Good golly, Ms Moly

Molybdenum is up 1000% in the past five year

…The molybdenum market is currently running at around 400m pounds a year, and is said to be growing at a minimum of 4% annually. The metal’s subscribers describe it as the “energy” metal, given how much it’s used in the crude oil and gas business.

Sprott himself subscribes to the “peak oil” school of thought, which holds that global crude oil production is peaking, meaning more drilling for every new unit discovered. Sprott tells investors that a 5,000 foot oil well requires 50 tons of molybdenum-hardened steel to drill; a 15,000 foot well requires a magnificent 1,100 tons. Nearly 80% of all wells drilled today are deeper than 8,000 feet.



As for supply, China (currently 20% of world molybdenum production) is consistently digging out less as small operators increasingly fall foul of new environmental, tariff and quota constraints. Like a number of other metals, molybdenum has historically been dug out as a by-product. About 60% of current global molybdenum production ranks as by-product.

Phelps Dodge, Codelco, Rio Tinto, Grupo Mexico, Antofagasta, BHP Billiton, Xstrata and Anglo American produce molybdenum on the outskirts of copper porphyry operations. Insiders reckon that most of these producers high-graded molybdenum output during the 2005 spike to $40/pound, such that 2007-8 molybdenum production profiles are largely flat.

MineWeb