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Subsequent to my previous report, "Molybdenum
The 21st Century Metal" www.adanacmoly.com/articles/Moly_21st_Century_Metal-180KB.pdf I have done
further extensive research for information on current and future uses of
Molybdenum. This has been an undertaking of continual frustration &
magnitude due to lack of mainstream information on this Noble Metal. Outside
of the continual references to Molybdenum being used in stainless steel and
other specialty metal alloys, fertilizers, lubricants and all the other uses
I previously outlined in the 321 report (some of which are not reported in
mainstream media) I have found what I consider the 'Big Secret' in
regard to Molybdenum.
This so called secret involves considering that few
people in the mining industry pay much attention to the Catalyst market
for Molybdenum, if any at all. It is considered a small portion of the
overall world demand in any charts, graphs or articles one may see and read.
This is not the case as I see it from all of my own research. Consider
why, when so many pundits and experts have continually called for the same
dramatic and rapid decline in Molybdenum prices as we have seen in past when
it spiked in price, that it has confounded all the predictions and has
remained high for months on-end, all the while outliving those same wrongful
predications. Today I believe there are little known, but yet profound
changes afoot in the world of energy due to scientific discoveries in
catalyst research that are outside the scope of most mainstream reports and
articles on Molybdenum, and they are so dramatic and exciting that soon the
entire Oil industry will soon be in shock. These changes being brought about
by the new discoveries in the catalyst sciences involve coal, plastics and
even used tires. The energy field I'm speaking of is 'Liquefaction'.
In the 1950's and even earlier, Coal Liquefaction to produce fuel oils was
known and studied in the USA,
Germany, Japan and S Africa
among others. Japan
in 1940 produced 30,000 T of liquefied coal oil. Production continued until
the end of WW2. Immediately after the end of the war the US military
banned further research into coal liquefaction, alleging that it was military
research. The process was costly and compared to the price of a barrel of
Oil, not yet feasible. It has been stated that for Coal Liquefaction to be
cost efficient and profitable, a barrel of crude must sell for $32.00. The
Japanese have published reports stating $20.00 p/barrel. The better the
catalyst functions, the higher the liquid yield rate becomes. Through
international cooperation coal liquefaction has gone from the research stage
to commercialization in Japan.
Today China, Japan, Germany,
Indonesia, & the USA have all
embarked on projects with coal liquefaction. Before I continue with this
discussion on the Liquefaction process tho, I would like to dwell on crude
oil for a moment.
Today thanks to the scientific study of new age band
catalysts, and Molybdenum Oxide, Nickel, Iron, Carbon & Cobalt compounds
in particular, we now have catalysts that are helping refiners meet the
stringent EPA & EEU pollution emission standards recently established.
Sulfur is the culprit and the enemy of clean air and consequently due to the
2005 EPA standards (Diesel sulfur content has gone from 300 ppm to 50 ppm)
the demand for refinery & hydro-cracking catalyst is going to increase
dramatically. There is also another factor at work when considering the crude
refinery catalyst demand.
For the last 20 to 30 years very few refineries have
been built worldwide, and none in the USA. As I write this I'm reading
of Venezuela
building three new refineries and expanding two existing ones. China in a JV with its own Sinopec
and Saudi Aramco & ExxonMobil have begun building their
multi-billion-dollar refinery and petrochemical complex in China's Fujian
province. Meanwhile a JV between Borealis & Abu Dhabi National
Oil Co. is advancing another ethylene cracking facility in Abu Dhabi. One should
be able to see the picture unfolding, "More Refineries" to come and
most likely in Europe, Canada
and the USA
first. Other nations will invariably follow suit in this age of peak oil and
rapidly increasing demand from developing nations like China, India, Brazil & SE Asia etc
coupled with growth in the western world. The more refineries and
hydro-cracking facilities in operation obviously mean's more Molybdenum
catalyst demand. With less sweet crude now available and more sour heavy
crude & Tar Sands Oil that has to be refined, it is going to mean a
great increase in catalyst demand.
