Australia's hottest town, Marble Bar, is shaping as one of the world's biggest potential sources of molybdenum - a global hot commodity - as demand and prices for the exotic steel hardening agent run rampant.
Over the past two years, the price of molybdenum - a shiny grey mineral half the weight of tungsten but just as tough and with one of the highest melting points of all metals - has jumped sevenfold to more than $US30 ($39) a pound as Chinese steel demand and the use of tougher corrosion resistant materials has skyrocketed.
Demand from the oil and gas business has jumped especially fast as more "moly-steels" are used in LNG tankers and oil and gas pipelines.
But with most supplies a by-product of copper mines in the Americas and China, and China set to move from a net exporter (it accounts for 30 per cent of global supply) to a net importer within five years, the world is facing potentially severe shortages.
Perth junior Moly Mines, led by veteran geologist Derek Fisher and chaired by Andrew Forrest, has put its foot on Australia's biggest known hard rock deposit and is speeding towards a development decision in mid 2006.
Spinifex Ridge, 50km north-east of Marble Bar, was discovered in 1970 by Anglo American and is estimated to contain 440 million pounds of molybdenum at an average grade of 0.07 per cent moly. After picking up the ground from a prospector last year, Moly Mines (the renamed Hibernia Gold) has since been fast-tracking drilling and development studies in a bid to start production by mid 2007.
Visiting the site this week, Mr Fisher said the proposed $400 million project had the potential to meet 5 per cent of world demand for more than 20 years at the planned annual production rate of 15 million to 20 million pounds.
That would make Moly Mines the world's seventh biggest producer, and rank the Marble Bar site as the fifth largest single producer.
"It's a unique story - it is a major resource (that) will have an enormous impact on the Marble Bar region, and will open up a whole new field of mining and metallurgy for Australia," he said.
Unlike past ventures linked to Mr Forrest, the deposit is geologically and metallurgically simple, requiring only conventional processing to produce a concentrate and within economic trucking distance from Port Hedland along existing roads.
"The most optimistic model we ran last year was based on (a price) of $US10 a pound, and at $US10 a pound this thing absolutely flies," Mr Fisher said. "So it is very difficult to see this not being developed at this point in time and our whole campaign is to try and push it into production as quickly as we can.
"If we can get into production with the price still up over $US20, we'll probably achieve pay-back within 12 months . . . they're quite mind boggling numbers."
Every $1 increase in molybdenum prices added $15 million to $20 million to the mine's bottom line, he said. Mr Fisher said a full feasibility study should be completed within nine months and he was confident of securing debt funding, enabling first production in mid 2007.
att The reporter visited Spinifex Ridge courtesy of Moly Mines.
