NOBLE ALLOYS: MOLY GATHERS MOMENTUM
The year 2007 has been a consistently good year for the molybdenum market, with prices holding at high levels. Both molybdenum oxide and ferro-molybdenum have been robust enough to bounce back from any occasional dip in values, and the oxide price saw out 2007 at an extremely healthy level of $32/lb – around $7 higher than at the end of 2006. The oxide price peaked at $34 in April, but has found a more “comfortable” level around the $32 mark. The start of the New Year saw moly oxide priced in a firmer range around $33/lb, and prices continue to rise in February 2008 to around $33.50-34/lb.
The market was underpinned throughout 2007 by good, solid demand from the steel industry and a succession of squeezes on oxide and concentrate supply. Industry observers believe that demand will remain solid, at least through the first half of 2008 and quite possibly further, all depending on the health of the steel market.
The year was punctuated with news of expansion plans and new projects, as companies sought to capitalize on the booming market for molybdenum or, in the case of Posco, secure supplies. The South Korean producer was showing real concerns over securing molybdenum in the first few months of the year, helping push the price up to $34/lb.
In December, Posco said it will invest $170 million in the Mt Hope molybdenum mine in Nevada, US, owned by General Moly.
The Mt Hope project is expected to produce 15,000 tpy of molybdenum from 2010. The project has also secured $70 million investment from the world's largest steelmaker ArcelorMittal.
Shipments of molybdenite concentrates commenced in late 2007 from the MAX molybdenum mine in British Columbia. The new mine's operator Roca Mines said in December that shipments totalling 37,800 lb of contained molybdenum have been purchased by UK trading firm Derek Raphael and Co which has an off take agreement for the mine's production, through its North American representative, W.G. Cook Ltd.
In November Xstrata Copper's North Chile Division launched feasibility studies on an expansion to more than double molybdenum processing capacity at its Altonorte metallurgical facility.
Initial estimates indicate an investment of approximately US$40 million will be required to refurbish a second molybdenum roaster at Altonorte that is currently idle and to construct a Brenda molybdenum leaching plant, Xstrata said.
The two projects would increase molybdenum processing capacity at Altonorte to 28,000 tpy from 12,000 tpy currently.
Also in November, one of the world’s oldest molybdenum mines - Knaben in Norway – started producing concentrates again last week, with production targeted at 100,000 kg next year, from 20,000 tonnes of ore. Privately owned by two Norwegians – Andreas Sigersvold and Einar Øgrey – the pair plan to lift output to 400,000 kg by 2009, bringing it back up to the production levels of “the good old days” just before the First World War.
Furthermore, construction started at Adanac Molybdenum Corporation Ruby Creek open-pit molybdenum mine near Atlin in the Canadian province of British Columbia.
In Australia Moly Mines completed a feasibility study and equity financing for of its 20 million tpy molybdenum and copper open pit mine and concentrator at Spinifex Ridge, with start-up scheduled for July 2009.
Moly Mines has awarded a A$1.1 billion (US$995 million), seven-year mining and earthmoving contract for the project to Perth-based contracting group Macmahon Holdings Limited., and the company is optimistic about the project's profitability, as molybdenum prices perform better that the long-term conservative price estimate taken as a basis or its feasibility study. Moly Mines, said it expects molybdenum prices to maintain current levels over the next two years.
Chief executive officer Derek Fisher said: "The large resource at Spinifex Ridge is sufficient to support a long-life mine. We have expanded the plant size by 33% from the 15 tpy pre-feasibility study and demonstrated a robust project capable of being a big world producer of molybdenum."
"World molybdenum market fundamentals look extremely strong fuelled by consistently strong growth and limited new supply.”
In December 2007, Moly Mines completed a toll treatment agreement and strategic alliance with the world's largest molybdenum processor Molymet of Chile. Spinifex Ridge is expected to produce 240m lb of moly concentrates and 270m lb of copper concentrates in the first 10 years of operation.
Producers have certainly been bullish about demand. An additional 100 million lb of molybdenum is required to meet global demand over the next four years and the present trend of firm prices is likely to continue and the current price levels may even be exceeded, Mark Wilson, vice-president sales and marketing for Thompson Creek Metals (formerly Blue Pearl) said in March. Wilson projected that from a base of 410 million lb of molybdenum consumed in 2006, world demand would grow by a compound 4%/year over the next four years.
