Time to think beyond copper concentrate

8th of 2, 2016


Ever since the Erdenet factory was established in 1978,copper has been the main pillar of the Mongolian economy. True, coal export revenue was more than that of copper from 2010 to 2013, but copper soon regained its pre-eminence, as data from 2014 and 2015 show. In keeping with global trends in the commodity markets, copper prices, too, have fallen, but despite that, copper is back driving the Mongolian economy, and promises to do so in the years to come. With Oyu Tolgoi set to expand and Tsagaansuvarga to begin production, Mongolian annual copper concentrate export is expected to be doubled to almost three million tons in the near future.

Increased copper output has another potential. Significant commercial use can be made of the several metals that can be extracted from porphyry copper ore, such as rhenium, tellurium, selenium and molybdenum. Professors D.Munkhbayar, M.Delgermaa, and L. Telmenbayar of Mongolian Science and Technological University believe that Mongolia can become a big producer of rhenium, once more studies are made of aspects of its commercial use. We shall return to rhenium later in this article.

Molybdenum is more well-known to us. The total production of molybdenum ore and concentrate was 4,000 tons in 2014, rising marginally to 5000 tons in 2015. In coming years, Tsagaansuvarga is expected to produce another 4,000 tons or more of molybdenum concentrate per annum. In another development,Shim-Technology, a Mongolian-Swiss joint venture, has been operating a molybdenum concentrate processing factory since September 2014. It is, however, yet to achieve its full capacity of producing 2500 tons of molybdenum oxide and 800 kg of rhenium by processing 3600 tons of molybdenum concentrate.

If molybdenum production is thus increased, so can be that of rhenium. For this, we need to conduct appropriate studies and set up facilities for rhenium extraction in both Oyu Tolgoi and Tsagaansuvarga. Their contribution to the country’s economy will not be small.

Incidentally, there is much scope to produce considerably more cathode copper in Mongolia. Sale of refined copper now accounts for just 1.4 percent of the total export revenue. Even this has come after a recent dramatic rise in refined copper production.  Mongolia started exporting refined copper only after Erdmin started operations in 1997. The country’s second refined copper factory, Achit Ikht Co., came only in October 2014. It has an annual capacity to produce 10,000 tons of refined copper. In 2015, Mongolia exported 12,400  tons of refined copper, from Achit Ikht and Erdmin, and earned $66.7 million, an increase of 95 percent by volume y-o-y and approximately 60 percent by earning. During 2011-2013, the respective figures had stood at 2,200 tons and $16 million. It is thus clear that proper planning which could include setting up small facilities for value added production can achieve very good results in the coming years.

To come back to rhenium,it is a rare metal whose value comes in kilograms, not tons. It is a strategically important element with sophisticated hi-tech use and is in great demand.

With its porphyry copper deposits having molybdenum Chile is the world’s top supplier of rhenium, accounting for over 50 percent of the total output. The USA and Kazakhstan are among the other big rhenium producers. Molymet in Chile is the world’s largest producer of rhenium.

Rhenium producing companies are very profitable.For example, Metminco sold its rhenium at approximately $5800/kg, according to its 2015 H1 report. Rhenium prices had peaked between 2005 and 2008, reaching as much as $11,000/kg. The average price of one kg of rhenium pellet was $3000 in 2014, and according to the Platts report, this fell to $2800 in the first half of 2015. One reason for the price drop is that there was a glut in supply when prices were high, but now that it has evened out, prices will rise as demand grows. Rhenium is used in making gas turbines, jet engines, accelerators in oil-fuel, X-ray machines, and spacecraft. It also has various metallurgical uses, according to the experts in Mongolian Science and Technological University.

Global rhenium supply, including recycled supply, was 58 tons in 2014. In a mid-2015 report,the market research organization Roskill wrote,“Demand for rhenium will experience a period of strong growth between 2015 and 2018 followed by stability through to 2020. Demand growth for the forecast period will average 6% py and reach about 85tpy.” With such possibilities, it is high time copper-rich Mongolia enters the rhenium producers’ league and reaps economic benefits.

The Mongolian Mining Journal 2016.01 /086/

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