HardAssetsInvestor

Written by Tom Vulcan  |

August 04, 2008

Rhenium: Son Of Moly

Details

Source: BASF

Opportunities In Rhenium

Rhenium, like moly, is available neither on the LME nor on any other exchange. And, most probably, never will be. If, however, an investor wants to invest in the physical metal, it is available either from the likes of BASF, Rhenium Alloys, Inc., H. Cross Company, etc., or, possibly, from a minor metals trading house that deals in rhenium.

In investments, exposure to rhenium is predicated on an exposure to moly. But exposure to moly does not, however, necessarily bring exposure to rhenium. Roskill estimates that, while a large proportion of primary rhenium comes from moly roasters, some 15 metric tonnes of the metal could be "lost to the market" each year in roasters without recovery circuits. So, when looking at moly producers, it's important to ascertain if they do have the facility either to extract rhenium themselves or sell the rhenium-bearing residues they produce.

If moly producers are small in number, the number of primary rhenium producers is even smaller.

Molibdenos y Metales S.A. of Chile, know by all as Molymet (Bloomberg Ticker - MOLYMET: CI), is the world's largest producer of primary rhenium and is public traded. It produces around two-thirds of such output, most of it as metallic rhenium. In 2007, 100% of Chile's rhenium metal exports (23.3 metric tonnes) went to the U.S., which as a country, according to the USGS, had, in 2007, to rely on imports for some 86% of its apparent consumption.

As a state enterprise, the world's second-largest supplier, Zhezkazganredmet (Red Met) in Kazakhstan is not open for public investment.

The world's third-largest primary rhenium producer is Phelps Dodge of the U.S., part of Freeport McMoRan (Bloomberg Ticker - FCX: US). And while both Molymet and Red Met rely on rhenium-bearing residues bought from others, Phelps Dodge actually has its own copper/moly mine in Arizona.

At one remove, other U.S. producers of moly concentrates containing rhenium include: Asarco Inc., Montana Resources and Rio Tinto (Bloomberg - RTPPF: US). And while for these companies moly is just one of the metals (or concentrates) they produce, one must not forget the pure moly play - Thomson Creek Metals (Bloomberg - TCM: CN).

How much, if at all, the balance sheets of these companies derive value from any rhenium to be found in the moly concentrates they produce would need further investigation. As, indeed, it would for other, smaller, pure-play moly mines such as Roca Mines Inc (Bloomberg Ticker - ROK: CN), General Moly (Bloomberg Ticker - GMO: US) and Moly Mines (Bloomberg Ticker - MOL: CN). Since China, too, is a rhenium producer, the same would also be true for such publicly quoted Chinese moly producers as Jinduicheng Molybdenum (Bloomberg Ticker - 601958: CH) and China Moly (Bloomberg Ticker - 3993: HK).

Finally, never forgetting to extol the virtues of scrap, I would have suggested looking at producers of secondary rhenium, particularly in Germany, a major producing country. However, unfortunately, Advent International and The Carlyle Group have already snapped up H.C. Starck GmbH and K.G. Company, and W.C. Heraeus GmbH remains, as it has been for the last 155 years, a private company.

Conclusion

Demand for rhenium looks unlikely to weaken for some time, especially in these times both of high fuel prices and environmental concern. And any new uses for the metal will only strengthen this demand further.

The rhenium market is currently tight, and appears set to remain so for some time. The price of the metal remains high, but without any new primary capacity coming to market soon, it does look under-pinned. The question remains, however, just how much in stocks remains lying around to fill any supply/demand gap: It may not be that much.

While rhenium is, essentially, a moly play (and always will be), this should not prevent an investor particularly interested in the metal from keeping an eye open for, I am sure, what will be only ever-increasing mentions of it in mining discoveries - for example, that of the Canadian mining concern MetalCORP (Bloomberg Ticker - MTLCF: US) back at the end of June this year.

Keep your eyes open!

Resources

Minor Metals Trade Association (MMTA)

Roskill Information Services Ltd

U.S. Geological Survey