are unlikely as long as there is excess capacity
    in the tellurium market.

-   If tellurium demand and prices increase, existing tellurium
    producers would be likely to increase production and/or expand
    product lines.

-   Tellurium price increases of 2 to 4 times would most likely not
    impact the PV panel manufacturing plans of the industry.

-   Tellurium price increases of 8 times or more would impact the
    economics of PV panel manufacturing and destabilize the industry.

-   The mining industry response to tight tellurium supplies would be
    increased exploration and development which historically has
    resulted price stabilization or decline.

**ASSESSMENT OF CRITICAL**

**THIN FILM RESOURCES**

**TELLURIUM**

**RAF-9-29609**

**Prepared By:**

**Jim Guilinger**

**World Industrial Minerals**

**April, 1999**

**TABLE OF CONTENTS**

**EXECUTIVE SUMMARY AND CONCLUSIONS**

**Introduction and
Background..........................................Section 1**

**Production
Methods......................................................Section 2**

**Current
Suppliers.........................................................Section
3**

**Production Capacity, Demand,
Resources...........................Section 4**

**Market
Analysis...........................................................
Section 5**

**Tellurium Report Bibliography And Phone
Log....................Appendix**

**Selected
Bibliography....................................................
Appendix**

Mr. Danny Cunningham

BP Solar

2300 N. Watney Way

Fairfield, CA 94533 May 20, 1999

Dear Mr. Cunningham:

Per the instructions of Ken Zweibel at NREL, I have enclosed a copy of a
report prepared by **World Industrial Minerals** on Cd-Te resources
titled **"Assessment of Critical Thin Film Resources, Cad-Telluride
(Cd/Te)"**.

If you have any questions, please do not hesitate to contact me.

Sincerely,

Jim Guilinger