Next is the new looming production and market for
(NG) Gas To Liquids Fuels (GTL). This market is fast becoming a
reality and will invariably become a robust market for catalysts as well. GTL
plants use catalysts of Cobalt/Iron/Molybdenum in the processes. Each GTL
plant according to Bill Bell VP of Methanol & GTL Technology &
Catalysts at Johnson Matthey "With GTL ready for ascension a
big market for catalysts is now emerging & we are looking at thousands of
tons plus of catalyst as inventory in a single plant". GTL plants
(in 2003) are being considered in almost every corner of the globe that has
reserves of NG, especially in areas like the Middle East where there is little
local market for it & there are no pipelines to market NG. GTL
converts natural gas (NG) into an easily exported liquid form. Shell
in 2003 had a plant in operation in Malaysia
& pursuing another in Qatar,
as is Sasol Chevron. Chevron is also considering other plants
in Nigeria,
Australia & Caribbean. Exxon-Mobil is also interested in Qatar and Syntroleum
is looking at Bolivian gas fields. BP is experimenting with a test
plant in Alaska.
(As this info on the GTL market is from 2003 I have no idea which projects
may now be completed) So now I have outlined another little spoken of
and upcoming demand on Molybdenum. The refinery demand for catalysts is
already in the Billions of dollars and the worldwide demand for all the
different combined types of catalyst uses in 2003 was approximately $7.5
Billion according to published reports.
According to a Roskill Metals report
on catalysts (30/10/03) based on the steel industry states, Molybdenum demand
has been growing at 2-4% p/a and in hydro-processing catalyst sector by 3-5%
p/a. I believe now with higher emissions standards these latter catalyst
demand percentages are now much higher if the truth be known. Also w/o going
into detail for the sake of brevity in this report I will only touch on the
fact that a Molybdenum/Ruthenium catalyst has been developed by Hitachi and
other companies for a low cost Fuel Cell. We do know fuel cells will appear
in cars, homes & industry in the near future. Washington State
University (WSU)
research teams have discovered an improved method of converting hydrocarbons
(such as methane) into hydrogen and carbon dioxide using Molybdenum Carbide
(Mo2C) as a catalyst. This conversion is an important step in fuel cell
systems and processes that convert natural gas (NG) into useful
petrochemicals. This patent is pending.
On another front Osiris in France and
others involved in the world nuclear industry are testing a Uranium/Molybdenum
enriched fuel for Nuclear reactors worldwide. This fuel will do away with
using weapons grade Uranium in reactors and once perfected will be used
throughout the world. The cost savings from low enriched fuel as opposed to
the current highly enriched fuel is substantial as well.
Now lastly before I return to the Coal
Liquefaction aspect that gave inspiration for this report, you should
realize that the global demand for Molybdenum rose by 7.2% in 2004 to 374
million lbs from 349 m/lbs in 2003 as outlined in a study commissioned by International
Molybdenum PLC and performed by CRU Strategies Ltd. mining
consultants. Further CRU states that conservatively Molybdenum demand
thru 2009 will grow by 3.5% to 4.1% p/a and the projected demand will be up
to 475 million lbs in the same year. They also (CRU) project a deficit in
Molybdenum production in 2008 and as much as a 14 million lb deficit in 2009.
The theory of the world entering a "Super Commodities Cycle"
is supported by recent reports by Citigroup-Smith Barney (China - The
Engine of a Commodities Cycle, March 31 /05) and Goldman Sachs (Metals
& Mining March 21 /05) and US Energy (Oil March 30/05) and along
with the likes of the renowned Jim Rogers I believe this super cycle
in finite resources is well underway and will last for many, many years to
come.
The mining industry has been slow in responding to current
growth in Molybdenum demand and low inventories. Several new projects, both
primary and by-product have been promoted in recent months. Given the need
for financing and environmental studies it is questionable if any or most of
these projects will be producing by 2009. One or two projects seem to have
the thrust, reserves and capability to achieve production in 2007/08
nonetheless. As another aside to the focus of this report it is also
noteworthy to mention that a memo from the US Army Research Office: Research
For Toxic Compound Destruction, states that the University of
Pittsburg has shown that Molybdenum, in the presence of oxygen, is a true
catalyst for destruction of nerve gas stimulant. A patent has been awarded on
this work.
Now back to the Liquefacton portion of this
report. The China Daily News online on the 03/12/2004 carried an
interesting article on China's
liquefaction projects. They stated in part that China
has set up its first coal liquefaction research centre in Shanghai, a move to safeguard the nation's
increasing oil supply shortage. The centre will explore and develop direct
and indirect liquefaction technologies to produce gasoline & diesel fuel.
Shenhua Corp. one of China's largest
coal companies w/ an 80% interest in this centre, has almost completed
construction of a US $3.3 billion coal liquefaction plant in Inner Mongolia.
