Australia's Talison Minerals, once the world's top tantalum producer, plans to reactivate its Wodgina mine in mid-2010 amid forecasts of a looming supply squeeze for the metal widely used in aerospace and computer manufacturing.

"Based on expectations that demand will pick up, the plan is to restart in the middle of next year," a Talison spokesman told Reuters.

Privately-held Talison supplied about a third of the world's tantalum before suspending operations at its Wodgina mine in northwest Australia last November, citing low demand and weakening prices.

Talison has since agreed to allow another Australia miner, Atlas Iron <AGO.AX>, to use its tantalum milling facilities for iron ore processing.

Roskill Information Services said Talison's closure, along with other producers, threatens to create a supply shortage that could last several years.

"Inventories are running down, scrap is in shorter supply because of a fall in capacitor manufacture and it is quite possible that legislation under consideration in the United States could severely restrict or even halt the supply of tantalum from central Africa," Roskill said.

"It is almost certain that a tantalum squeeze is approaching," it said.

Over the last year, lower-priced tantalum from central Africa, and particularly from the Democratic Republic of Congo, has been supplying a large part of the market.

Prices for tantalite, used to make tantalum metal, have fallen 15 percent to around $36.50 in the past 12 months, Thomson Reuters data shows.

Three companies -- U.S.-based Cabot Corporation>, Germany's HC Starck and China's Ningxia -- account for about 70 percent of purchases.

At full speed, the Wodgina mine can produce 1.4 million pounds of tantalum oxide annually.