This is a view shared by moly expert, Terry Adams of Adams Metals Ltd, who is forecasting worldwide molybdenum demand to grow at 4.5% per annum over the coming years, driven by strong growth in China and the CIS. To meet this demand existing primary production will have to be increased and new production opened beyond 2011, Adams told delegates at the International Molybdenum Associations annual general meeting in Denver, U.S.A. last year.
Adams estimated total global molybdenum demand in 2006 at 195,000 tonnes of molybdenum, with Europe the main consumer accounting for 33% of overall demand followed by the U.S.A. 21.3%, Japan 14.6%, China 10.8%, CIS 4.1% and other countries making up the balance of 16.2%. Over the coming years growth in demand from both China and the CIS is expected to be in excess of 10% per annum (p.a.) and that from the west at around 3% p.a. giving a combined overall growth in demand of 4.5% p.a.
The expected growth in demand could put a strain on the supply situation in the coming years, with Chinese demand forecast to be growing at more than 10%. Adams predicts that China’s exports could fall by over 10% if no new production comes on stream. To meet this shortfall, western mines will need to increase their production by 6%. At the start of the year, China imposed a duty on exports of molybdenum concentrates, and has doubled the export tax on ferro-molybdenum to 20%. The effects of this are already being felt in the market.
Looking at future end uses, Thompson Creek published a report by metal expert Dennis Battrum, founder and president of Marketfriendly inc., which forecast continued good global demand driven by uses in the energy sector. The use of molybdenum-containing and steel and alloys is increasing, in particular in oil and gas pipelines, as the technology becomes more advanced to meet challenging distances and environments. This is, however, still a latent demand, as the majority of manufactured pipes do not contain molybdenum - at least until manufacturing capacity catches up with the newly developed steel grades.
Molybdenum levels in more advanced pipes have crept up from 0.1% to 0.2-0.3%. "Depending on the size of the pipe, one mile of pipeline at these levels can absorb a ton of molybdenum," Battrum stated in the report.
The research sites a 52" x 1" pipeline made with X-80 steels using an equivalent of 6,909 lb of molybdenum per mile. This excludes the use of molybdenum in weld metal in joints, which can be higher by weight percentage than moly content in steel.
"The newest formulations for oil and gas pipeline steels can double this amount. While the percentage quantity of molybdenum in the steel is small, the reader can see the tremendous leverage on absolute molybdenum demand exerted by the number of miles laid and the new pipeline chemistries," the report said.
As witnessed above, companies are certainly doing their utmost to be in a position to meet this burgeoning demand.
However, they are not there yet, and material is still not in abundance. Adding to the tight concentrates situation last year was a land slide at Thompson Creek’s Endako mine in November. The incident has subsequently forced the company to revise downwards its fourth quarter and yearly output for 2007.
Total production of molybdenum at the Thompson Creek Mine and the company's 75% share of molybdenum production at the Endako Mine is currently estimated at approximately 3.0 million pounds in the fourth quarter of 2007. The company previously estimated fourth-quarter production at between 4.5 and 5 million pounds. For 2007, the company expects molybdenum production of 15.9 million pounds versus a previous estimate of between 17.5 and 18 million pounds.
At the Endako Mine, the company's 75% share of molybdenum production in the fourth quarter of 2007 was estimated at the end of the year at 1.2 million pounds, compared with a previous estimate of between 1.9 and 2.1 million pounds. Production for 2007 is estimated at 6.8 million pounds versus a previous estimate of between 7.5 and 7.7 million pounds.
It was another bit of news helping to keep molybdenum stoked up right to the bitter end of 2007. The metal started the year running. One of the first market pieces of 2007 was entitled: “Moly out front, leaving other nobles and minors behind”.
It’s been quite a year for the metal: strong, healthy and relatively stable, albeit at high prices. And all the signs look like another good year, unless, of course, the steel industry experiences dramatic decline.
By mid-February 2008, molybdenum oxide was trading in the range of $33.50-34/lb and ferro-molybdenum was straddling $80/kg duty paid in Europe.
Quelle: "www.metal-pages.com/newsletters/200802/"
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