Operations of this plant are expected to commence in 2005 to produce 1
million tons of gasoline and diesel fuel p/yr. By 2008 they expect to produce
5 million tons of oil with four more production lines. The second phase of
the project will involve an additional investment of US $7.3 billion. Plans
for two more coal to oil projects are on the shelf.
In another article by People's Daily news of
Jan. 24/05 it is stated that by 2013, 10% of oil imports to China
will have been replaced by coal liquefaction. The article also states that
international indicators show that the process is profitable at between
$22.00 to $28.00 US p/barrel and that the National Reform and Development
Commission is considering making coal liquefaction one of China's key
construction projects this year.
The other aspect of this trend towards liquefaction
is the use of recycled tires and plastics in the process. The plastics alone
it is estimated comprise approximately 21% by volume of US landfill
sites. There is obviously no need to mention the quantities of used tires in
the world. The process for the liquefaction involving tires & plastic is
called Co-Processing and is achieved by combining feed-stocks of coal
with the other two products simultaneously.
Without going into a long scientific and technical
overview of the coal liquefaction & the co-processing technologies it is
important to realize that the present success and feasibility of coal
liquefaction is hinged on the recent perfection of an Iron/Molybdenum
catalyst used in the de-sulfurization portion of the process. Soon you
will be reading about another new scientific field concerning Molybdenum
& Nano-Particle Technology. After all I have written about here in
this report, it is my estimation and firm belief that we are now witnessing a
historic time in the new expanding uses and demands on Molybdenum in the ever
changing world of the Catalyst & Alloy Metals markets and those changes/discoveries
are becoming more intense as time passes. To this end I believe now more than
ever that,
"MOLYBDENUM IS THE METAL OF THE 21ST
CENTURY"
(Post Script Notes) This report is not
intended to infer that there is some conspiracy of silence afoot in the
Molybdenum or Catalysts markets. In the title 'The Big Secret' simply
refers to the seeming secrecy in the catalyst markets and to the lack of
mainstream attention paid by mining media to Molybdenum.
Remember Molybdenum IS the biggest percentage dollar
gainer of ANY metal in the last 18 months, and we hear little but
negativity from media and mining websites.
Over the last few days I have read of Chinese
Molybdenum traders stockpiling product for the end quarter of 2005 in order to have
supply.
Sept 2/05 a London Mining article stated this in
part- "Prices of Mo alloys all rose on Friday as buyers in search of
large quantities found that the tightness of supply that had characterized
the market in the early part of the year has not lifted." End
Yes there is a bottleneck in Roasting facilities and
it is having some effect on Mo price, but why is there a bottleneck? Because
demand is outstripping world roasting facilities. Quite simple really!
With 5-7% more demand projected by various industry participants, I'd say
they better get busy building a lot more roasters, and bringing new Primary
Molybdenum Mines in the world onstream or we may see $50.00 p/lb Moly in
future.
China's Metals Info Network, ANTAIKE on
Aug 19/05 says new overseas roasting facilities will not be operational until
after 2007.
Albemarle Catalysts of Louisianna who use
approximately 10 million lbs of Molybdenum p/a, stated in a recent report-
"We expect a 5% yearly growth rate in certain catalyst
sectors"… and so with the peak oil events facing the world and
new refineries coming onstream (in Saudi Arabia & China) and expecting
two more refineries in China as well as others around the globe, Tar Sands
Oil, Coal Liquefaction, drilling exploration coupled with drill steel use
& pipelines etc, the demand for Molybdenum & Cracking catalyst should
continue to grow as will the specialty steel demand. Molybdenum has gained
a new place of stature in the world's insatiable demand for noble metals.
New Update: According to the latest
report from BCC Inc. Research, www.bccresearch.com/environ/C166R.html they estimate
that by 2009 the market for Environmetal and Energy related Catalysts will
grow by an average of 12.8% P/Yr. This is far beyond previous industry
estimates I have outlined. Molybdenum it would seem has a bright future
indeed.
If anyone has information on the Molybdenum markets
they wish to share or would like to follow any of the Jr companies I represent
please feel free to phone or email me anytime.
Ken Reser
Ph: 403-844-2914
Independent
Investor Relations Consultant For;
Adanac
Moly Corp.
www.adanacmoly.com
Goldrea Resources Corp.
www.goldrea.com
South Pacific Minerals Corp.
www.southpacificminerals.com
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