Molybdenum can occur in large low-grade porphyry molybdenum deposits, but it is more normally recovered as a sulphide in low-grade porphyry copper deposits: in other words, it is a by-product. The US, Chile and China are the big three producing regions, accounting for 59,000, 46,000 and 41,000 tonnes respectively of contained molybdenum in 2007. Total world availability last year was 187,000 tonnes, according to the US Geological Survey.

Molybdenum is principally used as an alloying element in steels and cast irons, so it was perfectly placed to benefit from the boom in China over the last few years, where steel production and consumption both surged. As a result of increased domestic activity, China exported less molybdenum in 2006 and 2007, which helped elevate prices to their highs.

Cobalt, too, is principally recovered as a by-product. It is found in nickel-bearing laterite deposits, nickel-copper sulphide orebodies in Australia, Canada and Russia, and in the sedimentary copper deposits of Congo and Zambia. In recent years, cobalt has also been made available from the US stockpile, but supplies are becoming exhausted now.

Global production of cobalt was around 53,750 tonnes last year, according to the CDI (Cobalt Development Institute) and it has been steadily rising this decade – supply back in 2000 was just over 38,700 tonnes. The main reason for this surge in availability is China, where production rose from 1,200 tonnes in 2000 to just over 13,000 tonnes in 2007.

Much of China’s output has been from cobalt-rich ores imported from Congo. China has mopped up cheap cobalt concentrates, refined them into 99.80 per cent metal, and sold them onto the world market. In 2006, however, the government looked to enforce a ban on exports of unprocessed cobalt. Now, China is trying to develop more domestic and foreign sources of cobalt supply, invest in African cobalt projects, and increase the recycling of scrap.

Cobalt’s key end-use is in superalloys, which are used mainly in aircraft gas turbine engines. Other major applications include batteries in hybrid vehicles and gas-to-liquid catalysts. It also provides the rich blue colouring in glass, enamels, pottery and china.

Cobalt and molybdenum may be much smaller than the major base metals, but their prices can be just as volatile. Molybdenum oxide (MO3) was habitually around $5-6/lb in price, for example, but it soared to nearly $100/lb in 2005 and now is around $30/lb. It was pulled higher by most of the same factors that lifted its parent metal, copper – hungry demand from industrialising nations, such as China, which caught the supply-side on the hop.

Cobalt has all the characteristics of a 'boom-or-bust' market – at one stage in the late 1990s it was as cheap as $5/lb – this year it has literally taken off. In early May the price reached a 30-year record of around $53/lb, then it tumbled in three months to $24.50/lb in mid-August, only to snap back above $30/lb in a matter of days.

Whether those sky-high prices in molybdenum and cobalt will be exceeded is debatable. But positive end-use factors suggest the price-floors will be some way above their previous cyclical lows – again similar to the major base metals. The days of cobalt and molybdenum being cheap throwaway materials are long gone now.

Martin Hayes
LME Ringsider enewsletter
Autumn 2008