LONDON, April 24 (Reuters) - The global trend towards more frequent air travel should keep planemakers busy and in turn ensure prices of rare and hi-tech metals such as cobalt, rhenium and titanium stay strong for years. Often mined in inaccessible and risky territories, these metals are prized for their exceptional strength and heat resistance, making them essential for jet engines and airframes.
"Two engines use twice as much cobalt and rhenium as one engine," said Stephen English, who trades cobalt for London-based merchant SFP (Metals). On Wednesday, Boeing's commercial planes unit said it would deliver 475-480 aircraft this year, rising to 500-505 in 2009. It delivered 441 commercial aircraft in 2007.
"That's why we're in eye of the storm," English said. "Today, you have evidence that refined cobalt supply is 54,000 tonnes, and demand is between 61,000 and 65,000 tonnes."
Though aluminium is the metal most widely used in aircraft, the aerospace industry represents only around 3 percent of world aluminium consumption, said consultant James F. King at an industry conference in Barcelona last week. Aerospace is by far a more crucial end market for less well-known, but much higher-value, metals.
One of these is cobalt, a blue-tinted metal mined mainly in the Democratic Republic of Congo, Australia and Canada by firms including Camec, BHP Billiton, Xstrata and Vale.
It trades at around $50 per lb on world markets -- making it more than 30 times more expensive than aluminium -- near to an all-time high, and up more than 50 percent since last April.
In 2007, almost a quarter of the world's cobalt was used in materials known as 'superalloys' which are capable of withstanding temperatures of up to 1,100 degrees Celsius.
Some 75 percent of these went into aircraft, according to figures from industry group the Cobalt Development Institute.
Sustaining cobalt prices is the fear that as demand accelerates, supply may not be able to grow quickly enough to meet the world's needs.
Though there are new mines scheduled to come on-stream around the end of the decade, many in the market are uncertain they will reach production as quickly as their owners plan.
Power supply and infrastructure issues in the DRC may hinder project development, while the generally higher cost of bringing mines to production, linked to rising steel and energy prices, can lead to delays or cancellation, according to a presentation given by J. Scott Bending, president of Canadian metals explorer and refiner Formation Capital.
"Very few entrants into the high purity cobalt market within the next decade are anticipated," he said.
On Tuesday, mining firm Lundin said capital expenditure estimates for the Tenke project in the DRC, said to be one of the world's richest cobalt deposits, had doubled to $1.75 billion from last October's figure of $900 million.
Several other projects in the DRC have been delayed, or production forecasts reduced. For a FACTBOX on Congolese cobalt mining.
FIS Price at posting:
0.0¢ Sentiment: Buy Disclosure: Held
