The stage show making all the headlines on both sides of the Atlantic is the Goldoni revival and re-write ‘One Man, Two Guvnors’ in which a servant over-stretches himself to farcical proportions in trying to satisfy the demands of his two masters, one of whom is a murderer and the other the murdered person’s twin sister.
Rhenium’s fate has not yet reached farcical proportions but it remains stretched to breaking point between the demands on its tiny 45mt per year supply from aerospace on the one hand and oil/petrochemicals on the other.
With both industries deeply inward-looking, neither is much aware of the other or indeed what their relative uses and projected demands may be.
Meanwhile, the miners who haplessly generate the rhenium as a minute particle within their many thousands of tons of copper ore production have in the past barely given the matter a second’s thought.
It fell to the efficiencies of the independents, the tollers of metal, the merchants, the scrappies, the cottage industries of recyclers to shed light and tally information across the spectrum and to retrieve units that, if not recycled, would be lost for ever.
Extraordinarily, despite all this, some quarters in the aero and petrochemical sectors roll blissfully on, apparently sure that the market will supply and that, like copper, all that is needed is a phone call to the broker to arrange delivery.
For a metal as un-substitutable as Rhenium is it not a state of affairs suited to the 30-40 year planning of either the aircraft or oil industries.
For this reason, the recent announcement of the departure of CEO Peter Reeve from Ivanhoe Australia should be highlighted and give pause for further thought. Ever since this junior subsidiary of parent company Ivanhoe Canada announced their discovery of a unique Molybdenum-Rhenium deposit in North West Queensland Australia in 2008, both oil and aero end users entered a state of relaxation safe in the knowledge that if they waited just long enough there would be 7mt per year of new supply (15% of primary production) coming round the hill. This is certainly what Ivanhoe advertised. However, when RTZ majority bought Ivanhoe Canada to obtain control of the Oyo Tolgai copper mine in Mongolia which is shortly to be renamed ‘Turquoise Hill’, the Australian operation became instantly marginalised. With Molybdenum prices falling, it is unlikely to be revived at any time soon. Furthermore, reports about the quality of the Molybdenum Sulphide Concs that would have emerged suggest they would have been low grade Mo 26% with significant impurities making the concs difficult to process. Equally, the short life expectancy of the mine – 14 years – could not necessarily justify the investment in new roasting facilities or local processing, despite difficulties with water. All in all this 7mt per year supply seems highly unlikely.
At the same time, delays at Rio Tinto’s Kennecott Bingham Canyon Molybdenum Autoclave Process (MAP) mean that rhenium from this source, at one time expected to be 2-3 mt per year by 2012 will be delayed to at least end 2014. And Codelco’s aim to re-start its rhenium circuit at the ageing Chuquicamata roaster have foundered, with the producer now aiming to build a new roaster at Mejillones, Chile for production of 2-3 mt rhenium by end 2015.
So three promises, and three defaults – so for this reason buyers in both oil and aero sectors would be well advised to engage positively at an early stage with the generators of rhenium; both to ascertain the veracity of producer claims but also, where suppliers are serious, to work with them hand in hand to smooth out the likely irregularities and dislocations of supply. It is no harm to be reminded that this is still an element which even at processing stage, whether in copper or molybdenum concs, is rarely above 250 grammes per metric ton.
By contrast, the announcement last week that Rolls-Royce Plc would spent just under £1 bln on an Advanced Blade Casting Facility in Rotherham UK sends quite a different signal. As uncertain the supply, as certain the demand. Expecting to produce 100,000 single crystal turbine blades per year when fully operational, this factory and investment makes clear that the technology in which rhenium at 3% or 6% is implicit, is part of the long term strategy of RR, just as it is of Pratt & Whitney and GE.
And here comes the farcical bit – all would be well were it not that at the same time as these developments in aerospace, new developments in the Petrochemical industry with regard to patents relating to foam and mattress production worldwide mean that demand for Ethylene Oxide promoted by Ag/Re bearing catalysts have seen an upsurge in demand seeing several metric tons of Rhenium drawn into this field as raw material each year. These units are as essential here as they are in aerospace.
Meanwhile, the debate, shadow-boxing and brinkmanship over new-style contracts of supply rattle on between the world’s largest consumers of Rhenium and the largest supplier (Molymet) as to ‘upon what basis’ they will be struck. Whether on fixed price terms or based on objectively reported published prices, consumers may well not have long to enjoy the luxury of indecision. What is most likely is that the anachronism of fixed price long term contracts at near $2000 per kg will surely pass into history. These prices which prevailed, endured and were honoured during the period which saw prices reach $12,000 per kg in August 2008 on the spot market will surely not be repeated. As to where the market will go, that is not for this article, but when spot prices have not been below $4000 per kg for the last year for catalyst grade Ammonium Perrhenate in Europe we may see that these sorts of levels will be the floor rather than the ceiling.
In a few days’ time the Farnborough Air Show takes places in Britain where Airbus and Boeing vie for primacy and new orders, advertising their fuel efficiency, lower emissions and longevity. The position at Airbus is that as of May 2012 they had banked a backlog of 8400 orders making 530 deliveries in 2011 compared to Boeing’s 477. Not one of those aircraft will have engines that do not contain at least some rhenium at the core of their engines.
The rhenium’s got to come from somewhere. So, let’s hope the servant is able to deliver and doesn’t (like in the stage show) fall flat on his face.
June 26th 2012