Molybdenum mysteries: Mo money to be made

Few people have heard of this metal with element symbol Mo (from Neo-Latin molybdaenum) and atomic number 42.

Molybdenum is mined at 76 projects of which 40 are based in China. Most production is dominated by China (53%), with Peru (16%), Chile (15%), and the US (12%) other main regions to mine the silver-grey refractory metal.

According to the US Geological Survey’s Mineral commodity summaries 2024, identified resources of molybdenum worldwide total about 25.4 million tons (23.04 million tonnes).

Yet only seven Mo operations are currently primary mines – in the others it’s a byproduct of copper. Only two active primary moly mines currently operate outside of China – both in Colorado, US, reflecting declining Western output.

Of the nearly 700 copper mines around the world just 60 reportedly also produce moly.

There are only a handful of ASX-listed mining companies with a focus on molybdenum including diversified electric vehicle and green energy technology metals company EV Resources (ASX:EVR).

Speaking to Mining.com.au ahead of the Q2 2024 molybdenum quarterly report, EV Resources Managing Director Hugh Callaghan says the metal isn’t typically mined as a primary resource for several reasons.

“Molybdenum prices have, for many years, not encouraged primary molybdenum mines in western countries,” Callaghan explains.

“Few primary molybdenum mines have proved economic in any but the most buoyant markets, and the only operating primary molybdenum mines in the west are the unusually high grade Henderson and Climax mines operated by Freeport McMoran in Colorado, USA. This is a function of price.”

Some 90% of Western molybdenum supply is a byproduct of copper production and grades generally range in the 0.01% to 0.25% Mo level, according to CPM Group.

Callaghan says there is a significant amount of Chinese molybdenum production, although the economics of these mines is opaque to say the least.

The World Bank forecasts demand for the metal from the renewables sector in 2030 may reach 12% of the current global production, meaning more primary mines will need to come online.

This is highlighted by producers in China continuing to face challenges amid tightening of environmental regulations making mining permits more difficult to obtain. High molybdenum prices have caused some consumers, especially in China, to also purchase less material to avoid higher costs.

Chilean state-owned mining company Codelco – one of the largest copper producers and third largest producer of molybdenum – issued a warning that if the Chilean Government continues to restrict its investment funding the company’s output of copper (and moly) may drop even further.

However, the silver-grey refractory metal is expected to continue to have strong demand in global power generation and infrastructure projects as countries prioritise clean energy to address climate change.

The USGS reports there was a decrease in North American molybdenum production in 2023 owing to declining ore grades at copper-molybdenum mines.

Given these supply risks, molybdenum is officially listed as a critical mineral in Australia, Canada, Japan, and China. As such, there has been a shift in some companies vying to supply molybdenum to the market.

There are various molybdenum-bearing minerals, but the only one of commercial significance is molybdenite (MoS2) – a natural molybdenum sulfide.

EV Resources’ Callaghan notes that in orebodies, molybdenite is generally present in quantities from 0.01% to 0.25%. It can occur as the sole mineralisation, but it is often associated with sulfide minerals of other metals, notably copper.

“Depending upon the minerals contained in the orebody and their quality, molybdenum mines are grouped in three classes – primary mines, where the recovery of molybdenite is the sole objective; byproduct mines, where the recovery of copper-bearing ores is the primary objective; and molybdenite recovery provides additional economic value, co-product mines, where both molybdenite and copper-bearing minerals are recovered,” he says.

On 27 May 2024, Mining.com.au reported EV Resources has concluded a review of molybdenum grades assayed at its flagship high-grade Parag copper-molybdenum project in Huaura province, Peru.

As Callaghan explains to Mining.com.au, in the global context, Parag is “exceptional” with holes demonstrating grades of at least 0.10% and up to 0.62%.

This reflects the unusual nature of a belt of intrusive structures in which Parag lies, and which has attracted several major mining groups whose land positions surround Parag, the MD adds. The ‘exceptional’ grades recorded – including expansive intersections of mineralisation from surface – have led to a re-evaluation of the exploration, and the commissioning of analysis of molybdenum as a byproduct.

“Molybdenum byproduct supply is thus an important source of units for the market but will ageing copper mines impact the molybdenum market negatively?” Callaghan asks.

Price and primary production predicament

Metals pricing platform Metalary says for those betting on this metal, they’re placing their bets on two suppositions.

“The first is that you think there won’t be a major disruption to the supply of the metal. Its major producers are US, China, and Chile,” Metalary says.

“The second supposition is you believe there will be a greater demand for it because of increased industrial activity in countries like China and India. This substance is much tied in to industrial manufacturing, as just about every type of extremely high-strength steel has molybdenum.”

Molybdenum prices have for many years not encouraged primary molybdenum mines to come online in Western countries. However, as the CPM Group graph (above) highlights, prices are on an upward trajectory.

“Few primary molybdenum mines have proved economic in any but the most buoyant markets, and the only operating primary molybdenum mines in the West are the unusually high-grade Henderson and Climax mines operated by Freeport McMoran in Colorado, USA,” Callaghan says.

“This is a function of price. Hence 90% of Western molybdenum supply is a byproduct of copper production. There is a significant amount of Chinese molybdenum production, although the economics of these mines is opaque to say the least.”

In 2023, the estimated average US molybdic oxide price increased by 34% compared with that in 2022. Estimated imports into the country for consumption increased by 8% compared with 2022.

