Mainstream media devotes a lot of time to discussing supply chain shortfalls, but rarely, if ever, is the commodity on topic boron. Think about it and you’ll realize we’re right and that it is something you probably never thought about before. But you should and here’s why.

Boron is used in a wide variety of applications, including glass, insulation glass fibers, ceramics, enamels, fertilizers, detergents, medicines, and flame retardants. Take note that boron is integral to production of flat display panel glass, like that of LCD, which makes it increasingly important. About 11–13% boron oxide is used in flat panel glass production. Another growth driver for boron demand is its multitude of uses related to decarbonization and fighting climate change. It is used in wind turbines, solar panels, rechargeable batteries, energy efficient buildings, hydrogen fuel cells, nuclear fusion, and electric vehicles.

Everyone talks about the amount of lithium and cobalt that are needed for a Tesla. Each one also needs 50 kilograms of boron for its glass, batteries, and steel beams. Wind turbines use a stunning 6,375 kilograms of boron for the blades and motor. Tens of thousands of turbines are being constructed annually now.

This explains why the European Commission’s list of Critical Raw Materials has included borates since 2017. The list helps to incentivize European production of critical raw materials and facilitate the launching of new mining and recycling activities.

With demand rising for these products, the boron market is expected to grow about 20 percent annually over the next decade. However, the supply of boron is not expected to keep pace with demand. The global borates market is expected to grow at 3% compound annual growth rate to reach 2.65 million tonnes (Mt) B₂O₃ (boron nitride) equivalent by 2023. This increase in demand of refined borates is equivalent to a whopping 344,000 Mt of Borax Pentahydrate and 201,000 Mt of Boric Acid. 5E Advanced Materials, Inc. (NASDAQ: FEAM) has indicated a potential supply shortfall of circa 2 million tonnes of boric acid equivalent by 2028.

Rio Tinto estimates that over the next five years, the boron industry will need increased production equivalent to nearly two additional boron mines the size of their California operation, in order to keep up with demand.

A shortfall is due to a number of factors, including, first and foremost, limited availability of deposits. Fact is, while boron is present everywhere in the environment, substantial deposits of borates are relatively rare worldwide. The planet's known boron reserves are limited, and the majority of these reserves are located in a few countries, such as Turkey, China, and the United States. This limits the supply of boron and makes it more expensive.

According to Market Index, 60% of global supply comes from Turkey and its state-owned assets. The market is essentially an oligopoly, with 80% of global supply coming from two companies – Turkey’s state-owned Eti Maden and Rio Tinto (NYSE: RIO). Rio owns an open-pit mine in Boron, California, that is one of only two world-class deposits so far on Earth.

 The shortfall of supply is expected to lead to higher prices for boron. Safe to say, the world is in desperate need of new production coming online.

The public markets, which were already pretty thin on boron companies, lost a lauded boron play last year. Allkem Ltd. (TSX: AKE), created by the merger of Orocobre and Galaxy Resources in August 2021, decided to become a 100% lithium play, swapping its Borax Argentina business for 1,800 hectares of the Olaroz salar.

We’ve Got a BONE to Pick (Up)

An up-and-comer to watch is Boron One Holdings Inc. (TSX-Venture: BONE) (OTCPK: ERVFF). The company’s flagship project is the Piskanja Boron Project in Serbia. Piskanja is Boron One's wholly owned boron deposit with a Measured Mineral Resource of 1.39 million tonnes (averaging 35.59% B2O3), an Indicated Mineral Resource of 5.48 million tonnes (averaging 34.05% B2O3), and an Inferred Mineral Resource of 284.7 thousand tonnes (averaging 39.59% B2O3), calculated in accordance with the Canadian Institute of Mining Definition Standards on Mineral Resources and Reserves (CIM Standards), as disclosed in the company's report titled, "Technical Report and Preliminary Economic Assessment For The Piskanja Borate Project, Serbia, June 24, 2022".

The report indicates a potential world-class mine with a life of more than 20 years. Other pertinent highlights of the Preliminary Economic Assessment (PEA) includes:

• NPV10 after tax: $525 million
• IRR after tax: 78.7%
• Gross Project Revenue: $2 billion
• Capex payback: 12 months
• Annual Gross Revenue: $126 million
• Net Project Cashflow (post-tax): $1.12 billion
• Boron One market capitalization: $10 million

Serbia is known to be a top ten country for boron reserves, positioning the European country in a prime spot to bolster its economy while meeting rising demand. Mining in the country is generally inexpensive by industry standards because of the favorable geology, meaning a mine could deliver premium B2O3 at competitive prices.

What type of margins you may ask? Consider Eti Maden, which saw gross profits grow 25x from 2004-2014 to reach almost $500 million (newer data is hard to come by).  Hoover’s estimated Eti’s profit margin at 44%.

The location of Piskanja is ideal, rich with history and infrastructure, located adjacent to the small town of Baljevac (3000 inhabitants). This provides all-weather roads, 3-phase power generation, rail, accommodations, cell/internet service, restaurants, fuel stations, machine shops, supplies, experienced mining workers, etc. It is located in the center of four other mines: Jarando underground coal mine; Rio’s proposed underground lithium/borate mine (that sits in limbo after the government cancelled Rio’s spatial plan in January 2022); Korlace, an old open pit asbestos mine; and Bela Stena, an old open pit magnesite mine.

It also helps that Serbia is looking to join the European Union and has a stated goal “to increase the mining industry’s contribution to GDP from its current 2% to 10%.”

Piskanja has been de-risked through the work already completed by Boron One. The exploration phase is done. The preliminary economic assessment demonstrates robust economics. The exploitation licensing process has begun. The company is properly funded, has a partner (Osmose Ltd.) that requires zero capex from BONE, and is actively seeking industry partnerships and offtake agreements, effectively checking all the boxes for things that build corporate value for a junior explorer. A Feasibility Study is underway, which represents a major milestone and last big step before designing a mine. The company is hoping to have a mine constructed by the end of 2026.

Management is being conservative with its forecast should its project become a commercialized mine. BONE’s planned production of 250,000 t/yr equals a market penetration of less than 5 percent. The mine should have some obvious competitive advantages. The large deposit contains colemanite, the optimal type of ore (high quality/low arsenic). Only one other mine in the world today produces colemanite and data shows that Piskanja’s colemanite has substantially less arsenic than that mine in Turkey. Plus, as mentioned, all the infrastructure is available, which helps keep costs down and margins up.

These advantages give BONE room in the market for offering high-quality product that can compete with the inferior producers from South America that currently command 20% market share today.

That’s Plenty

Boron One is simply bubbling over with assets, data, and staff that make Piskanja a highly compelling project, although it seems to still slide under investment radar. This seems most likely because the company quietly goes about its business and mainstream media doesn’t spend much (read as “nearly no”) time discussing boron. These things have a way of correcting themselves and when boron hits the headlines, BONE will be there.

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