Scientists have been given a challenge to come up with novel uses for moly

By Leia Michele Toovey- Exclusive to Moly Investing News

The future of Molybdenum demand gained some extra security with the likelihood of new applications in the short term. This is a result from the recent challenge posed to scientists around the globe by The Center For Advanced Interdisciplinary Research in Materials (CIMAT).

In March, the CIMAT had launched an initiative titled the ‘Molybdenum Offensive‘, a call to scientists to come up with proposals for new uses of the metal in the shortest possible time.

About 300 researchers in 32 countries had responded with 96 preliminary proposals. About 20 per cent of these will be short-listed in the coming weeks. The names of the winners of the annual grants of US$100,000 to develop ideas will be announced in December.  Each winner will have up to two years to develop this/her idea.

Moly hosts valuable characteristics, two key ones being its high melting point and its resistance to thermal expansion.  There has been much chatter in the scientific community about capitalizing on these unique capabilities.  The ‘molybdenum offensive’ will bring to fruition what scientists around the globe have been postulating.

Prices for the metal have shot up from about US$5 per pound in 2004 to US$33 per pound. Even as other metal prices eased off in recent weeks and months, molybdenum has held on to its highs, in part because of its wide gamut of uses. Current prices are receiving additional support in the lag time for new mines to come online.

Kevin Loughrey, CEO of North American based Thompson Creek Metals (TSX.TCM) spoke to analysts this week about the company’s second quarter financial results. “The molybdenum market remains strong and prices have been very stable. The occasional customer is taking a bit less this year, citing in particular foundries that sell (castings) to the automotive industry. But, most of our customers are taking toward the top end of what they’re entitled to take.”

The Thompson Creek mine in Idaho is on track for full-year output of between 16.5 million and 17 million lbs, while its Endako mine in British Columbia is on target to produce between 6.5 million and 7.5 million lbs.  Molybdenum production at the Thompson Creek Mine during the second quarter of 2008 was 4 million lbs, up 11.1per cent from 3.6 million lbs in the first quarter of 2008, and up 73.9 pr cent from 2.3 million lbs in the second quarter of 2007. The mine’s production is expected to move higher through the remainder of this year as higher grade ore is mined.

‘Long-term outlook for moly seems sound’

Victor Perez, Marketing Director of Chilean state-owned copper giant Codelco, is confident about the long-term outlook for molybdenum prices. According to Perez, booming demand for molybdenum means prices for the minor metal were unlikely to return to the historic lows seen in the previous two decades. Perez said that molybdenum was at an extraordinarily high price, but did not think that the metal was going to return to the historical levels seen in the ’80s and the ’90s of less than US$5 per pound.”

Codelco’s board of directors is due to approve in October or November a new 20,000 million tonne per year processing plant at Mejillones port in northern Chile. The development of this plant is estimated to cost Codelco in the range of US$120 and 150 million. Codelco is also investing in improving molybdenum recovery at its existing installations in its Andina, El Teniente and Codelco Norte divisions.

Eduardo Titelman, Executive Vice-president of Cochilco, the Chile state copper commission, believes that moly prices will hold on to there $33/ lb average through 2008.  This year-to-date average of $33 is up from $30 in 2007 and $25 in 2006. Tightening of supply is being pegged as the causal factor in moly’s recent price increase. Chile is the world’s third-largest molybdenum producer after the U.S. and China.

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