Like I said, moly is used to make high strength metal alloys. It can be found in almost every modern drill. It greatly increases the strength of the drill and can limit technical mishaps reducing costs. In that sense, moly is needed in every aspect from drilling exploratory holes in an oil and natural gas field, to drilling the production and injection wells that go into getting a geothermal power plant up and running.
You can also find moly in the coalfield. If it's a longwall mining operation, it can be found in the shearers used to extract the coal and the conveyers used to transport it. In an open-pit, truck and shovel operation, moly is again used in both the extraction and transportation process.
The corrosion resistance combined with temperature insensitivity makes moly very important in the production of oil/natural gas pipelines. The Alaskan pipeline consists of half-inch metal alloy that could handle up to 25,000 pounds of PSI and temperatures of negative 70 degrees Fahrenheit. You could find up to 7% moly in that 800 miles of pipeline. Without moly, you definitely wouldn't be getting an above +99% reliability rate, which delivers the U.S. with approximately 775,000 barrels of oil per day.
Molybdenum is also used as a hydroproccessing catalyst in petroleum production. In English, moly is used to remove sulfur and nitrogen in making light sweet crude. This is very important as the quality of oil is diminishing more as 'the low hanging fruit' in the oil world has already been picked. Canadian oil sands, and the tar oil from Venezuela are examples of oil that contain high levels of external elements that need to be purged in order to create light sweet crude oil.
Molybdenum can be found in every modern turbine used in a power plant. All power plants, except wind and water, directly use heat to turn a turbine. In the highly abusive environment of a turbine, strength, corrosion resistance and heat insensitivity, make moly the perfect industrial metal for power plant turbines. It greatly increases the lifespan; hence reducing the cost of the power plant
In a geothermal power plant, moly can be found in the back pressure turbine or the condenser and pumps that re-injects the fluids back into the earth. In wind energy, moly is used in the actual structure of the windmill and can be found in everything from the bearings to the generator. In hydroelectricity, again moly can be used in the turbines and generators.
Molybdenum's contributions to the world of nuclear energy are by far the most significant. Without molybdenum, the nuclear world would be set back at least 20 years. Newly developed high performance stainless steel (HPSS) contains up to 7.5% moly. I cannot stress the importance enough of HPSS to the world of nuclear energy. This alloy can more than triple the life of aging fleet condenser tubes. Fleet condensers, which are rather large, are used in the heat transfer process.
Brass, copper, and nickel, made up the alloys previously used in fleet condenser tubes. Although these alloys were efficient in conducting heat, their lifespan was only 8 years. HPSS conductors were brought into play about 30 years ago. As of right now, the longest HPSS conductor has remained in service for over 26 years and is still going strong today.
Older copper alloy fleet condenser tubes had corrosion issues. This affected the power plant in a couple of ways. It allowed for the build of corrosive materials reducing the efficiency of the power plant. Also, the corrosion rendered weak spots in the fleet condenser tube, which could then result in holes. This was just not acceptable, because chemicals like sodium and chloride could leak and damage other vital parts of the reactor. Corrosion resistance leading to less build up of undesirable substances increased the capacity of reactors by up to 20%.
The importance of molybdenum in nuclear energy is undeniable. But it is also used in harvesting EVERY other form of energy. Moly is the only way you can play these markets all at once.
Just because moly is vital to these markets doesn't necessarily mean that there's a bull market in this industrial metal. But do you really think I would have chattered on and on about moly if the supply and demand picture didn't look positive for investors?
Supply and Demand of MolybdenumSupply for molybdenum faces a similar conundrum to that of oil. Although there is current mine production significant enough to meet demand, refiners, or roasters, are expected to run into a shortfall. Guesses on when this shortfall, depending on demand, is estimated to come somewhere between 2009-2015. Yes that's kind of a large range, but let me tell you where that number comes from.
A roaster is similar to a refinery in that it processes the moly into a fine powder, pellets, or any other form refined moly used in the industrial world. Total world moly roaster capacity can currently put out at an annual rate of 320 million pounds. That 320 million pounds also barely meets global demand. There isn't much more roasting capacity left. The problem is that there is no one actively permitting for the production of any new roasters here in the United States, and roaster production looks grim on a global level as well.
The exact date is impossible to predict, but a roaster shortage is definitely on its way. The data above is based on one very important assumption. The assumption is that mines will also be able to increase their output. Western demand looks to increase by around 3% annually, while the demand of China and the C.I.S. are looking at a demand increase of around 10% annually.
Globally demand is expected to increase at around 4.5% per annum. Unless moly mine production picks up at a rapid pace, shortfalls of the silvery metal are expected to arrive at around 2009. Note that we are talking about mine production and not roaster capacity anymore.
This increasing demand can be attributed to two main factors. Hydroprocessing catalysts are becoming essential in today's market for crude oil. The other contributing factor is the increase in nuclear reactors that are planned for production. There are 48 nuclear reactors to be built by 2013, and approximately 100 that are to be built by 2020.
The International Molybdenum Association (IMOA) says that an average reactor contains about 520,000 feet of stainless steel alloy. Some larger reactors contain over 1 million feet of stainless steel alloy. With the metal alloy containing up to 8% moly, well you can do the math.
If you don't believe me when I tell you a molybdenum crunch is on the way, would you believe China? Your answer should be yes. China currently produces around 20% of global production. The IPO of a Chinese molybdenum ETF, China Molybdenum (very creative), jumped 59% after its open on Hong Kong's Hang Seng Index. Oh yeah, did I mention that China passed an export quota for moly on June 18? If global supply is able to keep up with global demand, which I sincerely doubt, we're still looking at China beginning to hoard the 1/5 of global production that currently produce.
Molybdenum has to supply the growing growth in all energy markets. More and more people are industrializing in the developing countries. That requires energy, and I expect that energy to arrive from numerous sources. The supply and demand picture represents us with a double-edged dagger: Roaster shortages are unable to keep up with growing demand. Mine production is unable to keep up with growing demand. I see both of these scenarios as very likely, but only one is necessary to send the price of molybdenum to new highs. As one or both of these scenarios, expect China and the countries in the C.I.S. to limit and eventually negate exports, only throwing gasoline on the already blazing fire
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