DETROIT () -- An investor who bought the metal rhenium in January through December 2005 would have paid $600 per pound for it. It could have been purchased directly from Engelhard Corporation, then an American trading and R&D company specializing in precious metals primarily used in automotive emission and process chemical catalysis. Since then Engelhard has been purchased by Germany's BASF and, operating as a profit centre, has been renamed BASF Catalysts. However, if today you approach BASF Catalysts to buy a pound of rhenium metal, it will cost you $2,500 as shown below:
Thus rhenium, which then and now is relatively easy to buy - although I don't know of any seller other than BASF Catalysts - would seem to have been a much, much better investment than gold, silver, platinum or palladium in December 2005.
What is rhenium? What's it got to do with molybdenum? Are there drivers for the price of rhenium that may drive it higher yet?
Rhenium is a silvery-white heavy metal, and it has the distinction of being the next-to-last element "discovered" which is present on the earth in sufficient concentration to be considered a "natural element." It is a very chemically reactive metal with multiple valances. It has in fact more oxidation (valance) states than any other known element. It is element number 75, and so it lies between tungsten (74) and osmium (76) in the periodic table of elements and, like its neighbours, it is very dense.
Rhenium is produced commercially as a byproduct of a byproduct. It was originally produced in gram quantities in 1928 when its original discoverers, who had first isolated it from a platinum ore and in the mineral columbite in 1925, found that they could recover a gram of rhenium from 660 kilograms of the primary molybdenum ore, molybdenite. During World War II when it was discovered that rhenium was present in the flue dust generated by a molybdenum roaster, it was also discovered that a simple set of chemical operations could separate the rhenium from any residual molybdenum in the flue dust. The rhenium was then converted to ammonium perrhenate, using the same reactions that are used to convert tungsten to ammonium pertungstate, and this salt is reduced to the metallic element by reacting it in a stream of heated hydrogen.
Today the same processes are used to produce rhenium metal, but the rhenium comes only from its presence in a concentration of between 2 and 2,000 parts per million in the molybdenum present as a byproduct in primary copper sulphide porphyry deposits. The largest one of these in production in the U.S. is Rio Tinto's [NYSE:RTP] Bingham Canyon (Kennecott) Complex in Utah. Rhenium is also produced from processing the molybdenum byproduct stream from several mines in Arizona.
Combining the above described American production with the same type of rhenium byproduct production from molybdenum byproduct production from porphyry copper sulphide deposits in Chile and Kazakhstan results in a global production of 50 metric tonnes per year at the present time in association with the present levels of copper production from the right type of ores those three countries.
There is more rhenium produced annually today than rhodium, ruthenium or gallium by a factor of from 3:2, rhodium and ruthenium, to greater than 1:1, ruthenium. Platinum and palladium are produced at a volume each of about 4 times as much as rhenium.
These numbers, along with the fact that rhenium is the element just before osmium, one of the six platinum group metals in the periodic table, probably explain why some people call rhenium the seventh platinum group metal and others call it a "precious metal."
Rhenium was actually just of academic interest until after World War II because the cost of recovering it and its linkage to the recovery of molybdenum, not then in much demand, made rhenium just too expensive to obtain in a commercial quantity.
This situation changed over the next half century as new technologies called for the development of high temperature, corrosion resistant, strong alloys for high amperage mechanical electrical contacts and for jet and rocket engine exhaust mediators and controls. In addition, rhenium platinum alloys were found effective in the catalytic refining of oil especially to produce gasoline fractions for unleaded fuels.
Simultaneously with the above new uses for rhenium, there has been an explosion of need for the much more abundant 179,000 metric tonnes produced in 2006 and the more easily obtained metal molybdenum. In just the last decade the demand for molybdenum, and also for high temperature alloys and corrosion resistant materials used in particular in the automotive and oil field tubular goods industries, has increased dramatically. These uses drove the recovery of molybdenum from copper and this enabled rhenium to be recovered. They also have driven the price of molybdenum to as much as 10 times its price early in this century.
In just the last two years as some copper miners have begun to count on molybdenum values as part of their bankability, there has also been a significant increase in demand for rhenium by the U.S. military and by an unexpected chemical discovery. First of all, the U.S. military needs rhenium critically in order to produce parts for the control of the exhaust of the very high temperature jet engines used in stealth aircraft where the exhaust heat must be absorbed and carried away to be radiated from the aircraft at a temperature below that at which IR heat seeking missiles will be enabled to target the engines.
Second, it has been discovered that rhenium diboride can be made easily by simply reacting elemental rhenium and boron and that the resultant compound is harder than diamond. Pure gaseous boron hydrides are cheap and easy to make and handle and have been studied for a long time - I myself did graduate research on boron hydrides as potential rocket fuel in the early 1960s. Thus a tool or any complex metal object can be coated with rhenium and then, at a fairly low temperature, which won't affect the temper of the machined tool, the rhenium coating can be exposed to and reacted with a boron hydride to form in-place a hard wear-resistant surface. I predict that this use of rhenium will grow so long as the price of industrial diamonds, or forming diamond coatings on tool steel, is higher than the cost of rhenium and of forming rhenium diboride on those same surfaces.
Rhenium's price has flattened at a new high value for the moment because a company which had inventoried rhenium to produce electrical contact alloys, Brush Technology, sold off its inventory earlier this year to take advantage of the climbing price to beef up its balance sheet. This action increased supply temporarily.
However, the U.S. Defense Department is now actively looking for rhenium both in the market and as a possible off-take from copper-molybdenum-rhenium mining. This action is a current driver for the bankability of molybdenum byproduct production, and it joins the long term driver of the need for molybdenum for use in making specialty steels for the transportation of sour crude oils and the intermediate products of the production of oil from tar sands in Canada. Any molybdenum produced as a byproduct of copper production is likely to have rhenium content.
So, rhenium production is at a relative peak, and it is a critical metal for the defence industry, and its compounds with boron can be used to replace diamonds in precision machining.
I think that as long as molybdenum is also in such demand that it is produced as a byproduct of porphyry copper sulphide deposits, there will be now also be rhenium production. I know of few operating molybdenum roasters in the U.S., and I believe that one is located by Blue Pearl's Thompson Creek [TSX:TCM] unit and is in Pennsylvania. There may be another one in Minnesota, but I don't know if it's in operation today. Phelps Dodge, now Freeport McMoran [NYSE:FCX], has a molybdenum roaster at its Sierrita Mine & Mill Complex in Arizona, along with a U.S. rhenium recovery circuit. The product is rhenium oxide, however, not yet the metal itself.
I don't know how much longer, if at all, civilians will be able to buy rhenium easily, but you can always invest in whoever is recovering molybdenum as a byproduct from porphyry copper sulphide mining and smelting.
Ask the miners if they have rhenium, and if they say yes, ask them if they are having it recovered and refined, and if so, ask them what value it is bringing to their balance sheet.
There's a new sophisticated world of mining out there, and any increase in the supply of rhenium will be marginal, but I don't think that the demand will subside. I repeat that the rhenium play is molybdenum, but it will only be some of the molybdenum producers who have rhenium, and only a few of those who recover it, or, sadly, even today even know if it's there.