By Leia Michele Toovey – Exclusive to Moly Investing News
The biggest news on the molybdenum market this week comes by the way of expansions, discoveries, and new constructions in the industry. This news is good news, as the market has plenty of room for more players. Molybdenum prices have been on an upward trend since 2004, not bad for a metal that used to only be mined if it was found in conjunction with copper. Declining production at copper mines in concert with increasing molybdenum values has paved the way to primary molybdenum producing mines. In the long term, this will likely emphasize the rise in molybdenum as the price will be influenced by the economics of a primary mining industry, rather than as a by-product of copper production. Molybdenum, with its new niche as a primary mining industry-is set to take off.
A Note on Moly’s Uniqueness
Molybdenum is used as an alloying agent in steel to enhance strength and resistance to wear and corrosion. It is also used in lubricants developed for high temperature and pressure applications. A new use for molybdenum is a direct result from the tightening of government regulations around the world; the requirement to remove more sulfur from oil is accomplished with a molybdenum catalyst. There are no known substitutes for molybdenum’s unique properties. The price of molybdenum oxide has increased from $3/lb to over $35/lb over the last couple of years due to the strong demand and short supply
The upward trend in molybdenum prices is a result of rising capital expenditures, a sharp increase in fuel prices, higher electricity prices, and growing freight charges. Add this to robust demand, narrow inventory levels, and expectations that molybdenum supplies will not exceed demand on a sustained basis, and you have a boost in the prices of the metal. Molybdenum demand has increased steadily over the past five years, in the traditional end uses, and in new industries seeking to utilize molybdenum’s significant alloying properties. Analysts have indicated that in order for current demand to be met (growth is at around 8% per annum) new primary molybdenum mines will have to be developed. With primary molybdenum mines a new development, it will take some time before there will be a surplus of molybdenum on the market. Until then, a continual upward movement of molybdenum’s prices is likely.
Key Company Developments
Kennecott Utah Copper Corporation (KUCC) is building its own Molybdenum Autoclave Process (MAP) facility. Rio Tinto (NYSE:RTP), the parent company of KUCC, will invest $270 million in the construction of a 250,000 square foot multi-building facility. In the early 1970’s, KUC shutdown its processing facility and began transporting its molybdenum in powdered form to Mexico and Belgium for processing. Now, KUCC plans on capitalizing on the increasing market and price for molybdenum via the construction of their new facility. In this facility, KUCC will utilize a new proprietary process that will extract molybdenum in a purer form.
Metalcorp Ltd (TSX:MTC) has discovered a second zone of molybdenum and rhenium at their Playter Project. The new discovery is significant; significant enough that when taken into consideration with the current market for molybdenum, the Playter Project becomes the most valuable asset in Metalcorp’s current portfolio. W. David Sinclair, a Geologist with the Geological Survey of Canada claimed that assay results indicate that this could be the largest deposit of this type in the world. Metalcorp will have a further announcement in the weeks to come as they await the assay results from a drill hole just 200m west of this grand discovery.
Moly Mines Ltd (TSX:MOL) is seeking to build a $1 billion mine in Australia. This will enable the company to increase reserves of molybdenum and copper at the project by 43 percent. The reserve is now 451 million metric tons of ore at 0.05 percent molybdenum and 0.08 percent copper. The new reserve may allow the mine to operate beyond thirty years and support expanded output.