In a sure sign that metal bubbles are back, a great rush is on to make money from molybdenum. On May 3, the same day it was reported that an unlisted Chinese firm, Sichuan Hanlong, was to spend US$200 million on acquiring 55 percent of an Australian molybdenum project, Russian oligarch Oleg Deripaska announced the forthcoming listing of his molybdenum company, Strikeforce Mining, on the Hong Kong stock exchange. (Since this was written Strikeforce advised that its share offer was postponed due to the general deterioration in market sentiment).

All this fits the thesis of an inexhaustible Chinese demand for lesser known and possibly rare metals. Molybdenum is utilized in hardening steel so is heavily used in just the sort of pipelines and railways projects now booming in China. As a pure metal, it is employed for a wide variety of other uses that require high melting temperatures. Demand is also coming from pipeline projects in Russia, Kazakhstan, India and elsewhere.

China itself is a large molybdenum producer but with domestic steel demand accounting for about half the world's total it has recently become a net importer of the metal so its companies seem prepared to pay very high prices for overseas mines which are supposed to ensure a supply for Chinese steel mills.

In March Hanlong, which is a part of a sprawling chemical and minerals business group based in Chengdu that includes Shanghai-listed Sichuan Hongda and Sichuan Jinlu became a 25 percent shareholder in General Moly of the US and by guaranteeing a debt of $665 million may be on the way to effective control. General Moly has two huge projects in progress in the US, one already backed by the Korean steel giant Posco. Assuming both get to full production General would be the largest producer in the world.

Since the Chinese company is being massively financed by state banks to acquire these and various other mining properties, it looks as though Beijing is behind the deal. A more natural buyer from a Chinese perspective might have been its own large producers of molybdenum (and also of other metals such as tungsten and antimony) such as Hong Kong-listed Henan-based China Molybdenum and Hunan Non-ferrous Metals Corp, which is controlled by the Hunan Provincial government. So it looks as though Sichuan is buying properties for national strategic reasons, not as a natural fit for its existing miners – who may find their prices suffer as a result.

For a China flush with dollars and bank credit now may seem a good time to be buying up mineral resources. But Deripaska thinks it is time to be selling. And he is probably right, particularly given that though the molybdenum market has been tightened and prices have risen from a 2009 low of US$8 to a current $17.50 they are still half their 2008 high of US$34. Molybdenum has a history of brief price spikes. In 1995 it jumped from US$4 a pound to US$15 before rapidly falling back to US$5 where it stayed till 2003.

It is now two years since Deripaska first tried to list Strikeforce, a unit of his holding company Basic Element, on a Hong Kong exchange desperate to get some non-Chinese listing (see Asia Sentinel June 12 2008). But the global crisis intervened. And when market conditions improved Deripaska preferred to get his much bigger aluminum company, Rusal, listed first.

Strikeforce is Russia's premier molybdenum producer. Its main mine is at Zhirekan close to the eastern Siberian city of Chita, the last major stop on the Trans-Siberian Railway before it enters China's Heilongjiang province.

One reason is that the majority of the metal produced is as a byproduct of mines mainly producing other metals – mostly copper. But even more dangerous for the future is the number of projects focused mainly on molybdenum. In addition to Australia, Canada also has new and revived ones mothballed during years of low prices. Russia itself has huge potential to increase supply. Nickel giant Norilsk has a big molybdenum/gold deposit at Bugdainskoye , also near Chita, and close to a huge copper deposit at Bystrinskoye with which it could share processing facilities.

Development of Bugdainskoye is being supported by construction of a railway. Other lower grade deposits are known to exist near Ulan-Ude and in Mongolia, close to where the border of China, Russia and Mongolia meet.

Having succeeded in raising US$2.2 billion early this year from the Hong Kong offering of a 10 percent stake in much-troubled, over-extended Rusal. Deripaska clearly hopes to repeat the trick with Strikeforce, a much smaller but better positioned company. It certainly plays to the notion of synergy between a Russia with vast supplies of Siberian minerals and a China with insatiable demand. But he made need to hurry before the molybdenum story is crushed between a peaking of Chinese demand and the advent of new mines.