TSXV:NER.H - Post by User
Comment by
Cooper123on Oct 30, 2010 2:14pm
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Post# 17635436
RE: RE: Its China
RE: RE: Its China
Read the dates.
Why Molybdenum Miners Are Soaring?
On September 27th, 2010I wrote an article mentioning that uranium miners and molybdenum minerswere poised for a breakout. I wrote in the article, "There have beensome recent breakouts in some uranium and molybdenum plays which I willbe telling my premium readers about in the next couple of days." Sincethat article the molybdenum and uranium miners have made huge gains dueto supply concerns globally. While investors are concerned of a globalcurrency devaluation, a global race is occurring to control molybdenumand uranium assets.
The primary molybdenum miners such as ThompsonCreek(TC) and General Moly(GMO) are up today on speculation that Chinawill curb molybdenum production as they classify the metal as a naturalresource. General Moly (GMO) released their earnings today and mentionedthat China remains a net importer of 5.5 million pounds year to date.This development will have a huge impact on the global supply ofmolybdenum as China is the largest producer and supplier of over onethird of the global supply. These primarily molybdenum producers willreceive a premium as molybdenum is usually a byproduct of copperproduction which is usually fixed. Primary molybdenum producers willreceive a premium for their assets as demand accelerates.
Theprice of molybdenum is more than 50% off pre credit crisis highs yetdemand is seriously exceeding supply. China has imposed mining quotas inthe past and is expected to curb exports again in 2011. China has also aneed for high strength steel. Even though it produced 50% of theworld's steel, China only consumed 30% of global supply. If they consumemore molybdenum similar to other producers they will demand a muchhigher amount of imports. They have a need for high strength steel whichrequires molybdenum. China's recent stimulus which focussed oninfrastructure requires a large supply of molybdenum as it is needed forbridges, power plants and pipelines.
This trend has a huge impacton many emerging markets which was relying on the Chinese supply. Koreaand the Japanese are under pressure to find supply for their own needs.Other growing economies which require high performance steel are goingto look for ways to control future supply.
Recently the ChineseGovernment accelerated and approved funding through Hanlong Investmentsfor General Moly's Mt. Hope project accelerating the funding and showingtheir commitment to the project. Mt. Hope is the largest and highestgrade primarily molybdenum project in development. Shares have soared onthe news and the enthusiasm from the Chinese Government.
Iexpect to see more transactions to occur in natural resource stocks in2011 especially in molybdenum and uranium. Buying these assets provideinvestors with a hedge against currency devaluation and leverage toemerging market growth. As many nations will be forced to devalue theircurrency to increase economic growth, major natural resource assets willgain interest from countries experiencing economic growth. Shareholdersin these key junior mining companies which control these world classassets may receive a premium in 2011 and beyond.
To stay updated with key junior miners about to make major moves, visit https://goldstocktrades.com.