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A Unique Metal that is Very rare and Little Understood and yet in Demand

A Unique Metal that is Very rare and Little Understood and yet in Demand
While most of the metals have lost their luster   during the commodity slump, there’s at least one metal that’s been attracting a lot of attention.
A metal - Niobium used to produce stronger, lighter steel for industrial pipes and aircraft parts, is mined in only three places on Earth, and the price of every kilogram is seven times higher than copper. The name of the metal stands for a Greek goddess who became a symbol of the tragic mourning mother.
Agreeing to pay $1.5 billion, or 50 percent more than the valuation by some analysts, China Molybdenum Co. outmaneuvered at least 15 companies last month to purchase Anglo American Plc’s niobium and phosphate unit in Brazil.
The growing appeal of a market that may be worth $4 billion for a soft, silvery metal many experts don’t know much about was showcased by the buying frenzy that included Vale SA, Apollo Global Management LLC and X2 Resources.
“I didn’t know what niobium was, and I had been in the minerals industry for 20 years before this opportunity came across my desk. I had to actually open up the periodic table just to double-check that it was an element. It definitely is a boutique space,” said Craig Burton, the chairman of Cradle Resources Ltd., which is seeking to develop the $200 million Panda Hill niobium project in Tanzania.
Niobium is hard to value and find.
One company – Cia Brasileira de Metalurgia & Mineracao in Brazil, supplies more than 80 percent of the metal to the world. There’s not enough liquidity to report one for niobium says Metal Bulletin Ltd. which publishes prices for metals as obscure as bismuth and germanium.
According to Cradle Resources, which is based in Perth, Australia, the metal averaged about $40 a kilogram last year. An equivalent amount of copper on the London Metal Exchange fetched about $5.49. Global demand for niobium is about 90,000 to 100,000 metric tons annually.
According to Anglo American, which wants to raise cash to cut debt after a collapse in commodity prices, as slumping oil and gas markets led to fewer metal pipe purchases, the price of the metal still fell last year because of the weak demand for steel. The dominant producer CBMM is able to match supply to demand and influence prices as almost all the metal comes from just three mines in Brazil and Canada.
Sources said that South32 Ltd. and Eurochem Group AG were among the companies that were outbid by China Molybdenum were Mosaic Co., the world’s largest producer of phosphate fertilizer. Investec Plc. RBC Capital Markets said the assets were among the best that London-based Anglo has offered and the sale was highly competitive and the winning offer exceeded the estimates of analysts at Bank of America Corp. and Investec Plc.
The very few operating mines make this business so attractive. According to Argonaut Securities Pty, Brazil’s CBMM supplies about 91 percent of the metal while the rest 89 percent is done by Anglo and Niobec. Niobium is listed as a strategically important mineral by both the U.S. and Europe.

“Niobium is a very unique business. We typically want to buy from people who regret selling it. We’ve been very carefully assembling a war chest in anticipation of a downturn in the industry,” said Kalidas Madhavpeddi, who heads the CMOC International unit of Luoyang, China-based China Molybdenum.

Christopher J. Mitchell

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