The US Geological Survey’s Mineral commodity summaries 2024 reports there was a decrease in North American molybdenum production owing to declining ore grades at copper-molybdenum mines. However, record-high molybdenum prices have led to some idled molybdenum mining companies to consider reopening.

Canadian company Centerra Gold (TSX:CG) last year updated plans to restart the Thompson Creek molybdenum mine located 48km southwest of Challis in Idaho. The pit and concentrator were put on care-and-maintenance in 2014.

The completed a Prefeasibility Study (PFS) for reopening the Thompson Creek forecasts a life of 11 years, producing 134 million pounds of molybdenum over that time. The average mill head grade is expected to be 0.07%.

The feasibility study at Thompson Creek which is expected to be complete in mid-2024.

Investigator Resources (ASX:IVR) on 28 May 2024 updated the Mineral Resource Estimate (MRE) for its Molyhil Tungsten-Molybdenum Project located 230km northeast of Alice Springs, Northern Territory, just off the Plenty Highway.

The measured resource has improved with a 150% increase in tonnes. Molybdenum metal increased from 600 tonnes to 1,200t (110% increase), while copper metal increased from 280t to 644t (147% increase).

Commenting on the updated MRE, Investigator Managing Director Andrew McIlwain says the current strength in both the tungsten and molybdenum prices is encouraging “and will no doubt enhance the economics of the project”.

Molybdenum has a higher supply risk than copper, nickel, lead, zinc, as well as lithium. Given the metal is officially listed as a critical mineral in Canada, China, and Japan there are concerns in the future this could lead to export restrictions from China, which accounts for 45% of global output.

Modest molybdenum demand growth?

Against the backdrop of the current molybdenum supply deficit and modest demand growth, feedstock availability remains the main headwind affecting the market.

“With molybdenum demand rising steadily, additional feedstock will need to be commissioned in order to satisfy ferromolybdenum and steel producers’ requirements,” EV Resources’ Callaghan adds.

“[Industry commentators] forecast the market to remain in deficit until 2025, which could cause a supply driven drop in demand unless projects accelerate plans to commission.

“Molybdenum supply will increasingly be inextricably linked with copper and copper in turn inextricably linked with molybdenum as copper grades decline steadily. The copper industry is increasingly dependent upon the contribution of by product or co product economics from gold, silver, or molybdenum.”

“With molybdenum demand rising steadily, additional feedstock will need to be commissioned in order to satisfy ferromolybdenum and steel producers’ requirements”

Speaking for conventional markets, Callaghan adds molybdenum prices generally work against primary molybdenum mines – probably nine years out of every 10. For the copper industry that is a positive, he says.

“At EVR we looked carefully at the idled Western molybdenum mines or projects that have been known about some time, and just couldn’t see them coming to production unless there was a step change in pricing which we think unlikely and probably even undesirable as it doesn’t encourage supply side discipline,” he says.

“The ruins of many primary molybdenum mines I’ve been to in the USA and Canada as part of this process were rather helpful in coming to this view.”

The main drivers of demand, according to Callaghan, are expected to remain traditional industries “as the idiocy of the net zero zealotry is undone by the remorseless logic of economics – affordability and practicality”.

Centuries of consumption

molybdenite, from which molybdenum is derived, was mistaken for graphite for many years.

The International Molybdenum Association (IMOA) states that in ancient times a number of substances were collectively known by the Greek word ‘molybdos,’ meaning lead-like. Molybdenite (MoS2) – the most abundant molybdenum-containing mineral – was in this class along with lead, galena, graphite, and others.

The IMOA says although they did not distinguish between these various compounds, the ancients certainly used molybdenite. Citing one example of their insight, a 14th century Japanese sword was reportedly found to contain molybdenum as an alloying element, the IMOA says.

In 1768, Swedish scientist Carl Wilhelm Scheele determined that molybdenite was a sulfide compound of an as-yet unidentified element. In 1782, at Scheele’s suggestion, Peter Jacob Hjelm chemically reduced the oxide with carbon, obtaining a dark metal powder that IMOA says he named ‘molybdenum.’

Because molybdenum enhances the performance of alloys, it strongly contributes to the sustainability of many applications. Through light-weighting, improved durability, and reduced maintenance it increases longevity, safety, and efficiency, and saves resources and energy.

Molybdenum-containing materials are used across nearly all industry sectors, including building and construction, chemical and other processing, oil and gas, mechanical engineering, power generation, transportation, medical and consumer products.

People can trade futures of the commodity in the London Metal Exchange, with contract lots of 6 tons with delivery points in Antwerp, Singapore, Rotterdam, and Baltimore.

According to the USGS, there is little substitution for molybdenum in its major application in steels and cast irons. In fact, due to its availability and versatility there has been a push to develop new materials that benefit from its alloying properties.

Potential substitutes, however do include boron, chromium, niobium (columbium), and vanadium in alloy steels; tungsten in tool steels; graphite, tantalum, and tungsten for refractory materials in high-temperature electric furnaces; and cadmium-red, chrome-orange, and organic-orange pigments for molybdenum orange.

Write to Adam Orlando at Mining.com.au

Images: International Molybdenum Encyclopedia, CPM Group & EV Resources
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Written By Adam Orlando
Mining.com.au Editor-in-Chief Adam Orlando has more than 20 years’ experience in the media having held senior roles at various publications, including as Asia-Pacific Sector Head (Mining) at global newswire Acuris (formerly Mergermarket). Orlando has worked in newsrooms around the world including Hong Kong, Singapore, London, and Sydney.