Expand Niobium Production Suggest Demand Heating Up
By Donald Levit -
January 6, 2017 - 21:08 GMT
Niobium is a metal that not many have heard of, but its status as a strategic metal means that it is a commodity that has the potential to outperform many investments.
Strategic metals are those that are essential to modern technology. Often they have niche applications, but their sources are limited, which makes them susceptible to supply side disruptions that can cause rapid swings in prices. Molybdenum is one of the more recognized strategic metals.
China controls most of the world’s molybdenum and the country has taken advantage of this, flooding the market with supplies when international producers became a threat and then charging exorbitant prices for exports once the country has resumed its control of the metal’s supply. This has caused some massive fluctuations in the commodity’s price, and investors who have capitalized on the upside have received returns hard to find elsewhere. Conversely, major losses have also been expected but the potential for such high returns continues to draw many to the market.
Niobium is used to produce stronger, lighter steel for industrial pipes and aircraft parts. It is mined in only three places on Earth. These characteristics make it a strategic metal.
The metal is starting to garner more interest, and countries and companies are moving to boost supplies due to the likelihood of increased demand and higher prices. At the end of December Russia announced that it would significantly increase the volume of domestic niobium production in the coming years by expanding existing production and processing capacities.
Currently, the majority of Russian niobium demand is met by the imports, but the country wants to reduce this reliance. When it comes to strategic metals, lower reliance on imports is important. Right now, Russia meets most of its demand from Brazil. Brazil controls about 85% of world niobium production.
