Great Article - Molybdenum- The Next Wave to Ride?Molybdenum- The Next Wave to Ride?
Wed, Jul 30, 2008
Many investors are giving molybdenum the title “The New Uranium”, which is a hint at the profit potential that a savvy investor can make on the moly market. If you look at moly’s past- it is known to hit high highs and low lows, at the drop of a hat. In fact, the past 15 years have seen moly prices oscillate from $1.82 per lb to $40.00 per lb.
Moly’s primary use is as an alloy, and it has a significant niche in this venue due to its tolerance for high heat, high stress situations. Corrosion resistant stainless steels contain 6 to 7.3 percent molybdenum. These grades are used for power plant condensers, offshore piping, critical components in nuclear power plants, and construction near corrosive sea side environments. Two well known architectural features, the Petronas Towers in Kuala Lumpur and London’s Canary Warf are constructed with moly reinforced steels. Moly is also used in chemical applications. Its use as a catalyst has come to the forefront recently, as tightening governmental regulations have required oil manufactures to remove more sulphur from crude. This is a feat that can only be accomplished with a moly catalyst. Another key use for moly in the energy sector is, as oil companies need to drill increasingly deep to tap into a reserve- they turn to higher grade molybdenum stainless steels (with 13 - 16 percent moly content) to manage the unfavorable elements at those depths. With this in mind, it is possible that moly provides another venue through which to profit off of diminishing oil reserves. For all of moly’s uses, there is no known replacement.
Moly is relatively new on the primary production scene. The main commercial source of moly is molybdenite that historically has been mined as a by product of copper. This is a likely reason why in the past moly prices changed so swiftly. A mine that produced moly as a secondary product could easily turn on or off the moly tap- depending on the current demand. However, now that the word is on the street that the demands will skyrocket- more primary producing companies are coming to the foreground. In the future, Moly should be guided by the economics of primary production.
Analysts have indicated that from 2008 to 2010 there will be a moly supply deficit. With that thought in mind, now would be a good time to jump on board moly stocks. Moly prices have increased steadily since 2001 when the price was under $5 per lb. Currently, prices are sitting at around $34 per lb, with many analysts saying that prices near $50 are justified with the current supply and demand picture. Global mining giant Rio Tinto believes the word on the street when it comes to moly; in fact they recently announced that they plan on sacrificing some of the copper production at their Kennecott mine in Utah, to step up moly production.
The world’s largest producers of molybdenum materials are the United States, Canada, Chile, Russia, and China. Large mines in Colorado and British Columbia yield molybdenite, while many copper deposits such as the Chuquicamata mine in northern Chile produce molybdenum as a byproduct of copper mining. A side product of molybdenum mining is rhenium. Molybednite mines are the only commercial source for rhenium.
The historical prices of moly are known to change quickly, and the same pattern has been witnessed in junior companies making their dollars by mining molybdenite. A classic example of this is moly junior Blue Pearl Mining. On February 6, 2006, their shares did something very radical. In the first hour of trading, four million shares changed hands. The result was an instantaneous 74.8 percent increase in share value. All this was the result of a press release indicating positive results in one drill hole. Moly companies have seen their moly profits skyrocketing. In 2007 China Molybdenum Co saw their profits increase by 47.9 percent. Many new companies have joined the moly race to capitalize on high prices. An example of some companies trading on the TSX venture exchange today are Galway resources (TSX.V: GWY), and Prophecy Resource Corporation (TSX.V: ETF). There are many more companies to keep an eye on, especially with a booming moly market!
Source:
https://www.molyinvestingnews.com/60-molybdenum-the-next-wave-to-ride.html